AMENDMENT NO. 1 TO PURCHASE, WARRANTIES
AND SERVICING AGREEMENT

THIS AMENDMENT NO. 1, effective as of May 14, 2004, amends the Purchase,
Warranties and Servicing Agreement among EMC Mortgage Corporation (the
“Purchaser”), First Tennessee Mortgage Services, Inc., as servicer (the
“Servicer”) and First Horizon Home Loan Corporation (the “Seller”, and together
with the Servicer, the “Company”), previously entered into as of September 1,
2003 (the “Agreement”).

RECITALS

WHEREAS, the Company sells to the Purchaser, and the Purchaser purchases from
the Company, from time to time, pursuant to the Agreement, certain conventional
residential Mortgage Loans on a servicing retained basis; and

WHEREAS, in connection with future sales of Mortgage Loans to the Purchaser, the
Company and the Purchaser wish to amend the Agreement as set forth below.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and the Company
agree to amend the Agreement as follows:

1. Section 3.02(h) of the Agreement shall be deleted in its entirety and
replaced with the following:
 
(h) Each Mortgage Loan complies with, and the Company has complied with,
applicable local, state and federal laws, regulations and other requirements
including, without limitation, usury, equal credit opportunity, real estate
settlement procedures, the Federal Truth-In-Lending Act, disclosure laws and all
applicable predatory and abusive lending laws and consummation of the
transactions contemplated hereby, including without limitation, the receipt of
interest by the owner of such Mortgage Loan, will not involve the violation of
any such laws, rules or regulations. None of the Mortgage Loans are (a) Mortgage
Loans subject to 12 CFR Part 226.31, 12 CFR Part 226.32 or 226.34 of Regulation
Z, the regulation implementing TILA, which implements the Home Ownership and
Equity Protection Act of 1994, as amended, or (b) except as may be provided in
subparagraph (c) below, classified and/or defined, as a “high cost”,
“threshold”, “predatory” “high risk home loan” or “covered” loan (or a similarly
classified loan using different terminology under a law imposing additional
legal liability for mortgage loans having high interest rates, points and
or/fees) under any other applicable state, federal or local law including, but
not limited to, the States of Georgia, New York, North Carolina, Arkansas,
Kentucky or New Mexico or (c) Mortgage Loans subject to the New Jersey Home
Ownership Security Act of 2002 (the “Act”), unless such Mortgage Loan is a (1)
“Home Loan” as defined in the Act that is a first lien Mortgage Loan, which is
not a “High Cost Home Loan” as defined in the Act or (2) “Covered Home Loan” as
defined in the Act that is a first lien purchase money Mortgage Loan, which is
not a High Cost Home Loan under the Act. In addition to and notwithstanding
anything to the contrary herein, no Mortgage Loan for which the Mortgaged
Property is located in New Jersey is a Home Loan as defined in the Act that was
made, arranged, or assigned by a person selling either a manufactured home or
home improvements to the Mortgaged Property or was made by an originator to whom
the Mortgagor was referred by any such seller. Each Mortgage Loan is being (and
has been) serviced in accordance with Accepted Servicing Practices and
applicable state and federal laws, including, without limitation, the Federal
Truth-In-Lending Act and other consumer protection laws, real estate settlement
procedures, usury, equal credit opportunity and disclosure laws. Company shall
maintain in its possession, available for the Purchaser’s inspection, as
appropriate, and shall deliver to the Purchaser or its designee upon demand,
evidence of compliance with all such requirements.

2. The following representations and warranties shall be added to Section 3.02
of the Agreement:

(yy)  There is no Mortgage Loan that was originated on or after October 1, 2002
and before March 7, 2003, which is secured by property located in the State of
Georgia.

(zz)  No proceeds from any Mortgage Loan were used to finance single premium
credit insurance policies.
 
(aaa)  No borrower was encouraged or required to select a Mortgage Loan product
offered by the Mortgage Loan’s originator which is a higher cost product
designed for less creditworthy borrowers, unless at the time of the Mortgage
Loan’s origination, such borrower did not qualify taking into account credit
history and debt-to-income ratios for a lower-cost credit product then offered
by the Mortgage Loan’s originator or any affiliate of the Mortgage Loan’s
originator. If, at the time of loan application, the borrower may have qualified
for a lower-cost credit product then offered by any mortgage lending affiliate
of the Mortgage Loan’s originator, the Mortgage Loan’s originator referred the
borrower’s application to such affiliate for underwriting consideration.
 
 
(bbb) The methodology used in underwriting the extension of credit for each
Mortgage Loan employs objective mathematical principles which relate the
borrower’s income, assets and liabilities to the proposed payment and such
underwriting methodology does not rely on the extent of the borrower’s equity in
the collateral as the principal determining factor in approving such credit
extension. Such underwriting methodology confirmed that at the time of
origination (application/approval) the borrower had a reasonable ability to make
timely payments on the Mortgage Loan.
 
 
(ccc) With respect to any Mortgage Loan that contains a provision permitting
imposition of a premium upon a prepayment prior to maturity: (i) prior to the
loan’s origination, the borrower agreed to such premium in exchange for a
monetary benefit, including but not limited to a rate or fee reduction, (ii)
prior to the loan’s origination, the borrower was offered the option of
obtaining a mortgage loan that did not require payment of such a premium, (iii)
the prepayment premium is disclosed to the borrower in the loan documents
pursuant to applicable state and federal law, and (iv) notwithstanding any state
or federal law to the contrary, the Servicer shall not impose such prepayment
premium in any instance when the mortgage debt is accelerated as the result of
the borrower’s default in making the loan payments.
 
 
(ddd) No borrower was required to purchase any credit life, disability, accident
or health insurance product as a condition of obtaining the extension of credit.
No borrower obtained a prepaid single-premium credit life, disability, accident
or health insurance policy in connection with the origination of the Mortgage
Loan; No proceeds from any Mortgage Loan were used to purchase single premium
credit insurance policies as part of the origination of, or as a condition to
closing, such Mortgage Loan.
 
 
(eee) The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to the Fannie Mae Selling Guide and that for each
Mortgage Loan, Servicer agrees it shall report one of the following statuses
each month as follows: new origination, current, delinquent (30-, 60-, 90-days,
etc.), foreclosed, or charged-off.
 

(fff) Any Mortgage Loan with a Mortgaged Property in the State of Illinois
complies with the Illinois Interest Act.

3. The following field shall be added to the definition of Mortgage Loan
Schedule:

“and (28) whether such Mortgage Loan is a “Home Loan”, “Covered Home Loan”,
“Manufactured Housing” or “Home Improvement Loan” as defined in the New Jersey
Home Ownership Security Act of 2002.”

4. Section 6.04 of the Agreement shall be deleted in its entirety and replaced
with the following:

Section 6.04 Annual Statement as to Compliance.

The Company will deliver to the Purchaser not later than March 15th of each
year, beginning March 15, 2005, an executed Officers' Certificate acceptable to
the Purchaser stating, as to each signatory thereof, that (i) a review of the
activities of the Company during the preceding calendar year and of performance
under this Agreement has been made under such officers' supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Company has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status of
cure provisions thereof. Such Officers’ Certificate shall contain no
restrictions or limitations on its use. Copies of such statement shall be
provided by the Company to the Purchaser upon request.

If the Company does not timely comply with this Section 6.04, the Purchaser
shall give prompt written notice to the Company. The Company shall have a period
of five (5) Business Days after receipt of such notice to provide what is
required hereunder. Failure of the Company to timely comply thereafter shall be
deemed an Event of Default, automatically, without notice and without any cure
period, and Purchaser may, in addition to whatever rights the Purchaser may have
under Sections 3.03 and 8.01 and at law or equity or to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof without compensating the Company for the same, as
provided in Section 9.01. Such termination shall be considered with cause
pursuant to Section 10.01 of this Agreement. This paragraph shall supercede any
other provision in this Agreement or any other agreement to the contrary.

5. Section 6.05 of the Agreement shall be deleted in its entirety and replaced
with the following:

Section 6.05 Annual Independent Certified Public Accountants' Servicing Report.

The Company, at its expense and not later than March 15th of each year,
beginning March 15, 2005, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Purchaser acceptable to the Purchaser to the effect
that such firm has examined certain documents and records relating to the
Company's servicing of mortgage loans of the same type as the Mortgage Loans
pursuant to servicing agreements substantially similar to this Agreement, which
agreements may include this Agreement, and that, on the basis of such an
examination, conducted substantially in the uniform single audit program for
mortgage bankers, such firm is of the opinion that the Company's servicing has
been conducted in compliance with the agreements examined pursuant to this
Section 6.05, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. Such statement shall contain no restrictions or limitations on its
use. Copies of such statement shall be provided by the Company to the Purchaser.
In addition, on an annual basis, Company shall provide Purchaser with copies of
its audited financial statements.

If the Company does not timely comply with this Section 6.05, the Purchaser
shall give prompt written notice to the Company. The Company shall have a period
of five (5) Business Days after receipt of such notice to provide what is
required hereunder. Failure of the Company to timely comply thereafter shall be
deemed an Event of Default, automatically, without notice and without any cure
period, and Purchaser may, in addition to whatever rights the Purchaser may have
under Sections 3.03 and 8.01 and at law or equity or to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof without compensating the Company for the same, as
provided in Section 9.01. Such termination shall be considered with cause
pursuant to Section 10.01 of this Agreement. This paragraph shall supercede any
other provision in this Agreement or any other agreement to the contrary.

6. All other terms and conditions of the Agreement remain unchanged and in full
force and effect.
 
7. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 
EMC MORTGAGE CORPORATON
                                        Purchaser

By:________________________
Name:
Title:

FIRST HORIZON HOME LOAN
CORPORATION
        Seller

By: _______________________
Name:
Title:

FIRST TENNESSEE MORTGAGE
SERVICES, INC.
        Servicer

By: _______________________
Name:
Title: