There is a paragraph about balloon payments on the continuation page of the 1003. What is that? Can I get rid of it?

Fannie Mae has a balloon notice requirement. More information is available here (at the bottom of the page) on the Special Notice for Balloon Mortgages.

The balloon text will print automatically on page 4 of the 1003 whenever number of months is entered in the 'Balloon In Months' field on the Loan Programs screen. If you would like to disable printing the text on the 1003, click 'Loan App/Processing' (on the left) > '1003 Application Page 4' (in the center)> 'Print'(on the right) > 'Defaults' (at the bottom) > select the 1003 tab, and check 'Page 4 - Omit Special Notice for Balloon Mortgages.'