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1 <br /> • " t <br /> Agreement. If such insurance proceeds are $50,000 or less, such proceeds shall, at the request <br /> of the Developer, be paid to or upon the order of the Developer, which shall keep them separate <br /> from all other funds and use them only to pay the costs of repair or replacement of the property <br /> damaged or destroyed. The Loan Agreement provides that the Developer shall commence and <br /> diligently prosecute, or cause to be commenced and diligently prosecuted, the repair or <br /> replacement of the property damaged or destroyed in accordance with any plans and <br /> specifications approved by an independent architect and shall pay any amounts required for the <br /> completion of such repair or replacement if the insurance proceeds (including any income earned <br /> on the investment thereof) are insufficient therefor. If, following the completion of such repair <br /> or replacement, any moneys remain in the Insurance Account, such moneys shall, subject to any <br /> applicable FHA requirements, be paid to the Developer. <br /> Section 509. Mortgage. Security Agreement and Regulatory Agreement Controlling. <br /> Notwithstanding any other provision of this Indenture, the Trustee and the Issuer agree for <br /> themselves, their successors and assigns, that should any conflict arise between this Indenture <br /> and the Mortgage or the Regulatory Agreement, the Mortgage or the Regulatory Agreement, as <br /> the case may be, shall be controlling. <br /> Section 510. Application of Proceeds of Condemnation Compensation. (a) Paragraph <br /> 8 of the Mortgage provides that all proceeds of condemnation shall be assigned to the mortgagee <br /> under the Mortgage, to the extent of any indebtedness that remains unpaid. The Trustee (as <br /> mortgagee under the Mortgage) shall recover and hold all such proceeds of condemnation. <br /> Pending the application of such condemnation proceeds pursuant to paragraph (B) below, such <br /> condemnation proceeds shall be held by the Trustee (as mortgagee under the Mortgage) in a <br /> separate account (the "Condemnation Account"). No such amounts may be applied or released <br /> without.the Prior approval of FHA. Upon the institution of any condemnation proceedings with <br /> respect to the Project, or any portion thereof, the Loan Agreement provides that the Developer <br /> shall immediately notify the Trustee and the Mortgage Banker. The Developer shall have the <br /> sole right to settle any condemnation award. <br /> (b) The Trustee as (mortgagee under the Mortgage) shall determined whether to apply <br /> the proceeds of condemnation to the prepayment of the last installments of principal becoming <br /> due under the Note and Mortgage, and if such proceeds are applied to the prepayment of the <br /> Note and Mortgage, such proceeds and any income earned on the investment thereof less the <br /> reasonable expenses of the Trustee and the Developer in collecting the same shall then become <br /> part of the Trust Estate, and shall be deposited in the Bond Fund and applied to the <br /> Extraordinary Mandatory Redemption of Bonds. Any such proceeds received from a taking of <br /> less than substantially all of the Project shall be applied as follows: <br /> (1) if no part of the improvements included in the Project is taken or damaged, <br /> and the Trustee (as mortgagee under the Mortgage) in its discretion determines that the <br /> efficient utilization of the Project is not impaired by such taking, then all of the <br /> 3152.1 32 <br />