FIRST HORIZON ASSET SECURITIES INC.

                            Depositor

               FIRST HORIZON HOME LOAN CORPORATION

                         Master Servicer

                               and

                      THE BANK OF NEW YORK,

                             Trustee

      _____________________________________________________

                 POOLING AND SERVICING AGREEMENT

                   Dated as of January 1, 2004

      _____________________________________________________

       FIRST HORIZON MORTGAGE PASS-THROUGH TRUST 2004-AR1

       MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR1



<PAGE>

                        TABLE OF CONTENTS


ARTICLE I DEFINITIONS....................................      5

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES............................................    33
 SECTION 2.1 Conveyance of Mortgage Loans.................    33
 SECTION 2.2 Acceptance by Trustee of the Mortgage Loans..    36
 SECTION 2.3 Representations and Warranties of the Master
     Servicer;  Covenants of the Seller...................    38
 SECTION 2.4 Representations and Warranties of the
     Depositor as to the Mortgage Loans...................    40
 SECTION 2.5 Delivery of Opinion of Counsel in
     Connection with Substitutions........................    41
 SECTION 2.6 Execution and Delivery of Certificates.......    41
 SECTION 2.7 REMIC Matters................................    42
 SECTION 2.8 Covenants of the Master Servicer.............    44

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS.....................................................    44
 SECTION 3.1 Master Servicer to Service Mortgage
     Loans................................................    44
 SECTION 3.2 Subservicing; Enforcement of the
     Obligations of Servicers.............................    45
 SECTION 3.3 Rights of the Depositor and the Trustee
     in Respect of the Master Servicer....................    46
 SECTION 3.4 Trustee to Act as Master Servicer............    46
 SECTION 3.5 Collection of Mortgage Loan Payments;
     Certificate Account; Distribution Account............    46
 SECTION 3.6 Collection of Taxes, Assessments and
     Similar Items; Escrow Accounts.......................    50
 SECTION 3.7 Access to Certain Documentation and
     Information Regarding the Mortgage Loans.............    50
 SECTION 3.8 Permitted Withdrawals from the Certificate
     Account and Distribution Account.....................    51
 SECTION 3.9 Maintenance of Hazard Insurance; Maintenance
     of Primary Insurance Policies........................    52
 SECTION 3.10 Enforcement of Due-on-Sale Clauses;
     Assumption Agreements................................    54
 SECTION 3.11 Realization Upon Defaulted Mortgage Loans;
     Repurchase of Certain Mortgage Loans.................    55
 SECTION 3.12 Trustee to Cooperate; Release of
     Mortgage Files.......................................    58
 SECTION 3.13 Documents Records and Funds in Possession
     of Master Servicer to be Held for the Trustee........    59
 SECTION 3.14 Master Servicing Compensation...............    59
 SECTION 3.15 Access to Certain Documentation.............    60
 SECTION 3.16 Annual Statement as to Compliance...........    60
 SECTION 3.17 Annual Independent Public Accountants'
     Servicing Statement; Financial Statements............    60
 SECTION 3.18 Errors and Omissions Insurance; Fidelity
     Bonds................................................    61
 SECTION 3.19 Notification of Adjustments.................    61

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER
SERVICER..................................................    61
 SECTION 4.1 Advances.....................................    61
 SECTION 4.2 Priorities of Distribution...................    62

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 SECTION 4.3 Method of Distribution.......................    67
 SECTION 4.4 Allocation of Losses.........................    68
 SECTION 4.5 Reserved.....................................    69
 SECTION 4.6 Monthly Statements to Certificateholders.....    69
 SECTION 4.7 Reserved.....................................    72

ARTICLE V THE CERTIFICATES................................    72
 SECTION 5.1 The Certificates.............................    72
 SECTION 5.2 Certificate Register; Registration of
     Transfer and Exchange of Certificates................    72
 SECTION 5.3 Mutilated, Destroyed, Lost or Stolen
     Certificates.........................................    77
 SECTION 5.4 Persons Deemed Owners........................    78
 SECTION 5.5 Access to List of Certificateholders'
     Names and Addresses..................................    78
 SECTION 5.6 Maintenance of Office or Agency..............    78

ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER..........    78
 SECTION 6.1 Respective Liabilities of the Depositor
     and the Master Servicer..............................    78
 SECTION 6.2 Merger or Consolidation of the Depositor
     or the Master Servicer...............................    79
 SECTION 6.3 Limitation on Liability of the Depositor,
     the Master Servicer and Others.......................    79
 SECTION 6.4 Limitation on Resignation of Master
     Servicer.............................................    80

ARTICLE VII DEFAULT.......................................    80
 SECTION 7.1 Events of Default............................    80
 SECTION 7.2 Trustee to Act; Appointment of Successor.....    82
 SECTION 7.3 Notification to Certificateholders...........    83

ARTICLE VIII CONCERNING THE TRUSTEE.......................    83
 SECTION 8.1 Duties of Trustee............................    83
 SECTION 8.2 Certain Matters Affecting the Trustee........    85
 SECTION 8.3 Trustee Not Liable for Certificates or
     Mortgage Loans.......................................    86
 SECTION 8.4 Trustee May Own Certificates.................    87
 SECTION 8.5 Trustee's Fees and Expenses..................    87
 SECTION 8.6 Eligibility Requirements for Trustee.........    87
 SECTION 8.7 Resignation and Removal of Trustee...........    88
 SECTION 8.8 Successor Trustee............................    89
 SECTION 8.9 Merger or Consolidation of Trustee...........    89
 SECTION 8.10 Appointment of Co-Trustee or Separate
     Trustee..............................................    89
 SECTION 8.11 Tax Matters.................................    91
 SECTION 8.12 Periodic Filings............................    92

ARTICLE IX TERMINATION....................................    93
 SECTION 9.1 Termination upon Liquidation or Purchase
     of all Mortgage Loans................................    93
 SECTION 9.2 Final Distribution on the Certificates.......    93
 SECTION 9.3 Additional Termination Requirements..........    95

ARTICLE X [RESERVED]......................................    95


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ARTICLE XI MISCELLANEOUS PROVISIONS.......................    95
 SECTION 11.1 Amendment...................................    95
 SECTION 11.2 Recordation of Agreement; Counterparts......    97
 SECTION 11.3 Governing Law...............................    97
 SECTION 11.4 Intention of Parties........................    97
 SECTION 11.5 Notices.....................................    98
 SECTION 11.6 Severability of Provisions..................    99
 SECTION 11.7 Assignment..................................    99
 SECTION 11.8 Limitation on Rights of Certificateholders..    99
 SECTION 11.9 Inspection and Audit Rights.................   100
 SECTION 11.10 Certificates Nonassessable and Fully Paid..   100
 SECTION 11.11 Limitations on Actions; No Proceedings.....   101
 SECTION 11.12 Acknowledgment of Seller...................   101

                            SCHEDULES

Schedule I:    Mortgage Loan Schedule                      S-I-1
Schedule II:   Representations and Warranties of
               the Master Servicer                        S-II-1
Schedule III:  Form of Monthly Master Servicer Report    S-III-1

                            EXHIBITS

Exhibit A:  Form of Senior Certificate                       A-1
Exhibit B:  Form of Subordinated Certificate                 B-1
Exhibit C:  Form of Residual Certificate                     C-1
Exhibit D:  Form of Reverse of Certificates                  D-1
Exhibit E:  Form of Initial Certification                    E-1
Exhibit F:  Form of Delay Delivery Certification             F-1
Exhibit G:  Form of Final Certification of Custodian         G-1
Exhibit H:  Transfer Affidavit                               H-1
Exhibit I:  Form of Transferor Certificate                   I-1
Exhibit J:  Form of Investment Letter [Non-Rule 144A]        J-1
Exhibit K:  Form of Rule 144A Letter                         K-1
Exhibit L:  Request for Release (for Trustee)                L-1
Exhibit M:  Request for Release (Mortgage Loan)              M-1






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<PAGE>

     THIS POOLING AND SERVICING AGREEMENT, dated as of January 1,
2004, among FIRST HORIZON ASSET SECURITIES INC., a Delaware
corporation, as depositor (the "Depositor"), FIRST HORIZON HOME
LOAN CORPORATION, a Kansas corporation, as master servicer (the
"Master Servicer"), and THE BANK OF NEW YORK, a banking
corporation organized under the laws of the State of New York, as
trustee (the "Trustee").

                         WITNESSETH THAT

     In consideration of the mutual agreements herein contained,
the parties hereto agree as follows:

                      PRELIMINARY STATEMENT

     The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. The Trust
Fund for federal income tax purposes will consist of two separate
REMICs.  The Certificates will represent the entire beneficial
ownership interest in the Trust Fund. The Regular Certificates
will represent "regular interests" in the Upper REMIC.  The Class
II-A-RU Certificates will represent the sole class of residual
interests in the Upper REMIC and the Class II-A-RL Certificates
will represent the sole class of residual interests in the Lower
REMIC, as described in Section 2.7.  The "latest possible
maturity date" for federal income tax purposes of all REMIC
regular interests created hereby will be the Latest Possible
Maturity Date.

     The following table sets forth characteristics of the
Certificates, together with the minimum denominations and
integral multiples in excess thereof in which such Classes shall
be issuable (except that one Certificate of each Class of
Certificates may be issued in a different amount and, in
addition, one Residual Certificate representing the Tax Matters
Person Certificate may be issued in a different amount):




          [Remainder of Page Intentionally Left Blank]









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<PAGE>

                                                               Integral
                 Initial Class      Initial                    Multiples
    Class         Certificate    Pass Through     Minimum      in Excess
 Designation        Balance          Rate       Denomination    Minimum
--------------  ---------------  ------------   ------------  ----------
Class I-A-1     $ 26,262,000.00  4.300%[FN-1]     $ 25,000      $1,000
Class II-A-1    $101,138,000.00  4.950%[FN-1]     $ 25,000      $1,000
Class II-A-RU   $         50.00  4.950%[FN-1]     $     50          N/A
Class II-A-RL   $         50.00  4.950%[FN-1]     $     50          N/A
Class III-A-1   $ 41,690,000.00  5.150%[FN-1]     $ 25,000      $1,000
Class III-A-2   $  2,195,000.00  5.150%[FN-1]     $ 25,000      $1,000
Class B-1       $  2,565,000.00  4.902%[FN-2]     $100,000      $1,000
Class B-2       $  1,150,000.00  4.902%[FN-2]     $100,000      $1,000
Class B-3       $    620,000.00  4.902%[FN-2]     $100,000      $1,000
Class B-4       $    619,000.00  4.902%[FN-2]     $100,000      $1,000
Class B-5       $    443,000.00  4.902%[FN-2]     $100,000      $1,000
Class B-6       $    265,509.24  4.902%[FN-2]     $100,000      $1,000

(1) The Pass-Through Rates for the Senior Certificates for each
subsequent Distribution Date will equal the Weighted Average
Adjusted Net Mortgage Rate for the related Mortgage Pool, as of
the first day of the month immediately prior to the month in
which the relevant Distribution Date occurs, after taking into
account scheduled payments of principal on that date.

(2) The Pass-Through Rates for the Subordinated Certificates for
each subsequent Distribution Date will equal the weighted average
of the Weighted Average Adjusted Net Mortgage Rates for each
Mortgage Pool, weighted on the basis of the Group Subordinate
Amount for each Mortgage Pool, as of the first day of the month
immediately prior to the month in which the relevant Distribution
Date occurs, after taking into account scheduled payments of
principal on that date.





                               -2-

<PAGE>


Accretion Directed Certificates  None.

Accrual Certificates             None.

Accrual Components               None.

Book-Entry Certificates          All Classes of Certificates other than the
                                 Physical Certificates.

Certificate Group                With respect to Pool I, the Group I Senior
                                 Certificates, with respect to Pool II, the
                                 Group II Senior Certificates and with
                                 respect to Pool III, the Group III Senior
                                 Certificates.  The Subordinated
                                 Certificates correspond to all the
                                 Mortgage Pools.

COFI Certificates                None.

Component Certificates           None.

Components                       For purposes of calculating distributions,
                                 the Component Certificates will be
                                 comprised of multiple payment components
                                 having the designations, Initial Component
                                 Balances and Pass-Through Rates set forth
                                 below:

                                                  Initial
                                                 Component    Pass-Through
                                 Designation      Balance          Rate
                                 -----------      -------      ------------
                                     N/A            N/A            N/A

Delay Certificates               All interest-bearing Classes of
                                 Certificates other than the Non-Delay
                                 Certificates, if any.

ERISA-Restricted Certificates    The Residual Certificates, Private
                                 Certificates and Certificates of any Class
                                 that no longer satisfy the applicable
                                 rating requirement of the Underwriters'
                                 Exemption.

Floating Rate Certificates       None.

Group I Senior Certificates      The Class I-A-1 Certificates.

Group II Senior Certificates     The Class II-A-1, Class II-A-RU and Class
                                 II-A-RL Certificates.

Group III Senior Certificates    The Class III-A-1 and Class III-A-2
                                 Certificates.

Insured Retail Certificates      None.

Interest Only Certificates       None.

Inverse Floating Rate
Certificates                     None.

LIBOR Certificates               None.

Non-Delay Certificates           None.

Notional Amount Components       None.

Offered Certificates             All Classes of the Certificates other than
                                 the Private Certificates.

Physical Certificates            The Private Certificates and the Residual
                                 Certificates.


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<PAGE>


Planned Principal Classes        None.

Principal Only Certificates      None.

Private Certificates             The Class B-4, Class B-5 and Class B-6
                                 Certificates.

Rating Agencies                  S&P and Moody's; except that, for the
                                 purposes of the Class B-1, Class B-2,
                                 Class B-3, Class B-4 and Class B-5
                                 Certificates, S&P shall be the sole Rating
                                 Agency.

Regular Certificates             All Classes of Certificates, other than
                                 the Residual Certificates.

Residual Certificates            The Class II-A-RU and Class II-A-RL
                                 Certificates.

Scheduled Principal Classes      None.

Senior Certificates              The Group I Senior Certificates, the Group
                                 II Senior Certificates and the Group III
                                 Senior Certificates, collectively.

Senior Support Certificates      The Class III-A-2 Certificates.

Subordinated Certificates        The Class B-1, Class B-2, Class B-3, Class
                                 B-4, Class B-5 and Class B-6 Certificates.

Super Senior Certificates        The Class III-A-1 Certificates.

Support Classes                  None.

Targeted Principal Classes       None.

Underwriter                      Citigroup Global Markets Inc.

     With respect to any of the foregoing designations as to
which the corresponding reference is "None," all defined terms
and provisions herein relating solely to such designations shall
be of no force or effect, and any calculations herein
incorporating references to such designations shall be
interpreted without reference to such designations and amounts.
Defined terms and provisions herein relating to statistical
rating agencies not designated above as Rating Agencies shall be
of no force or effect.









                               -4-

<PAGE>

                            ARTICLE I
                           DEFINITIONS

     Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:

     Accrued Certificate Interest:  For any Class of Certificates
for any Distribution Date, the interest accrued during the
related Interest Accrual Period at the applicable Pass-Through
Rate on the Class Certificate Balance of such Class of
Certificates immediately prior to such Distribution Date, less
such Class' share of any Net Interest Shortfall, allocable among
the outstanding Classes of Senior Certificates of the related
Certificate Group based on the Accrued Certificate Interest
otherwise distributable thereto, and allocable to the
Subordinated Certificates based on interest accrued on their
related Apportioned Principal Balances.

     Adjusted Mortgage Rate:  As to each Mortgage Loan, and at
any time, the per annum rate equal to the Mortgage Rate less the
Master Servicing Fee Rate.

     Adjusted Net Mortgage Rate:  As to each Mortgage Loan, and
at any time, the per annum rate equal to the Mortgage Rate less
the related Expense Fee Rate.

     Adjustment Date:  A date specified in each Mortgage Note as
a date on which the Mortgage Rate on the related Mortgage Loan
will be adjusted.

     Advance:  The payment required to be made by the Master
Servicer with respect to any Distribution Date pursuant to
Section 4.1, the amount of any such payment being equal to the
aggregate of payments of principal and interest (net of the
Master Servicing Fee and net of any net income in the case of any
REO Property) on the Mortgage Loans that were due on the related
Due Date and not received as of the close of business on the
related Determination Date, less the aggregate amount of any such
delinquent payments that the Master Servicer has determined would
constitute a Nonrecoverable Advance if advanced.

     Agreement:  This Pooling and Servicing Agreement and all
amendments or supplements hereto.

     Allocable Share:  With respect to any Class of Subordinated
Certificates on any Distribution Date, such Class' pro rata share
(based on the Class Certificate Balance of each Class entitled
thereto) of each of the components of the Subordinated Optimal
Principal Amount for each Mortgage Pool; provided, that, except
as provided in this Agreement, no Subordinated Certificates
(other than the Class of Subordinated Certificates with the
highest priority of distribution) shall be entitled on any
Distribution Date to receive distributions pursuant to clauses
(2), (3) and (5) of the definition of Subordinated Optimal
Principal Amount unless the Class Prepayment Distribution Trigger
for such Class is satisfied for such Distribution Date.

     Amount Held for Future Distribution:  As to any Distribution
Date, the aggregate amount held in the applicable subaccount of
the Certificate Account at the close of business on the related
Determination Date on account of (i) Principal Prepayments on the
related Mortgage

                               -5-

<PAGE>

Pool received after the related Prepayment Period and Liquidation
Proceeds in the related Mortgage Pool received in the month of
such Distribution Date and (ii) all Scheduled Payments in the
related Mortgage Pool due after the related Due Date.

     Apportioned Principal Balance:  For any Class of
Subordinated Certificates and any Distribution Date, an amount
equal to the Class Certificate Balance of such Class immediately
prior to that  Distribution Date multiplied by a fraction, the
numerator of which is the applicable Group Subordinate Amount for
such Distribution Date and the denominator of which is the sum of
the Group Subordinate Amounts for such Distribution Date.

     Appraised Value:  With respect to any Mortgage Loan, the
Appraised Value of the related Mortgaged Property shall be: (i)
with respect to a Mortgage Loan other than a Refinancing Mortgage
Loan, the lesser of (a) the value of the Mortgaged Property based
upon the appraisal made at the time of the origination of such
Mortgage Loan and (b) the sales price of the Mortgaged Property
at the time of the origination of such Mortgage Loan; (ii) with
respect to a Refinancing Mortgage Loan other than a Streamlined
Documentation Mortgage Loan, the value of the Mortgaged Property
based upon the appraisal made at the time of the origination of
such Refinancing Mortgage Loan; and (iii) with respect to a
Streamlined Documentation Mortgage Loan, (a) if the loan-to-value
ratio with respect to the Original Mortgage Loan at the time of
the origination thereof was 90% or less, the value of the
Mortgaged Property based upon the appraisal made at the time of
the origination of the Original Mortgage Loan and (b) if the loan-
to-value ratio with respect to the Original Mortgage Loan at the
time of the origination thereof was greater than 90%, the value
of the Mortgaged Property based upon the appraisal (which may be
a drive-by appraisal) made at the time of the origination of such
Streamlined Documentation Mortgage Loan.

     Available Funds:  For each Mortgage Pool, with respect to
any Distribution Date, an amount equal to the sum of:

     *    all scheduled installments of interest, net of the
          Master Servicing Fee and the Trustee Fee, and all
          scheduled installments of principal due in respect of
          the Mortgage Loans in such Mortgage Pool on the Due
          Date in the month in which the Distribution Date occurs
          and received before the related Determination Date,
          together with any Advances in respect thereof;

     *    all Insurance Proceeds and all Liquidation Proceeds
          received in respect of the Mortgage Loans in such
          Mortgage Pool during the calendar month before the
          Distribution Date, which in each case is net of
          unreimbursed expenses incurred in connection with a
          liquidation or foreclosure and unreimbursed Advances,
          if any;

     *    all Principal Prepayments received in respect of the
          Mortgage Loans in such Mortgage Pool during the related
          Prepayment Period, plus interest received thereon, net
          of any Prepayment Interest Excess;

     *    any Compensating Interest in respect of Principal
          Prepayments in Full received in respect of the Mortgage
          Loans in such Mortgage Pool during the related
          Prepayment Period (or, in the case of the first
          Distribution Date, from the Cut-off Date); and

                               -6-

<PAGE>

     *    any Substitution Adjustment Amount or the Purchase
          Price for any Deleted Mortgage Loan in the related
          Mortgage Pool or a Mortgage Loan in the related
          Mortgage Pool repurchased by the Seller or the Master
          Servicer as of such Distribution Date, reduced by
          amounts  in reimbursement for Advances previously made
          and other amounts that the Master Servicer is entitled
          to be reimbursed for out of the Certificate Account
          pursuant to this Agreement.

     Bankruptcy Code:  The United States Bankruptcy Reform Act of
1978, as amended.

     Bankruptcy Coverage Termination Date:  The date on which the
Bankruptcy Loss Coverage Amount is reduced to zero.

     Bankruptcy Loss:  With respect to any Mortgage Loan, a
Deficient Valuation or Debt Service Reduction; provided, however,
that a Bankruptcy Loss shall not be deemed a Bankruptcy Loss
hereunder so long as the Master Servicer has notified the Trustee
in writing that the Master Servicer is diligently pursuing any
remedies that may exist in connection with the related Mortgage
Loan and either (A) the related Mortgage Loan is not in default
with regard to payments due thereunder or (B) delinquent payments
of principal and interest under the related Mortgage Loan and any
related escrow payments in respect of such Mortgage Loan are
being advanced on a current basis by the Master Servicer, in
either case without giving effect to any Debt Service Reduction
or Deficient Valuation.

     Bankruptcy Loss Coverage Amount:  As of any Determination
Date, the Bankruptcy Loss Coverage Amount shall equal the Initial
Bankruptcy Coverage Amount as reduced by (i) the aggregate amount
of Bankruptcy Losses allocated to the Certificates since the Cut-
off Date and (ii) any permissible reductions in the Bankruptcy
Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that any such reduction will
not result in a downgrading of the then current ratings assigned
to the Classes of Certificates rated by it.  As of any
Distribution Date on or after the Cross-over Date, the Bankruptcy
Loss Coverage Amount will be zero.

     Blanket Mortgage:  The mortgage or mortgages encumbering the
Cooperative Property.

     Book-Entry Certificates:  As specified in the Preliminary
Statement.

     Business Day:  Any day other than (i) a Saturday or a
Sunday, or (ii) a day on which banking institutions in the City
of Dallas, or the State of Texas or the city in which the
Corporate Trust Office of the Trustee is located are authorized
or obligated by law or executive order to be closed.

     Certificate:  Any one of the Certificates executed by the
Trustee in substantially the forms attached hereto as exhibits.

     Certificate Account:  The separate Eligible Account or
Accounts created and maintained by the Master Servicer pursuant
to Section 3.5 with a depository institution in the name of the
Master Servicer for the benefit of the Trustee on behalf of
Certificateholders and designated "First Horizon Home Loan
Corporation in trust for the registered holders of First Horizon
Asset Securities Inc. Mortgage Pass-Through Certificates, Series
2004-AR1."

                               -7-

<PAGE>

     Certificate Group:  As specified in the Preliminary
Statement.

     Certificate Owner:  With respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-
Entry Certificate.

     Certificate Principal Balance:  With respect to any
Certificate and as of any Distribution Date, the Certificate
Principal Balance on the date of the initial issuance of such
Certificate, as reduced by:

     (a)  all amounts distributed on previous Distribution Dates
          on such Certificate on account of principal,

     (b)  the principal portion of all Realized Losses previously
          allocated to such Certificate, and

     (c)  in the case of a Subordinated Certificate, such
          Certificate's pro rata share, if any, of the
          Subordinated Certificate Writedown Amount for previous
          Distribution Dates.

     Certificate Register:  The register maintained pursuant to
Section 5.2 hereof.

     Certificateholder or Holder:  The person in whose name a
Certificate is registered in the Certificate Register, except
that, solely for the purpose of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the
Depositor or the Seller or any affiliate or agent of the
Depositor or the Seller shall be deemed not to be Outstanding and
the Percentage Interest evidenced thereby shall not be taken into
account in determining whether the requisite amount of Percentage
Interests necessary to effect such consent has been obtained;
provided, however, that if any such Person (including the
Depositor) owns 100% of the Percentage Interests evidenced by a
Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires
the consent of the Holders of Certificates of a particular Class
as a condition to the taking of any action hereunder. The Trustee
is entitled to rely conclusively on a certification of the
Depositor or any affiliate of the Depositor in determining which
Certificates are registered in the name of an affiliate of the
Depositor.

     Class:  All Certificates bearing the same class designation
as set forth in the Preliminary Statement.

     Class Certificate Balance:  With respect to any Class of
Certificates and as of any Distribution Date the aggregate of the
Certificate Principal Balances of all Certificates of such Class
as of such date.

     Class Prepayment Distribution Trigger:  For a Class of
Subordinated Certificates (other than the Class of Subordinated
Certificates with the highest priority of distribution), a
trigger that is satisfied on any Distribution Date on which a
fraction (expressed as a percentage), the numerator of which is
the aggregate Class Certificate Balance of such Class and each
Class subordinate thereto, if any, and the denominator of which
is the aggregate Pool Principal Balance for all Mortgage Pools
with respect to such Distribution Date, equals or exceeds such
percentage calculated as of the Closing Date.

                               -8-

<PAGE>

     Closing Date:  January 30, 2004.

     Code:  The Internal Revenue Code of 1986, including any
successor or amendatory provisions.

     COFI:  Not applicable.

     COFI Certificates:  Not applicable.

     Compensating Interest:  As to any Distribution Date and any
Principal Prepayment in respect of a Mortgage Loan that is
received during the period from the sixteenth day of the month
(or, in the case of the first Distribution Date, from the Cut-off
Date) prior to the month of such Distribution Date through the
last day of such month, an additional payment to the related
Mortgage Pool made by the Master Servicer, to the extent funds
are available from the Master Servicing Fee, equal to the amount
of interest at the Adjusted Net Mortgage Rate for that Mortgage
Loan from the date of the prepayment to the related Due Date;
provided that the aggregate of all such payments as to the
Mortgage Loans in a Mortgage Pool shall not exceed 0.0083% of the
Pool Principal Balance of such Mortgage Pool as of the related
Determination Date, and provided further that if a partial
Principal Prepayment is applied after the first of the month
following the month of receipt, no additional payment is required
for such Principal Prepayment.

     Component:  Not applicable.

     Component Certificates:  Not applicable.

     Cooperative Corporation:  The entity that holds title (fee
or an acceptable leasehold estate) to the real property and
improvements constituting the Cooperative Property and which
governs the Cooperative Property, which Cooperative Corporation
must qualify as a Cooperative Housing Corporation under Section
216 of the Code.

     Coop Shares:  Shares issued by a Cooperative Corporation.

     Cooperative Loan:  Any Mortgage Loan secured by Coop Shares
and a Proprietary Lease.

     Cooperative Property:  The real property and improvements
owned by the Cooperative Corporation, including the allocation of
individual dwelling units to the holders of the Coop Shares of
the Cooperative Corporation.

     Cooperative Unit:  A single family dwelling located in a
Cooperative Property.

     Corporate Trust Office:  The designated office of the
Trustee in the State of New York at which at any particular time
its corporate trust business with respect to this Agreement shall
be administered, which office at the date of the execution of
this Agreement is located at The Bank of New York, 101 Barclay
Street, 8W, New York, New York 10286 (Attn: Corporate Trust
Mortgage-Backed Securities Group, First Horizon Asset Securities
Inc. Series 2004-AR1), facsimile no. (212) 815-3986, and which is
the address to which notices to and correspondence with the
Trustee should be directed.

                               -9-

<PAGE>

     Corresponding Classes of Certificates:  As to any Lower
REMIC Interest in Section 2.7, the Class or Classes that are
identified in Section 2.7 as corresponding to such Lower REMIC
interest.

     Cross-over Date:  The Distribution Date on which the
respective Class Certificate Balances of each Class of
Subordinated Certificates have been reduced to zero.

     Custodial Agreement:  The Custodial Agreement dated as of
January 30, 2004 by and among the Trustee, the Master Servicer
and the Custodian.

     Custodian:  LaSalle Bank National Association, a national
banking association, and its successors and assigns, as custodian
under the Custodial Agreement.

     Cut-off Date:  January 1, 2004.

     Cut-off Date Pool Principal Balance:  With respect to Pool
I, $27,130,199.54; with respect to Pool II, $104,481,785.31; and
with respect to Pool III, $45,335,624.39.

     Cut-off Date Principal Balance:  As to any Mortgage Loan,
the Stated Principal Balance thereof as of the close of business
on the Cut-off Date.

     Debt Service Reduction:  With respect to any Mortgage Loan,
a reduction by a court of competent jurisdiction in a proceeding
under the Bankruptcy Code in the Scheduled Payment for such
Mortgage Loan which became final and non-appealable, except such
a reduction resulting from a Deficient Valuation or any reduction
that results in a permanent forgiveness of principal.

     Defective Mortgage Loan:  Any Mortgage Loan which is
required to be repurchased pursuant to Section 2.2 or 2.3.

     Deficient Valuation:  With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged
Property in an amount less than the then-outstanding indebtedness
under the Mortgage Loan, or any reduction in the amount of
principal to be paid in connection with any Scheduled Payment
that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court which
is final and non-appealable in a proceeding under the Bankruptcy
Code.

     Definitive Certificates:  Any Certificate evidenced by a
Physical Certificate and any Certificate issued in lieu of a Book-
Entry Certificate pursuant to Section 5.2(e).

     Delay Certificates:  As specified in the Preliminary
Statement.

     Delay Delivery Mortgage Loans:  The Mortgage Loans for which
all or a portion of a related Mortgage File is not delivered to
Trustee on the Closing Date. The number of Delay Delivery
Mortgage Loans shall not exceed 25% of the aggregate number of
Mortgage Loans as of the Closing Date.

     Deleted Mortgage Loan:  As defined in Section 2.3(b) hereof.

                              -10-

<PAGE>

     Denomination:  With respect to each Certificate, the amount
set forth on the face thereof as the "Initial Certificate Balance
of this Certificate" or the Percentage Interest appearing on the
face thereof.

     Depositor:  First Horizon Asset Securities Inc., a Delaware
corporation, or its successor in interest.

     Depository:  The initial Depository shall be The Depository
Trust Company, the nominee of which is CEDE & Co., as the
registered Holder of the Book-Entry Certificates. The Depository
shall at all times be a "clearing corporation" as defined in
Section 8-102(a)(5) of the Uniform Commercial Code of the State
of New York.

     Depository Participant:  A broker, dealer, bank or other
financial institution or other Person for whom from time to time
a Depository effects book-entry transfers and pledges of
securities deposited with the Depository.

     Determination Date:  As to any Distribution Date, the
earlier of (i) the third Business Day after the 15th day of each
month, and (ii) the second Business Day prior to the related
Distribution Date.

     Distribution Account:  The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.5 in the name
of the Trustee for the benefit of the Certificateholders and
designated "The Bank of New York, in trust for registered Holders
of First Horizon Asset Securities Inc. Mortgage Pass-Through
Certificates, Series 2004-AR1." Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses
and purposes set forth in this Agreement.

     Distribution Account Deposit Date:  As to any Distribution
Date, 1:30 p.m. Central time on the Business Day immediately
preceding such Distribution Date.

     Distribution Date:  The 25th day of each calendar month
after the initial issuance of the Certificates, or if such 25th
day is not a Business Day, the next succeeding Business Day,
commencing in February 2004.

     Due Date:  With respect to any Distribution Date, the first
day of the month in which the related Distribution Date occurs.

     Eligible Account:  Any of (i) an account or accounts
maintained with a federal or state chartered depository
institution or trust company the short-term unsecured debt
obligations of which (or, in the case of a depository institution
or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the
highest short-term ratings of each Rating Agency at the time any
amounts are held on deposit therein, or (ii) an account or
accounts in a depository institution or trust company in which
such accounts are insured by the FDIC or the SAIF (to the limits
established by the FDIC or the SAIF, as applicable) and the
uninsured deposits in which accounts are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the
Trustee and to each Rating Agency, the Certificateholders have a
claim with respect to the funds in such account or a perfected
first priority security interest against any collateral (which
shall be limited to Permitted Investments)

                              -11-

<PAGE>

securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust
company in which such account is maintained, or (iii) a trust
account or accounts maintained with (a) the trust department of a
federal or state chartered depository institution or (b) a trust
company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency.  Eligible Accounts may
bear interest, and may include, if otherwise qualified under this
definition, accounts maintained with the Trustee.

     ERISA:  The Employee Retirement Income Security Act of 1974,
as amended.

     ERISA-Qualifying Underwriting:  With respect to any ERISA-
Restricted Certificate, a best efforts or firm commitment
underwriting or private placement that meets the requirements of
the Underwriters' Exemption.

     ERISA-Restricted Certificate:  As specified in the
Preliminary Statement.

     Escrow Account:  The Eligible Account or Accounts
established and maintained pursuant to Section 3.6(a) hereof.

     Event of Default:  As defined in Section 7.1 hereof.

     Excess Loss:  With respect to a Mortgage Pool, the amount of
any (i) Fraud Loss realized after the Fraud Loss Coverage
Termination Date, (ii) Special Hazard Loss realized after the
Special Hazard Coverage Termination Date or (iii) Deficient
Valuation realized after the Bankruptcy Coverage Termination
Date.

     Excess Proceeds:  With respect to any Liquidated Mortgage
Loan, the amount, if any, by which the sum of any Liquidation
Proceeds of such Mortgage Loan received in the calendar month in
which such Mortgage Loan became a Liquidated Mortgage Loan, net
of any amounts previously reimbursed to the Master Servicer as
Nonrecoverable Advance(s) with respect to such Mortgage Loan
pursuant to Section 3.8(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Mortgage Loan as of the Due Date in
the month in which such Mortgage Loan became a Liquidated
Mortgage Loan plus (ii) accrued interest at the Mortgage Rate
from the Due Date as to which interest was last paid or advanced
(and not reimbursed) to Certificateholders up to the Due Date
applicable to the Distribution Date immediately following the
calendar month during which such liquidation occurred.

     Expense Fee Rate:  As to each Mortgage Loan, the sum of the
related Master Servicing Fee Rate and the Trustee Fee Rate.

     FDIC:  The Federal Deposit Insurance Corporation, or any
successor thereto.

     FHLMC:  The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and
existing under Title III of the Emergency Home Finance Act of
1970, as amended, or any successor thereto.

     FIRREA:  The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.

                              -12-

<PAGE>

     First Horizon:  First Horizon Home Loan Corporation, a
Kansas corporation and an indirect wholly owned subsidiary of
First Tennessee National Corporation, a Tennessee corporation.

     Fitch:  Fitch Ratings or any successor thereto. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 11.5(b) the address for notices to Fitch
shall be Fitch, Inc., One State Street Plaza, New York, New York
10004, Attention: Residential Mortgage Surveillance Group, or
such other address as Fitch may hereafter furnish to the
Depositor and the Master Servicer.

     FNMA:  The Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.

     Fraud Loan:  A Liquidated Mortgage Loan as to which a Fraud
Loss has occurred.

     Fraud Loss Coverage Amount:  As of the Closing Date
$3,538,952.  As of any Distribution Date from the first
anniversary of the Cut-off Date and prior to the third
anniversary of the Cut-off Date, the Fraud Loss Coverage Amount
will equal $3,538,952 minus the aggregate amount of Fraud Losses
that would have been allocated to the Subordinated Certificates
in the absence of the Loss Allocation Limitation since the Cut-
off Date.  As of any Distribution Date from the third to the
fifth anniversary of the Cut-off Date, the Fraud Loss Coverage
Amount will equal (1) the lesser of (a) the Fraud Loss Coverage
Amount as of the most recent anniversary of the Cut-off Date and
(b) 1.0% of the aggregate outstanding principal balance of all of
the Mortgage Loans as of the most recent anniversary of the Cut-
off Date minus (2) the Fraud Losses that would have been
allocated to the Subordinated Certificates in the absence of the
Loss Allocation Limitations since the most recent anniversary of
the Cut-off Date.  As of any Distribution Date on or after the
earlier of the Cross-over Date or the fifth anniversary of the
Cut-off Date, the Fraud Loss Coverage Amount shall be zero.

     Fraud Loss Coverage Termination Date:  The date on which the
Fraud Loss Coverage Amount is reduced to zero.

     Fraud Losses:  Realized Losses on Mortgage Loans as to which
a loss is sustained by reason of a default arising from fraud,
dishonesty or misrepresentation in connection with the related
Mortgage Loan, including a loss by reason of the denial of
coverage under any related Primary Insurance Policy because of
such fraud, dishonesty or misrepresentation.

     Group I Senior Certificates:  As specified in the
Preliminary Statement.

     Group II Senior Certificates:  As specified in the
Preliminary Statement.

     Group III Senior Certificates:  As specified in the
Preliminary Statement.

     Group Subordinate Amount:  For a Mortgage Pool and any
Distribution Date; the excess of (a) the Pool Principal Balance
of such Mortgage Pool for the immediately preceding Distribution
Date, over (b) the aggregate Class Certificate Balance of the
Senior Certificates of the related Certificate Group immediately
prior to that Distribution Date.

                              -13-

<PAGE>

     Index:  Not applicable.

     Indirect Participant:  A broker, dealer, bank or other
financial institution or other Person that clears through or
maintains a custodial relationship with a Depository Participant.

     Initial Bankruptcy Coverage Amount:  $100,000.

     Insurance Policy:  With respect to any Mortgage Loan
included in the Trust Fund, any insurance policy, including all
riders and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.

     Insurance Proceeds:  Proceeds paid by an insurer pursuant to
any Insurance Policy, in each case other than any amount included
in such Insurance Proceeds in respect of Insured Expenses.

     Insured Expenses:  Expenses covered by an Insurance Policy
or any other insurance policy with respect to the Mortgage Loans.

     Insured Retail Certificates:  Not applicable.

     Interest Accrual Period:  With respect to each Class of
Delay Certificates and any Distribution Date, the calendar month
prior to the month of such Distribution Date. With respect to any
Non-Delay Certificates and any Distribution Date, the one month
period commencing on the 25th day of the month preceding the
month in which such Distribution Date occurs and ending on the
24th day of the month in which such Distribution Date occurs.

     Interest Determination Date:  Not applicable.

     Interest Only Certificates:  Not applicable.

     Latest Possible Maturity Date:  As to each Class of
Subordinated Certificates and each Class of Senior Certificates
in the Certificate Groups corresponding to Pool I, Pool II and
Pool III, the Distribution Date following the third anniversary
of the scheduled maturity date of the Mortgage Loan in Pool I,
Pool II and Pool III having the latest scheduled maturity date as
of the Cut-off Date.

     Lender PMI Mortgage Loan:  Not applicable.

     LIBOR:  Not applicable.

     LIBOR Certificates:  Not applicable.

     Liquidated Mortgage Loan:  With respect to any Distribution
Date, a defaulted Mortgage Loan (including any REO Property)
which was liquidated in the calendar month preceding the month of
such Distribution Date and as to which the Master Servicer has
determined (in accordance with this Agreement) that it has
received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan, including the final
disposition of an REO Property.

                              -14-

<PAGE>

     Liquidation Proceeds:  Amounts, including Insurance
Proceeds, received in connection with the partial or complete
liquidation of defaulted Mortgage Loans, whether through
trustee's sale, foreclosure sale or otherwise or amounts received
in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection
with an REO Property, less the sum of related unreimbursed Master
Servicing Fees, Servicing Advances and Advances.

     Loan-to-Value Ratio:  With respect to any Mortgage Loan and
as to any date of determination, the fraction (expressed as a
percentage) the numerator of which is the principal balance of
the related Mortgage Loan at such date of determination and the
denominator of which is the Appraised Value of the related
Mortgaged Property.

     Loss Allocation Limitation:  As defined in Section 4.4(g).

     Lost Mortgage Note:  Any Mortgage Note the original of which
was permanently lost or destroyed and has not been replaced.

     Lower REMIC:  The segregated pool of assets consisting of
the Rounding Account and the Trust Fund but excluding the
Retained Yield and the Lower REMIC Interests.

     Lower REMIC Interests:  The regular REMIC interests issued
by the Lower REMIC as set forth in Section 2.7.

     Lower REMIC Subordinated Balance Ratio: As to any
Distribution Date, the ratio of the principal balances among each
of the Lower REMIC Interest L-I-A-1, Lower REMIC Interest L-II-A-
1 and Lower REMIC Interest L-III-A-1, which shall be maintained
pursuant to Section 2.7, equal to the ratio among the Group
Subordinate Amount for Pool I, the Group Subordinate Amount for
Pool II and the Group Subordinate Amount for Pool III; after
distributions are made on such Distribution Date such ratio of
Group Subordinate Amounts is determined assuming distributions on
the Certificates (and allocation of Realized Losses) have been
made on such Distribution Date.

     Maintenance:  With respect to any Cooperative Unit, the rent
paid by the Mortgagor to the Cooperative Corporation pursuant to
the Proprietary Lease.

     Majority in Interest:  As to any Class of Regular
Certificates, the Holders of Certificates of such Class
evidencing, in the aggregate, at least 51% of the Percentage
Interests evidenced by all Certificates of such Class.

     Master Servicer:  First Horizon Home Loan Corporation, a
Kansas corporation, and its successors and assigns, in its
capacity as master servicer hereunder.

     Master Servicer Advance Date:  As to any Distribution Date,
1:30 p.m. Central time on the Business Day immediately preceding
such Distribution Date.

     Master Servicing Fee:  As to each Mortgage Loan and any
Distribution Date, an amount payable out of each full payment of
interest received on such Mortgage Loan and equal to one-twelfth
of the Master Servicing Fee Rate multiplied by the Stated
Principal Balance of such

                              -15-

<PAGE>

Mortgage Loan as of the Due Date in the month of such
Distribution Date (prior to giving effect to any Scheduled
Payments due on such Mortgage Loan on such Due Date), subject to
reduction as provided in Section 3.14.

     Master Servicing Fee Rate:  For each Mortgage Loan in (i)
Pool I, a per annum rate equal to 0.275%, (ii) Pool II, a per
annum rate equal to 0.256% and (iii) Pool III, a per annum rate
equal to 0.249%.

     MLPA:  The Mortgage Loan Purchase Agreement dated as of
August 29, 2004, by and between First Horizon Home Loan
Corporation, as seller, and First Horizon Asset Securities Inc.,
as purchaser, as related to the transfer, sale and conveyance of
the Mortgage Loans.

     Monthly Statement:  The statement delivered to the
Certificateholders pursuant to Section 4.6.

     Moody's:  Moody's Investors Service, Inc., or any successor
thereto. If Moody's is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 11.5(b) the
address for notices to Moody's shall be Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Residential Pass-Through Monitoring, or such other
address as Moody's may hereafter furnish to the Depositor or the
Master Servicer.

     Mortgage:  The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple or leasehold
interest in real property securing a Mortgage Note.

     Mortgage File:  The mortgage documents listed in Section
2.1(b) hereof pertaining to a particular Mortgage Loan and any
additional documents delivered to the Trustee to be added to the
Mortgage File pursuant to this Agreement.

     Mortgage Loan Schedule:  The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the
addition of Substitute Mortgage Loans and the deletion of Deleted
Mortgage Loans pursuant to the provisions of this Agreement)
transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, attached hereto as
Schedule I, setting forth the following information with respect
to each Mortgage Loan:

               (1)  the loan number;

               (2)  the Mortgagor's name and the street address
                    of the Mortgaged  Property, including the zip
                    code;

               (3)  the maturity date;

               (4)  the original principal balance;

               (5)  the Cut-off Date Principal Balance;

               (6)  the first payment date of the Mortgage Loan;

               (7)  the Scheduled Payment in effect as of the Cut-
                    off Date;

                              -16-

<PAGE>

               (8)  the Loan-to-Value Ratio at origination;

               (9)  a code indicating whether the residential
                    dwelling at the time of origination was
                    represented to be owner-occupied;

               (10) a code indicating whether the residential
                    dwelling is either (a) a detached single
                    family dwelling (b) a dwelling in a de
                    minimis PUD, (c) a condominium unit or PUD
                    (other than a de minimis PUD), (d) a two-to-
                    four unit residential property or (e) a
                    Cooperative Unit;

               (11) the Mortgage Rate;

               (12) the purpose for the Mortgage Loan;

               (13) the type of documentation program pursuant to
                    which the Mortgage Loan was originated; and

               (14) the Master Servicing Fee for the Mortgage
                    Loan.

     Such schedule shall also set forth the total of the amounts
described under (4) and (5) above for all of the Mortgage Loans.

     Mortgage Loans:  Such of the mortgage loans transferred and
assigned to the Trustee pursuant to the provisions hereof as from
time to time are held as a part of the Trust Fund (including any
REO Property), the mortgage loans so held being identified in the
Mortgage Loan Schedule, notwithstanding foreclosure or other
acquisition of title of the related Mortgaged Property.

     Mortgage Note:  The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under
a Mortgage Loan.

     Mortgage Pool:  Any of Pool I, Pool II or Pool III.

     Mortgage Rate:  The annual rate of interest borne by a
Mortgage Note from time to time, net of any insurance premium
charged by the mortgagee to obtain or maintain any Primary
Insurance Policy.

     Mortgaged Property:  The underlying property securing a
Mortgage Loan, which, with respect to a Cooperative Loan, is the
related Coop Shares and Proprietary Lease.

     Mortgagor:  The obligor(s) on a Mortgage Note.

     National Cost of Funds Index:  The National Monthly Median
Cost of Funds Ratio to SAIF-Insured Institutions published by the
Office of Thrift Supervision.

     Net Interest Shortfall:  For any Distribution Date and each
Mortgage Pool, the sum of (a) the amount of interest which would
otherwise have been received for any Mortgage Loan in such

                              -17-

<PAGE>

Mortgage Pool that was the subject of (x) a Relief Act Reduction
or (y) a Special Hazard Loss, Fraud Loss, or Deficient Valuation,
after the exhaustion of the respective amounts of coverage for
those types of losses provided by the Subordinated Certificates;
and (b) any Net Prepayment Interest Shortfalls in respect of such
Mortgage Pool.

     Net Prepayment Interest Shortfalls:  As to any Distribution
Date and each Mortgage Pool, the amount by which the aggregate of
Prepayment Interest Shortfalls in respect of the Mortgage Loans
or such Mortgage Pool during the related Prepayment Period
exceeds an amount equal to the Compensating Interest paid in
respect of such Mortgage Loans, if any, for such Distribution
Date.

     Non-Delay Certificates:  As specified in the Preliminary
Statement.

     Non-Excess Loss:  Any Realized Loss other than an Excess
Loss.

     Nonrecoverable Advance:  Any portion of an Advance
previously made or proposed to be made by the Master Servicer
that, in the good faith judgment of the Master Servicer, will not
be ultimately recoverable by the Master Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise.

     Notice of Final Distribution:  The notice to be provided
pursuant to Section 9.2 to the effect that final distribution on
any of the Certificates shall be made only upon presentation and
surrender thereof.

     Notional Amount: Not applicable.

     Notional Amount Components:  Not applicable.

     Offered Certificates:  As specified in the Preliminary
Statement.

     Officer's Certificate:  A Certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the
President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Master Servicer, or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as
the case may be, and delivered to the Depositor and the Trustee,
as the case may be, as required by this Agreement.

     Opinion of Counsel:  A written opinion of counsel, who may
be counsel for the Depositor or the Master Servicer, including,
in-house counsel, reasonably acceptable to the Trustee; provided,
however, that with respect to the interpretation or application
of the REMIC Provisions, such counsel must (i) in fact be
independent of the Depositor and the Master Servicer, (ii) not
have any direct financial interest in the Depositor or the Master
Servicer or in any affiliate of either, and (iii) not be
connected with the Depositor or the Master Servicer as an
officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.

     Optional Termination:  The termination of the trust created
hereunder in connection with the purchase of the Mortgage Loans
pursuant to Section 9.1(a) hereof.

                              -18-

<PAGE>

     Original Group Subordinate Amount:  With respect to a
Mortgage Pool, the related Group Subordinate Amount as of the Cut-
off Date.

     Original Mortgage Loan:  The Mortgage Loan refinanced in
connection with the origination of a Refinancing Mortgage Loan.

     OTS:  The Office of Thrift Supervision.

     Outside Reference Date:  Not applicable.

     Outstanding:  With respect to the Certificates as of any
date of determination, all Certificates theretofore executed and
authenticated under this Agreement except:

               (i)  Certificates theretofore canceled by the
          Trustee or delivered to the Trustee for cancellation;
          and

               (ii) Certificates in exchange for which or in lieu
          of which other Certificates have been executed and
          delivered by the Trustee pursuant to this Agreement.

     Outstanding Mortgage Loan:  As of any Due Date, a Mortgage
Loan with a Stated Principal Balance greater than zero which was
not the subject of a Principal Prepayment in Full prior to such
Due Date and which did not become a Liquidated Mortgage Loan
prior to such Due Date.

     Ownership Interest:  As to any Residual Certificate, any
ownership interest in such Certificate including any interest in
such Certificate as the Holder thereof and any other interest
therein, whether direct or indirect, legal or beneficial.

     Pass-Through Rate:  For any interest bearing Class of
Certificates, the per annum rate set forth or calculated in the
manner described in the Preliminary Statement.

     Percentage Interest:  As to any Certificate, the percentage
interest evidenced thereby in distributions required to be made
on the related Class, such percentage interest being set forth on
the face thereof or equal to the percentage obtained by dividing
the Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of the same Class.

     Permitted Investments:  At any time, any one or more of the
following obligations and securities:

               (i)  obligations of the United States or any
          agency thereof, provided such obligations are backed by
          the full faith and credit of the United States;

               (ii) general obligations of or obligations
          guaranteed by any state of the United States or the
          District of Columbia receiving the highest long-term
          debt rating of each Rating Agency;

                              -19-

<PAGE>

              (iii) commercial or finance company paper which is
          then receiving the highest commercial or finance
          company paper rating of each Rating Agency;

               (iv) certificates of deposit, demand or time
          deposits, or bankers' acceptances issued by any
          depository institution or trust company incorporated
          under the laws of the United States or of any state
          thereof and subject to supervision and examination by
          federal and/or state banking authorities, provided that
          the commercial paper and/or long term unsecured debt
          obligations of such depository institution or trust
          company (or in the case of the principal depository
          institution in a holding company system, the commercial
          paper or long-term unsecured debt obligations of such
          holding company, but only if Moody's is not a Rating
          Agency) are then rated one of the two highest long-term
          and/or the highest short-term ratings of each Rating
          Agency for such securities;

               (v)  demand or time deposits or certificates of
          deposit issued by any bank or trust company or savings
          institution to the extent that such deposits are fully
          insured by the FDIC and receiving the highest short-
          term debt rating of each Rating Agency;

               (vi) guaranteed reinvestment agreements issued by
          any bank, insurance company or other corporation and
          receiving the highest short-term debt rating of each
          Rating Agency and containing, at the time of the
          issuance of such agreements, such terms and conditions
          as will not result in the downgrading or withdrawal of
          the rating then assigned to the Certificates by either
          Rating Agency;

              (vii) repurchase obligations with respect to any
          security described in clauses (i) and (ii) above, in
          either case entered into with a depository institution
          or trust company (acting as principal) described in
          clause (iv) above;

             (viii) securities (other than stripped bonds,
          stripped coupons or instruments sold at a purchase
          price in excess of 115% of the face amount thereof)
          bearing interest or sold at a discount issued by any
          corporation incorporated under the laws of the United
          States or any state thereof which, at the time of such
          investment, have one of the two highest ratings of each
          Rating Agency (except if the Rating Agency is Moody's
          or S&P, such rating shall be the highest commercial
          paper rating of Moody's or S&P, as applicable, for any
          such securities);

               (ix) units of a taxable money-market portfolio
          having the highest rating assigned by each Rating
          Agency (except if Fitch is a Rating Agency and has not
          rated the portfolio, the highest rating assigned by
          Moody's) and restricted to obligations issued or
          guaranteed by the United States of America or entities
          whose obligations are backed by the full faith and
          credit of the United States of America and repurchase
          agreements collateralized by such obligations; and

               (x)  such other investments bearing interest or
          sold at a discount acceptable to each Rating Agency as
          will not result in the downgrading or

                              -20-

<PAGE>

          withdrawal of the rating then assigned to the
          Certificates by either Rating Agency, as evidenced by a
          signed writing delivered by each Rating Agency;

provided that no such instrument shall be a Permitted Investment
if such instrument evidences the right to receive interest only
payments with respect to the obligations underlying such
instrument.

     Permitted Transferee:  Any person other than (i) the United
States, any State or political subdivision thereof, or any agency
or instrumentality of any of the foregoing, (ii) a foreign
government, International Organization or any agency or
instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of
the Code) which is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on
unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(l) of the Code) with respect to any
Residual Certificate, (iv) rural electric and telephone
cooperatives described in section 1381(a)(2)(C) of the Code, (v)
an "electing large partnership" as defined in section 775 of the
Code, (vi) a Person that is not (a) a citizen or resident of the
United States, (b) a corporation, partnership, or other entity
created or organized in or under the laws of the United States,
any state thereof or the District of Columbia, (c) an estate
whose income from sources without the United States is includible
in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or
business within the United States or (d) a trust if a court
within the United States is able to exercise primary supervision
over the administration of the trust and one or more United
States persons have the authority to control all substantial
decisions of the trust, unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue
Service Form W-8ECI or any applicable successor form, and (vii)
any other Person so designated by the Depositor based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in
a Residual Certificate to such Person may cause any REMIC created
hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding; provided, however, that if a person
is classified as a partnership under the Code, such person shall
only be a Permitted Transferee if all of its beneficial owners
are described in subclauses (a), (b), (c) or (d) of clause (vi)
and the governing documents of such person prohibits a transfer
of any interest in such person to any person described in clause
(vi). The terms "United States," "State" and "International
Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be
treated as an instrumentality of the United States or of any
State or political subdivision thereof for these purposes if all
of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its
board of directors is not selected by such government unit.

     Person:  Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political
subdivision thereof.

     Physical Certificate:  As specified in the Preliminary
Statement.

     Planned Balance:  Not applicable.

     Planned Principal Classes:  Not applicable.

                              -21-

<PAGE>

     Pool I:  The aggregate of the Mortgage Loans identified on
the Mortgage Loan Schedule as being included in Pool I.

     Pool II:  The aggregate of the Mortgage Loans identified on
the Mortgage Loan Schedule as being included in Pool II.

     Pool III:  The aggregate of the Mortgage Loans identified on
the Mortgage Loan Schedule as being included in Pool III.

     Pool Principal Balance:  For each Mortgage Pool, with
respect to any Distribution Date, the aggregate of the Stated
Principal Balances of the Mortgage Loans which were Outstanding
Mortgage Loans on the Due Date in the month preceding the month
of such Distribution Date.

     Prepayment Interest Excess:  As to any Principal Prepayment
received by the Master Servicer from the first day through the
fifteenth day of any calendar month (other than the calendar
month in which the Cut-off Date occurs), all amounts paid by the
related Mortgagor in respect of interest on such Principal
Prepayment.  All Prepayment Interest Excess shall be paid to the
Master Servicer as additional master servicing compensation.

     Prepayment Interest Shortfall:  As to any Distribution Date,
Mortgage Loan and Principal Prepayment received (a) during the
period from the sixteenth day of the month preceding the month of
such Distribution Date (or, in the case of the first Distribution
Date, from the Cut-off Date) through the last day of such month,
in the case of a Principal Prepayment in Full, or (b) during the
month preceding the month of such Distribution Date, in the case
of a partial Principal Prepayment, the amount, if any, by which
one month's interest at the related Adjusted Mortgage Rate on
such Principal Prepayment exceeds the amount of interest actually
paid by the Mortgagor in connection with such Principal
Prepayment.

     Prepayment Period:  (a) With respect to any Principal
Prepayments in Full and any Distribution Date, the period from
the sixteenth day of the month preceding the month of such
Distribution Date (or, in the case of the first Distribution
Date, from the Cut-off Date) through the fifteenth day of the
month of such Distribution Date, and (b) with respect to any
other Principal Prepayments and any Distribution Date, the month
preceding the month of such Distribution Date.

     Primary Insurance Policy:  Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with
respect to any Mortgage Loan.

     Principal Prepayment:  Any payment of principal by a
Mortgagor on a Mortgage Loan that is received in advance of its
scheduled Due Date and is not accompanied by an amount
representing scheduled interest due on any date or dates in any
month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Master Servicer in
accordance with the terms of the related Mortgage Note.

     Principal Prepayment in Full:  Any Principal Prepayment made
by a Mortgagor of the entire principal balance of a Mortgage
Loan.

     Private Certificate:  As specified in the Preliminary
Statement.

                              -22-

<PAGE>

     Proprietary Lease:  With respect to any Cooperative Unit, a
lease or occupancy agreement between a Cooperative Corporation
and a holder of related Coop Shares.

     PUD:  Planned Unit Development.

     Purchase Price:  With respect to any Mortgage Loan required
to be purchased by the Seller pursuant to Section 2.2 or 2.3
hereof or purchased at the option of the Master Servicer pursuant
to Section 3.11, an amount equal to the sum of (i) 100% of the
unpaid principal balance of the Mortgage Loan on the date of such
purchase, (ii) accrued interest thereon at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if the
purchaser is the Master Servicer) from the date through which
interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to
Certificateholders, and (iii) any costs and damages incurred by
the Trust in connection with the noncompliance of such Mortgage
Loan with any specifically applicable predatory or abusive
lending law.

     Qualified Insurer:  A mortgage guaranty insurance company
duly qualified as such under the laws of the state of its
principal place of business and each state having jurisdiction
over such insurer in connection with the insurance policy issued
by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states
and to write the insurance provided by the insurance policy
issued by it, approved as a FNMA-approved mortgage insurer and
having a claims paying ability rating of at least "AA" or
equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Mortgage
Loan must have at least as high a claims paying ability rating as
the insurer it replaces had on the Closing Date.

     Rating Agency:  Each of the Rating Agencies specified in the
Preliminary Statement. If any such organization or a successor is
no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable
Person, as is designated by the Depositor, notice of which
designation shall be given to the Trustee. References herein to a
given rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers.

     Realized Loss:  With respect to each Liquidated Mortgage
Loan, an amount (not less than zero or more than the Stated
Principal Balance of the Mortgage Loan) as of the date of such
liquidation, equal to (i) the Stated Principal Balance of the
Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Adjusted Net Mortgage Rate from the Due Date
as to which interest was last paid or advanced (and not
reimbursed) to Certificateholders up to the Due Date in the month
in which Liquidation Proceeds are required to be distributed on
the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Liquidation Proceeds, if any,
received during the month in which such liquidation occurred, to
the extent applied as recoveries of interest at the Adjusted Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan.
With respect to each Mortgage Loan which has become the subject
of a Deficient Valuation, if the principal amount due under the
related Mortgage Note has been reduced, the difference between
the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal
balance of the Mortgage Loan as reduced by the Deficient
Valuation.

                              -23-

<PAGE>

     Recognition Agreement:  With respect to any Cooperative
Loan, an agreement between the Cooperative Corporation and the
originator of such Mortgage Loan which establishes the rights of
such originator in the Cooperative Property.

     Record Date:  With respect to any Distribution Date, the
close of business on the last Business Day of the month preceding
the month in which such Distribution Date occurs.

     Reference Bank:  Not applicable.

     Refinancing Mortgage Loan:  Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.

     Regular Certificates:  As specified in the Preliminary
Statement.

     Relief Act:  The Servicemembers Civil Relief Act, or any
similar state or local legislation or regulations.

     Relief Act Reductions:  With respect to any Distribution
Date and any Mortgage Loan as to which there has been a reduction
in the amount of interest collectible thereon for the most
recently ended calendar month as a result of the application of
the Relief Act, the amount, if any, by which interest collectible
on such Mortgage Loan for the most recently ended calendar month
is less than interest accrued thereon for such month pursuant to
the Mortgage Note.

     REMIC:  A "real estate mortgage investment conduit" within
the meaning of section 860D of the Code.

     REMIC Change of Law:  Any proposed, temporary or final
regulation, revenue ruling, revenue procedure or other official
announcement or interpretation relating to REMICs and the REMIC
Provisions issued after the Closing Date.

     REMIC Provisions:  Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which
appear at sections 860A through 860G of Subchapter M of Chapter 1
of the Code, and related provisions, and regulations promulgated
thereunder, as the foregoing may be in effect from time to time
as well as provisions of applicable state laws.

     REO Property:  A Mortgaged Property acquired by the Trust
Fund through foreclosure or deed-in-lieu of foreclosure in
connection with a defaulted Mortgage Loan.

     Request for Release:  The Request for Release submitted by
the Master Servicer to the Trustee, substantially in the form of
Exhibits L and M, as appropriate.

     Required Insurance Policy:  With respect to any Mortgage
Loan, any insurance policy that is required to be maintained from
time to time under this Agreement.

     Required Recordation States:  The states of Florida,
Maryland and Mississippi.

     Residual Certificates:  As specified in the Preliminary
Statement.

                              -24-

<PAGE>

     Responsible Officer:  When used with respect to the Trustee,
any Vice President, any Assistant Vice President, the Secretary,
any Assistant Secretary, any Trust Officer or any other officer
of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having
direct responsibility for the administration of this Agreement
and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and
familiarity with the particular subject.

     Scheduled Payment:  The scheduled monthly payment on a
Mortgage Loan due on any Due Date allocable to principal and/or
interest on such Mortgage Loan which, unless otherwise specified
herein, shall give effect to any related Debt Service Reduction
and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.

     Scheduled Principal Classes:  Not applicable.

     Securities Act:  The Securities Act of 1933, as amended.

     Security Agreement: The security agreement with respect to a
Cooperative Loan.

     Seller:  First Horizon Home Loan Corporation, a Kansas
corporation, and its successors and assigns, in its capacity as
seller of the Mortgage Loans.

     Senior Certificates:  As specified in the Preliminary
Statement.

     Senior Final Distribution Date:  For each Certificate Group,
the Distribution Date on which the Class Certificate Balance of
each Class of related Senior Certificates has been reduced to
zero.

     Senior Optimal Principal Amount:  As to a Mortgage Pool and
with respect to each Distribution Date, an amount equal to the
sum of:

          (1)  the related Senior Percentage of all Scheduled
Payments of principal due on each Mortgage Loan in such Mortgage
Pool on the first day of the month in which the Distribution Date
occurs, as specified in the amortization schedule at the time
applicable thereto after adjustment for previous principal
prepayments and the principal portion of Debt Service Reductions
after the Bankruptcy Loss Coverage Amount has been reduced to
zero, but before any adjustment to such amortization schedule by
reason of any other bankruptcy or similar proceeding or any
moratorium or similar waiver or grace period;

          (2)  the related Senior Prepayment Percentage of the
Stated Principal Balance of each Mortgage Loan in such Mortgage
Pool which was the subject of a Principal Prepayment in Full
received by the Master Servicer during the applicable Prepayment
Period;

          (3)  the related Senior Prepayment Percentage of all
partial Principal Prepayments in respect of each Mortgage Loan in
such Mortgage Pool received during the applicable Prepayment
Period;

          (4)  the lesser of:

                              -25-

<PAGE>

               (a)  the related Senior Prepayment Percentage of
          the sum of (x) the Liquidation Proceeds allocable to
          principal on each Mortgage Loan in such Mortgage Pool
          which became a Liquidated Mortgage Loan during the
          related Prepayment Period, other than Mortgage Loans
          described in clause (y), and (y) the principal balance
          of each Mortgage Loan in such Mortgage Pool that was
          purchased by a private mortgage insurer during the
          related Prepayment Period as an alternative to paying a
          claim under the related Insurance Policy; and

               (b)(i) the related Senior Percentage of the sum of
          (x) the Stated Principal Balance of each Mortgage Loan
          in such Mortgage Pool which became a Liquidated
          Mortgage Loan during the related Prepayment Period,
          other than Mortgage Loans described in clause (y), and
          (y) the Stated Principal Balance of each Mortgage Loan
          in such Mortgage Pool that was purchased by a private
          mortgage insurer during the related Prepayment Period
          as an alternative to paying a claim under the related
          Insurance Policy minus (ii) the related Senior
          Percentage of the principal portion of Excess Losses
          (other than Debt Service Reductions) for such Mortgage
          Pool during the related Prepayment Period; and

          (5)  the related Senior Prepayment Percentage of the
sum of (a) the Stated Principal Balance of each Mortgage Loan in
such Mortgage Pool which was repurchased by the seller in
connection with such Distribution Date and (b) the difference, if
any, between the Stated Principal Balance of a Mortgage Loan in
such Mortgage Pool that has been replaced by the seller with a
Substitute Mortgage Loan pursuant to this Agreement in connection
with such Distribution Date and the Stated Principal Balance of
such Substitute Mortgage Loan.

     Senior Percentage:  On any Distribution Date for a
Certificate Group, the lesser of 100% and the percentage (carried
to six places rounded up) obtained by dividing the aggregate
Class Certificate Balances of all Classes of Senior Certificates
of such Certificate Group immediately preceding such Distribution
Date by the Pool Principal Balance of the related Mortgage Pool
for the immediately preceding Distribution Date.

     Senior Prepayment Percentage:  On any Distribution Date
occurring during the periods set forth below, and as to each
Certificate Group, the Senior Prepayment Percentages, described
below:

                              -26-

<PAGE>

Period (Dates Inclusive)         Senior Prepayment Percentage
------------------------------   ------------------------------------
February 2004 - January 2009     100%

February 2009 - January 2010     The related Senior Percentage plus
                                 70% of the related Subordinated
                                 Percentage

February 2010 - January 2011     The related Senior Percentage plus
                                 60% of the related Subordinated
                                 Percentage

February 2011 - January 2012     The related Senior Percentage plus
                                 40% of the related Subordinated
                                 Percentage

February 2012 - January 2013     The related Senior Percentage plus
                                 20% of the related Subordinated
                                 Percentage

February 2013 and thereafter     The related Senior Percentage

provided however, (i) if on any Distribution Date the Senior
Percentage for a Certificate Group exceeds the initial Senior
Percentage for such Certificate Group, the Senior Prepayment
Percentage for each Certificate Croup for such Distribution Date
will equal 100% and (ii) if on any Distribution Date on or after
the Distribution Date in February 2007, prior to giving effect to
any distributions on such Distribution Date, the Subordinated
Percentage for such Certificate Group for such Distribution Date
is equal to or greater than twice the initial Subordinated
Percentage for such Certificate Group, then the Senior Prepayment
Percentage for such Certificate Group for such Distribution Date
will equal the Senior Percentage for such Certificate Group.

     The reductions in the Senior Prepayment Percentage for each
Certificate Group described above will not occur, and the Senior
Prepayment Percentage or each Certificate Group for such prior
period will be calculated without regard to clause (ii) of the
paragraph above, unless, as of the last day of the month
preceding the Distribution Date:

     (1)  the aggregate Stated Principal Balance of Mortgage
          Loans in any Mortgage Pool delinquent 60 days or more
          (including for this purpose any Mortgage Loans in
          foreclosure or subject to bankruptcy proceedings and
          Mortgage Loans with respect to which the related
          Mortgaged Property, including REO Property, has been
          acquired by the Trust Fund) does not exceed 50% of the
          aggregate Certificate Principal Balances of the
          Subordinated Certificates as of that date; and

     (2)  cumulative Realized Losses in any Mortgage Pool do not
          exceed 30% of the related Original Group Subordinate
          Amount if such Distribution Date occurs on or after
          February 2007.

     Senior Support Certificates:  As specified in the
Preliminary Statement.

     Servicing Advances:  All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by
the Master Servicer of its servicing obligations, including, but
not limited to, the cost of (i) the preservation, restoration and
protection of a Mortgaged Property, (ii) any expenses
reimbursable to the Master Servicer pursuant to Section

                              -27-

<PAGE>

3.11 and any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO
Property and (iv) compliance with the obligations under Section
3.9.

     Servicing Agreement:  The servicing agreement, dated as of
November 26, 2002 by and between First Horizon Asset Securities
Inc. and its assigns, as owner, and First Tennessee Mortgage
Services, Inc., as servicer.

     Servicing Officer:  Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing
of the Mortgage Loans whose name and facsimile signature appear
on a list of servicing officers furnished to the Trustee by the
Master Servicer on the Closing Date pursuant to this Agreement,
as such list may from time to time be amended.

     Servicing Rights Transfer and Subservicing Agreement:  The
servicing rights transfer and subservicing agreement, dated as of
November 26, 2002, by and between First Horizon Home Loan
Corporation, as transferor and subservicer, and First Tennessee
Mortgage Services, Inc., as transferee and servicer.

     Special Hazard Coverage Termination Date:  The date on which
the Special Hazard Loss Coverage Amount is reduced to zero.

     Special Hazard Loss:  Any Realized Loss suffered by a
Mortgaged Property on account of direct physical loss but not
including (i) any loss of a type covered by a hazard insurance
policy or a flood insurance policy required to be maintained with
respect to such Mortgaged Property pursuant to Section 3.9 to the
extent of the amount of such loss covered thereby, or (ii) any
loss caused by or resulting from:

          (1)  normal wear and tear;

          (2)  fraud, conversion or other dishonest act on the
part of the Trustee, the Master Servicer or any of their agents
or employees (without regard to any portion of the loss not
covered by any errors and omissions policy);

          (3)  errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or a part thereof
ensues and then only for the ensuing loss;

          (4)  nuclear or chemical reaction or nuclear radiation
or radioactive or chemical contamination, all whether controlled
or uncontrolled, and whether such loss be direct or indirect,
proximate or remote or be in whole or in part caused by,
contributed to or aggravated by a peril covered by the definition
of the term "Special Hazard Loss";

          (5)  hostile or warlike action in time of peace and
war, including action in hindering, combating or defending
against an actual, impending or expected attack:

               (i)  by any government or sovereign power, de jure
          or de facto, or by any authority maintaining or using
          military, naval or air forces;

               (ii) by military, naval or air forces; or

                              -28-

<PAGE>

             (iii) by an agent of any such government, power,
          authority or forces;

          (6)  any weapon of war employing nuclear fission,
fusion or other radioactive force, whether in time of peace or
war; or

          (7)  insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in
hindering, combating or defending against such an occurrence,
seizure or destruction under quarantine or customs regulations,
confiscation by order of any government or public authority or
risks of contraband or illegal transportation or trade.

     Special Hazard Loss Coverage Amount:  Upon the initial
issuance of the Certificates, $2,559,351.  As of any Distribution
Date, the Special Hazard Loss Coverage Amount will equal the
greater of

          (a)  1.00% (or if greater than 1.00%, the highest
percentage of Mortgage Loans by principal balance secured by
Mortgaged Properties in any single California zip code) of the
outstanding principal balance of all the Mortgage Loans as of the
related Determination Date; and

          (b)  twice the outstanding principal balance of the
Mortgage Loan which has the largest outstanding principal balance
as of the related Determination Date,

less, in each case, the aggregate amount of Special Hazard Losses
that would have been previously allocated to the Subordinated
Certificates in the absence of the Loss Allocation Limitation.
As of any Distribution Date on or after the Cross-over Date, the
Special Hazard Loss Coverage Amount will be zero.

     Special Hazard Mortgage Loan:  A Liquidated Mortgage Loan as
to which a Special Hazard Loss has occurred.

     S&P:  Standard & Poor's Corporation, a division of The
McGraw-Hill Companies, Inc. If S&P is designated as a Rating
Agency in the Preliminary Statement, for purposes of Section
11.5(b) the address for notices to S&P shall be Standard &
Poor's, 55 Water Street, 41st Floor, New York, New York 10041,
Attention: Mortgage Surveillance Monitoring, or such other
address as S&P may hereafter furnish to the Depositor and the
Master Servicer.

     Startup Day:  The Closing Date.

     Stated Principal Balance:  As to any Mortgage Loan and Due
Date, the unpaid principal balance of such Mortgage Loan as of
such Due Date as specified in the amortization schedule at the
time relating thereto (before any adjustment to such amortization
schedule by reason of any moratorium or similar waiver or grace
period) after giving effect to any previous partial Principal
Prepayments and Liquidation Proceeds allocable to principal
(other than with respect to any Liquidated Mortgage Loan) and to
the payment of principal due on such Due Date and irrespective of
any delinquency in payment by the related Mortgagor.

     Streamlined Documentation Mortgage Loan:  Any Mortgage Loan
originated pursuant to the Seller's Streamlined Loan
Documentation Program then in effect.

                              -29-

<PAGE>

     Subordinated Certificates:  As specified in the Preliminary
Statement.

     Subordinated Certificate Writedown Amount:  As of any
Distribution Date, the amount by which (a) the sum of the Class
Certificate Balances of all of the Certificates, after giving
effect to the distribution of principal and the allocation of
Realized Losses in reduction of the Class Certificate Balances of
all of the Certificates on such Distribution Date, exceeds (b)
the aggregate Pool Principal Balance for each Mortgage Pool on
the first day of the month of such Distribution Date less any
Deficient Valuations occurring before the Bankruptcy Loss
Coverage Amount has been reduced to zero.

     Subordinated Optimal Principal Amount:  With respect to each
Mortgage Pool and each Distribution Date, an amount equal to the
sum of the following (but in no event greater than the aggregate
Class Certificate Balances of the Subordinated Certificates
immediately prior to such Distribution Date):

          (1)  the related Subordinated Percentage of all
Scheduled Payments of principal due on each outstanding Mortgage
Loan in the related Mortgage Pool on the first day of the month
in which the Distribution Date occurs, as specified in the
amortization schedule at the time applicable thereto, after
adjustment for previous principal prepayments and the principal
portion of Debt Service Reductions after the Bankruptcy Loss
Coverage Amount has been reduced to zero, but before any
adjustment to such amortization schedule by reason of any other
bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period;

          (2)  the related Subordinated Prepayment Percentage of
the Stated Principal Balance of each Mortgage Loan in the related
Mortgage Pool which was the subject of a Principal Prepayment in
Full received by the Master Servicer during the related
Prepayment Period;

          (3)  the related Subordinated Prepayment Percentage of
all partial Principal Prepayments received in respect of each
Mortgage Loan in the related Mortgage Pool during the related
Prepayment Period, plus, on the Senior Final Distribution Date,
100% of any related Senior Optimal Principal Amount remaining
undistributed on such date;

          (4)  the amount, if any, by which the sum of (a) the
net Liquidation Proceeds allocable to principal received during
the related Prepayment Period in respect of each Liquidated
Mortgage Loan in the related Mortgage Pool, other than Mortgage
Loans described in clause (b), and (b) the principal balance of
each Mortgage Loan in the related Mortgage Pool that was
purchased by a private mortgage insurer during the related
Prepayment Period as an alternative to paying a claim under the
related Insurance Policy exceeds (c) the sum of the amounts
distributable to the Senior Certificateholders under clause (4)
of the definition of applicable Senior Optimal Principal Amount
on such Distribution Date; and

          (5)  the related Subordinated Prepayment Percentage of
the sum of (a) the Stated Principal Balance of each Mortgage Loan
in the related Mortgage Pool which was repurchased by the seller
in connection with such Distribution Date and (b) the difference,
if any, between the Stated Principal Balance of a Mortgage Loan
in the related Mortgage Pool that has been replaced by the seller
with a Substitute Mortgage Loan pursuant to the Agreement in

                              -30-

<PAGE>

connection with such Distribution Date and the Stated Principal
Balance of each such Substitute Mortgage Loan.

     Subordinated Percentage:  For any Distribution Date and each
Certificate Group, 100% minus the related Senior Percentage.

     Subordinated Prepayment Percentage:  For any Distribution
Date, 100% minus the Senior Prepayment Percentage.

     Subservicer:  Any person to whom the Master Servicer has
contracted for the servicing of all or a portion of the Mortgage
Loans pursuant to Section 3.2 hereof.

     Substitute Mortgage Loan:  A Mortgage Loan substituted by
the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, as confirmed in a Request for Release,
substantially in the form of Exhibit L, (i) have a Stated
Principal Balance, after deduction of the principal portion of
the Scheduled Payment due in the month of substitution, not in
excess of, and not more than 10% less than the Stated Principal
Balance of the Deleted Mortgage Loan; (ii) have an Adjusted Net
Mortgage Rate not lower than the Adjusted Net Mortgage Rate of
the Deleted Mortgage Loan, provided that the Master Servicing Fee
for the Substitute Mortgage Loan shall be equal to or greater
than that of the Deleted Mortgage Loan; (iii) have a maximum
mortgage rate not more than 1% per annum higher or lower than the
maximum mortgage rate of the Deleted Mortgage Loan; (iv) have a
minimum mortgage rate specified in its related Mortgage Note not
more than 1% per annum higher or lower than the minimum mortgage
rate of the Deleted Mortgage Loan; (v) have the same mortgage
index, reset period and periodic rate as the Deleted Mortgage
Loan and a gross margin not more than 1% per annum higher or
lower than that of the Deleted Mortgage Loan (vi) be accruing
interest at a rate no lower than and not more than 1% per annum
higher than, that of the Deleted Mortgage Loan; (iv) have a Loan-
to-Value Ratio no higher than that of the Deleted Mortgage Loan;
(vii) have a remaining term to maturity no greater than (and not
more than one year less than that of) the Deleted Mortgage Loan;
(viii) not be a Cooperative Loan unless the Deleted Mortgage Loan
was a Cooperative Loan and (ix) comply with each representation
and warranty set forth in Section 2.3 hereof.

     Substitution Adjustment Amount:  The meaning ascribed to
such term pursuant to Section 2.3.

     Super Senior Certificates:  As specified in the Preliminary
Statement.

     Targeted Principal Classes:  Not applicable.

     Tax Matters Person:  The person designated as "tax matters
person" in the manner provided under Treasury regulation  1.860F-
4(d) and Treasury regulation  301.6231(a)(7)-1. Initially, the
Tax Matters Person shall be the Trustee.

     Tax Matters Person Certificate:  The Class II-A-RU and Class
II-A-RL Certificates, each with a Denomination of $0.01.

                              -31-

<PAGE>

     Transfer:  Any direct or indirect transfer or sale of any
Ownership Interest in a Residual Certificate.

     Trust Fund:  The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and
principal received on or with respect thereto after the Cut-off
Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof; (ii) all of the Depositor's rights as
purchaser under the MLPA; (iii) the Certificate Account and the
Distribution Account and all amounts deposited therein pursuant
to the applicable provisions of this Agreement; (iv) property
that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; and (v)
all proceeds of the conversion, voluntary or involuntary, of any
of the foregoing.

     Trustee:  The Bank of New York and its successors and, if a
successor trustee is appointed hereunder, such successor.

     Trustee Fee:  As to any Distribution Date and a Mortgage
Pool, an amount equal to one-twelfth of the Trustee Fee Rate
multiplied by the applicable Pool Principal Balance with respect
to such Distribution Date.

     Trustee Fee Rate:  With respect to each Mortgage Loan, the
per annum rate agreed upon in writing on or prior to the Closing
Date by the Trustee and the Depositor.

     Two Times Test:  A test that is satisfied with respect to a
Certificate Group and any Distribution Date if the related Senior
Prepayment Percentage for such Distribution Date is determined in
accordance with clause (ii) of the proviso in the definition of
"Senior Prepayment Percentage."

     Unanticipated Recovery:  As defined in Section 4.2(g).

     Undercollateralization Distribution:  As defined in Section
4.2(h).

     Undercollateralized Group: With respect to any Distribution
Date, the Senior Certificates of any Certificate Group as to
which the aggregate Certificate Principal Balance thereof, after
giving effect to distributions pursuant to Section 4.2(a) on such
date, is greater than the Pool Principal Balance of the related
Mortgage Pool for such Distribution Date.

     Underwriter:  As specified in the Preliminary Statement.

     Underwriters' Exemption:  Prohibited Transaction Exemption
2002-41, 67 Fed. Reg. 54487 (2002), as amended (or any successor
thereto), or any substantially similar administrative exemption
granted by the U.S. Department of Labor.

     Upper REMIC:  The segregated pool of assets consisting of
the Lower REMIC interests.

     Voting Rights:  The portion of the voting rights of all of
the Certificates which is allocated to any Certificate.  As of
any date of determination, (a) 98% of all Voting Rights will be
allocated among all Holders of the Certificates, other than the
Class II-A-RU and Class II-A-RL Certificates, in proportion to
their then outstanding Class Certificate Balances; and

                              -32-

<PAGE>

(b) 1.0% of all Voting Rights will be allocated to each of the
Class II-A-RU and Class II-A-RL Certificates (such Voting Rights
to be allocated among the Holders of Certificates of each such
Class in accordance with their respective Percentage Interests).

     Weighted Average Adjusted Net Mortgage Rate:  For a Mortgage
Pool, the average of the Adjusted Net Mortgage Rates of the
Mortgage Loans in the related Loan Group, weighted on the basis
of the Stated Principal Balances thereof.

                           ARTICLE II
                  CONVEYANCE OF MORTGAGE LOANS;
                 REPRESENTATIONS AND WARRANTIES

          SECTION 2.1  Conveyance of Mortgage Loans.

     (a)  The Depositor, concurrently with the execution and
          delivery hereof, hereby sells, transfers, assigns, sets
          over and otherwise conveys to the Trustee for the
          benefit of the Certificateholders, without recourse,
          all the right, title and interest of the Depositor in
          and to the Trust Fund together with (i) the Depositor's
          right to (A) require the Seller to cure any breach of a
          representation or warranty made by the Seller pursuant
          to the MLPA, or (B) repurchase or substitute for any
          affected Mortgage Loan in accordance herewith, and
          (ii) all right, title and interest of the Depositor in,
          to and under the Servicing Agreement, which right has
          been assigned to the Depositor pursuant to the MLPA.

     (b)  In connection with the transfer and assignment set
          forth in clause (a) above, the Depositor has delivered
          or caused to be delivered to the Trustee or the
          Custodian on its behalf (or, in the case of the Delay
          Delivery Mortgage Loans, will deliver or cause to be
          delivered to the Trustee or the Custodian on its behalf
          within thirty (30) days following the Closing Date) for
          the benefit of the Certificateholders the following
          documents or instruments with respect to each Mortgage
          Loan so assigned:

          (i)  (A) the original Mortgage Note endorsed by manual
               or facsimile signature in blank in the following
               form: "Pay to the order of ________________,
               without recourse," with all intervening
               endorsements showing a complete chain of
               endorsement from the originator to the Person
               endorsing the Mortgage Note (each such endorsement
               being sufficient to transfer all right, title and
               interest of the party so endorsing, as noteholder
               or assignee thereof, in and to that Mortgage
               Note); or

               (B) with respect to any Lost Mortgage Note, a lost
               note affidavit from the  Seller stating that the
               original Mortgage Note was lost or destroyed,
               together with a copy of such Mortgage Note;

          (ii) except as provided below, the original recorded
               Mortgage or a copy of such Mortgage certified by
               the Seller as being a true and complete copy of
               the Mortgage;

                              -33-

<PAGE>

        (iii)  a duly executed assignment of the Mortgage in
               blank (which may be included in a blanket
               assignment or assignments), together with, except
               as provided below, all interim recorded
               assignments of such mortgage (each such
               assignment, when duly and validly completed, to be
               in recordable form and sufficient to effect the
               assignment of and transfer to the assignee
               thereof, under the Mortgage to which the
               assignment relates); provided that, if the related
               Mortgage has not been returned from the applicable
               public recording office, such assignment of the
               Mortgage may exclude the information to be
               provided by the recording office;

          (iv) the original or copies of each assumption,
               modification, written assurance or substitution
               agreement, if any;

          (v)  either the original or duplicate original title
               policy (including all riders thereto) with respect
               to the related Mortgaged Property, if available,
               provided that the title policy (including all
               riders thereto) will be delivered as soon as it
               becomes available, and if the title policy is not
               available, and to the extent required pursuant to
               the second paragraph below or otherwise in
               connection with the rating of the Certificates, a
               written commitment or interim binder or
               preliminary report of the title issued by the
               title insurance or escrow company with respect to
               the Mortgaged Property, and

          (vi) in the case of a Cooperative Loan, the originals
               of the following documents or instruments:

               (A)  The Coop Shares, together with a stock power
                    in blank;

               (B)  The executed Security Agreement;

               (C)  The executed Proprietary Lease;

               (D)  The executed Recognition Agreement;

               (E)  The executed UCC-1 financing statement with
                    evidence of  recording thereon which have
                    been filed in all places required to perfect
                    the Seller's interest in the Coop Shares and
                    the Proprietary Lease; and

               (F)  Executed UCC-3 financing statements or other
                    appropriate UCC financing statements required
                    by state law, evidencing a complete and
                    unbroken line from the mortgagee to the
                    Trustee with evidence of recording thereon
                    (or in a form suitable for recordation).

     In the event that in connection with any Mortgage Loan the
Depositor cannot deliver (a) the original recorded Mortgage or
(b) all interim recorded assignments satisfying the requirements
of clause (ii) or (iii) above, respectively, concurrently with
the execution and delivery hereof because such document or
documents have not been returned from the applicable public
recording office,  the Depositor shall promptly deliver or cause
to be delivered to the

                              -34-

<PAGE>

Trustee or the Custodian on its behalf such original Mortgage or
such interim assignment, as the case may be, with evidence of
recording indicated thereon upon receipt thereof from the public
recording office, or a copy thereof, certified, if appropriate,
by the relevant recording office, but in no event shall any such
delivery of the original Mortgage and each such interim
assignment or a copy thereof, certified, if appropriate, by the
relevant recording office, be made later than one year following
the Closing Date; provided, however, in the event the Depositor
is unable to deliver or cause to be delivered by such date each
Mortgage and each such interim assignment by reason of the fact
that any such documents have not been returned by the appropriate
recording office, or, in the case of each such interim
assignment, because the related Mortgage has not been returned by
the appropriate recording office, the Depositor shall deliver or
cause to be delivered such documents to the Trustee or the
Custodian on its behalf as promptly as possible upon receipt
thereof and, in any event, within 720 days following the Closing
Date. The Depositor shall forward or cause to be forwarded to the
Trustee or the Custodian on its behalf (a) from time to time
additional original documents evidencing an assumption or
modification of a Mortgage Loan and (b) any other documents
required to be delivered by the Depositor or the Master Servicer
to the Trustee. In the event that the original Mortgage is not
delivered and in connection with the payment in full of the
related Mortgage Loan and the public recording office requires
the presentation of a "lost instruments affidavit and indemnity"
or any equivalent document, because only a copy of the Mortgage
can be delivered with the instrument of satisfaction or
reconveyance, the Master Servicer shall execute and deliver or
cause to be executed and delivered such a document to the public
recording office. In the case where a public recording office
retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office,
the Depositor shall deliver or cause to be delivered to the
Trustee or the Custodian on its behalf a copy of such Mortgage
certified by such public recording office to be a true and
complete copy of the original recorded Mortgage.

     In addition, in the event that in connection with any
Mortgage Loan the Depositor cannot deliver or cause to be
delivered the original or duplicate original lender's title
policy (together with all riders thereto), satisfying the
requirements of clause (v) above, concurrently with the execution
and delivery hereof because the related Mortgage has not been
returned from the applicable public recording office, the
Depositor shall promptly deliver or cause to be delivered to the
Trustee or the Custodian on its behalf such original or duplicate
original lender's title policy (together with all riders thereto)
upon receipt thereof from the applicable title insurer, but in no
event shall any such delivery of the original or duplicate
original lender's title policy be made later than one year
following the Closing Date; provided, however, in the event the
Depositor is unable to deliver or cause to be delivered by such
date the original or duplicate original lender's title policy
(together with all riders thereto) because the related Mortgage
has not been returned by the appropriate recording office, the
Depositor shall deliver or cause to be delivered such documents
to the Trustee or the Custodian on its behalf as promptly as
possible upon receipt thereof and, in any event, within 720 days
following the Closing Date.  Notwithstanding the preceding, in
connection with any Mortgage Loan for which either the original
or duplicate original title policy has not been delivered to the
Trust, if at any time during the term of this Agreement the
parent company of the Seller does not have a long term senior
debt rating of A- or higher from S&P and A- or higher from Fitch
(if rated by Fitch), then the Depositor shall within 30 days
deliver or cause to be delivered to the Trustee or the Custodian
on its behalf (if it has not previously done so) a written
commitment or interim binder or

                              -35-

<PAGE>

preliminary report of the title issued by the title insurance or
escrow company with respect to the Mortgaged Property.

     Subject to the immediately following sentence, as promptly
as practicable subsequent to such transfer and assignment, and in
any event, within thirty (30) days thereafter, the Master
Servicer shall (i) complete each assignment of Mortgage, as
follows: "First Horizon Mortgage Pass-Through Certificates,
Series 2004-AR1, The Bank of New York, as trustee for the holders
of the Certificates", (ii) cause such assignment to be in proper
form for recording in the appropriate public office for real
property records and (iii) cause to be delivered for recording in
the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with
respect to any assignments of Mortgage as to which the Master
Servicer has not received the information required to prepare
such assignment in recordable form, the Master Servicer's
obligation to do so and to deliver the same for such recording
shall be as soon as practicable after receipt of such information
and in any event within thirty (30) days after receipt thereof.
Notwithstanding the foregoing, the Master Servicer need not cause
to be recorded any assignment which relates to a Mortgage Loan in
any state other than  the Required Recordation States.

     In the case of Mortgage Loans that have been prepaid in full
as of the Closing Date, the Depositor, in lieu of delivering the
above documents to the Trustee or the Custodian on its behalf,
will deposit in the Certificate Account the portion of such
payment that is required to be deposited in the Certificate
Account pursuant to Section 3.8 hereof.

     Notwithstanding anything to the contrary in this Agreement,
within thirty days after the Closing Date, the Depositor shall
either (i) deliver or cause to be delivered to the Trustee or the
Custodian on its behalf the Mortgage File as required pursuant to
this Section 2.1 for each Delay Delivery Mortgage Loan or (ii)
(A) substitute or cause to be substituted a Substitute Mortgage
Loan for the Delay Delivery Mortgage Loan or (B) repurchase or
cause to be repurchased the Delay Delivery Mortgage Loan, which
substitution or repurchase shall be accomplished in the manner
and subject to the conditions set forth in Section 2.3 (treating
each Delay Delivery Mortgage Loan as a Deleted Mortgage Loan for
purposes of such Section 2.3), provided, however, that if the
Depositor fails to deliver a Mortgage File for any Delay Delivery
Mortgage Loan within the thirty-day period provided in the prior
sentence, the Depositor shall use its best reasonable efforts to
effect or cause to be effected a substitution, rather than a
repurchase of, such Deleted Mortgage Loan and provided further
that the cure period provided for in Section 2.2 or in Section
2.3 shall not apply to the initial delivery of the Mortgage File
for such Delay Delivery Mortgage Loan, but rather the Depositor
shall have five (5) Business Days to cure or cause to be cured
such failure to deliver. At the end of such thirty-day period,
the Trustee or the Custodian, on its behalf shall send a Delay
Delivery Certification for the Delay Delivery Mortgage Loans
delivered during such thirty-day period in accordance with the
provisions of Section 2.2.  Notwithstanding anything to the
contrary contained in this Agreement, none of the Mortgage Loans
in the Trust Fund is or will be Delay Delivery Mortgage Loans.

          SECTION 2.2  Acceptance by Trustee of the Mortgage Loans.

     The Trustee or the Custodian, on behalf of the Trustee,
acknowledges receipt of the documents identified in the Initial
Certification in the form annexed hereto as Exhibit E and

                              -36-

<PAGE>

declares that it or the Custodian holds and will hold such
documents and the other documents delivered to it or the
Custodian, as applicable, constituting the Mortgage Files, and
that it or the Custodian, as applicable, holds or will hold such
other assets as are included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future
Certificateholders. The Trustee acknowledges that the Custodian
will maintain possession of the Mortgage Notes in the State of
Illinois, unless otherwise permitted by the Rating Agencies.

     The Trustee agrees to execute and deliver or to cause the
Custodian to execute and deliver on the Closing Date to the
Depositor and the Master Servicer an Initial Certification in the
form annexed hereto as Exhibit E.  Based on its or the
Custodian's review and examination, and only as to the documents
identified in such Initial Certification, the Custodian, on
behalf of the Trustee, acknowledges that such documents appear
regular on their face and relate to such Mortgage Loan. Neither
the Trustee nor the Custodian shall be under any duty or
obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the
same are genuine, enforceable or appropriate for the represented
purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to
be on their face.

     On or about the thirtieth (30th) day after the Closing Date,
the Trustee shall deliver or shall cause the Custodian to deliver
to the Depositor and the Master Servicer a Delay Delivery
Certification in the form annexed hereto as Exhibit F, with any
applicable exceptions noted thereon.  Notwithstanding anything to
the contrary contained in this Agreement, none of the Mortgage
Loans in the Trust Fund is or will be Delay Delivery Mortgage
Loans.

     Not later than 90 days after the Closing Date, the Trustee
shall deliver or shall cause the Custodian to deliver to the
Depositor and the Master Servicer a Final Certification in the
form annexed hereto as Exhibit G, with any applicable exceptions
noted thereon.

     If, in the course of such review, the Trustee or the
Custodian, on behalf of the Trustee, finds any document
constituting a part of a Mortgage File which does not meet the
requirements of Section 2.1, the Trustee shall list or shall
cause the Custodian to list such as an exception in the Final
Certification; provided, however that neither the Trustee nor the
Custodian shall make any determination as to whether (i) any
endorsement is sufficient to transfer all right, title and
interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is
in recordable form or is sufficient to effect the assignment of
and transfer to the assignee thereof under the mortgage to which
the assignment relates. The Seller shall promptly correct or cure
such defect within 90 days from the date it was so notified of
such defect and, if the Seller does not correct or cure such
defect within such period, the Seller shall either (a) substitute
for the related Mortgage Loan a Substitute Mortgage Loan, which
substitution shall be accomplished in the manner and subject to
the conditions set forth in Section 2.3, or (b) purchase such
Mortgage Loan from the Trustee within 90 days from the date the
Seller was notified of such defect in writing at the Purchase
Price of such Mortgage Loan; provided, however, that in no event
shall such substitution or purchase occur more than 540 days from
the Closing Date, except that if the substitution or purchase of
a Mortgage Loan pursuant to this provision is required by reason
of a delay in delivery of any documents by the appropriate
recording office, and there is a dispute between either the
Master Servicer or the Seller and the Trustee over the location
or status of the recorded document, then such substitution or
purchase

                              -37-

<PAGE>

     shall occur within 720 days from the Closing Date. The
Trustee shall deliver written notice to each Rating Agency within
270 days from the Closing Date indicating each Mortgage Loan (a)
which has not been returned by the appropriate recording office
or (b) as to which there is a dispute as to location or status of
such Mortgage Loan. Such notice shall be delivered every 90 days
thereafter until the related Mortgage Loan is returned to the
Trustee or the Custodian on its behalf. Any such substitution
pursuant to (a) above or purchase pursuant to (b) above shall not
be effected prior to the delivery to the Trustee of the Opinion
of Counsel required by Section 2.5 hereof, if any, and any
substitution pursuant to (a) above shall not be effected prior to
the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit L. No substitution is
permitted to be made in any calendar month after the
Determination Date for such month. The Purchase Price for any
such Mortgage Loan shall be deposited by the Seller in the
Certificate Account on or prior to the Distribution Account
Deposit Date for the Distribution Date in the month following the
month of repurchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit M
hereto, the Trustee shall  cause the Custodian to release the
related Mortgage File to the Seller and shall execute and deliver
at the Seller's request such instruments of transfer or
assignment prepared by the Seller, in each case without recourse,
as shall be necessary to vest in the Seller, or a designee, the
Trustee's interest in any Mortgage Loan released pursuant hereto.

     The Trustee shall retain or shall cause the Custodian to
retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions set forth herein.
The Master Servicer shall promptly deliver to the Trustee or the
Custodian on its behalf, upon the execution or receipt thereof,
the originals of such other documents or instruments constituting
the Mortgage File as come into the possession of the Master
Servicer from time to time.

     It is understood and agreed that the obligation of the
Seller to substitute for or to purchase any Mortgage Loan which
does not meet the requirements of Section 2.1 above shall
constitute the sole remedy respecting such defect available to
the Trustee, the Depositor and any Certificateholder against the
Seller.

          SECTION 2.3  Representations and Warranties of the Master
     Servicer;  Covenants of the Seller.

     (a)  The Master Servicer hereby makes the representations
          and warranties set forth in Schedule II hereto and by
          this reference incorporated herein, to the Depositor
          and the Trustee, as of the Closing Date, or if so
          specified therein, as of the Cut-off Date.

     (b)  Upon discovery by any of the parties hereto of a breach
          of a representation or warranty made pursuant to
          Schedule B to the MLPA that materially and adversely
          affects the interests of the Certificateholders in any
          Mortgage Loan, the party discovering such breach shall
          give prompt notice thereof to the other parties. The
          Seller hereby covenants that within 90 days of the
          earlier of its discovery or its receipt of written
          notice from any party of a breach of any representation
          or warranty made pursuant to Schedule B to the MLPA
          which materially and adversely affects the interests of
          the Certificateholders in any Mortgage Loan, it shall
          cure such breach in all material respects, and if such
          breach is not so cured,

                              -38-

<PAGE>

          shall, (i) if such 90-day period expires prior to the
          second anniversary of the Closing Date, remove such
          Mortgage Loan (a "Deleted Mortgage Loan") from the
          Trust Fund and substitute in its place a Substitute
          Mortgage Loan, in the manner and subject to the
          conditions set forth in this Section; or (ii)
          repurchase the affected Mortgage Loan or Mortgage Loans
          from the Trustee at the Purchase Price in the manner
          set forth below; provided, however, that any such
          substitution pursuant to (i) above shall not be
          effected prior to the delivery to the Trustee of the
          Opinion of Counsel required by Section 2.5 hereof, if
          any, and any such substitution pursuant to (i) above
          shall not be effected prior to the additional delivery
          to the Trustee or the Custodian on its behalf of a
          Request for Release substantially in the form of
          Exhibit M and the Mortgage File for any such Substitute
          Mortgage Loan. The Seller shall promptly reimburse the
          Master Servicer and the Trustee for any expenses
          reasonably incurred by the Master Servicer or the
          Trustee in respect of enforcing the remedies for such
          breach.  With respect to the representations and
          warranties described in this Section which are made to
          the best of the Seller's knowledge, if it is discovered
          by either the Depositor, the Seller or the Trustee that
          the substance of such representation and warranty is
          inaccurate and such inaccuracy materially and adversely
          affects the value of the related Mortgage Loan or the
          interests of the Certificateholders therein,
          notwithstanding the Seller's lack of knowledge with
          respect to the substance of such representation or
          warranty, such inaccuracy shall be deemed a breach of
          the applicable representation or warranty.

     With respect to any Substitute Mortgage Loan or Loans, the
Seller shall deliver to the Trustee or the Custodian on its
behalf for the benefit of the Certificateholders the Mortgage
Note, the Mortgage, the related assignment of the Mortgage, and
such other documents and agreements as are required by Section
2.1, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.1. No substitution is permitted to be made
in any calendar month after the Determination Date for such
month. Scheduled Payments due with respect to Substitute Mortgage
Loans in the month of substitution shall not be part of the Trust
Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the month of substitution, distributions
to Certificateholders will include the monthly payment due on any
Deleted Mortgage Loan for such month and thereafter the Seller
shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan. The Master Servicer shall amend the
Mortgage Loan Schedule for the benefit of the Certificateholders
to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Substitute Mortgage Loan or Loans and the
Master Servicer shall deliver the amended Mortgage Loan Schedule
to the Trustee.  Upon such substitution, the Substitute Mortgage
Loan or Loans shall be subject to the terms of this Agreement in
all respects, and the Seller shall be deemed to have made with
respect to such Substitute Mortgage Loan or Loans, as of the date
of substitution, the representations and warranties made pursuant
to Schedule B to the MLPA with respect to such Mortgage Loan.
Upon any such substitution and the deposit to the Certificate
Account of the amount required to be deposited therein in
connection with such substitution as described in the following
paragraph, the Trustee shall release or shall cause the Custodian
to release the Mortgage File held for the benefit of the
Certificateholders relating to such Deleted Mortgage Loan to the
Seller and shall execute and deliver at the Seller's direction
such instruments of transfer or assignment prepared by the
Seller, in each case without recourse, as shall be necessary to
vest title in the

                              -39-

<PAGE>

Seller, or its designee, the Trustee's interest in any Deleted
Mortgage Loan substituted for pursuant to this Section 2.3.

     For any month in which the Seller substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the Master Servicer will determine the amount (if any) by which
the aggregate principal balance of all such Substitute Mortgage
Loans as of the date of substitution is less than the aggregate
Stated Principal Balance of all such Deleted Mortgage Loans
(after application of the scheduled principal portion of the
monthly payments due in the month of substitution). The amount of
such shortage (the "Substitution Adjustment Amount") plus an
amount equal to the aggregate of any unreimbursed Advances with
respect to such Deleted Mortgage Loans shall be deposited in the
Certificate Account by the Seller on or before the Distribution
Account Deposit Date for the Distribution Date in the month
succeeding the calendar month during which the related Mortgage
Loan became required to be purchased or replaced hereunder.

     In the event that the Seller shall have repurchased a
Mortgage Loan, the Purchase Price therefor shall be deposited in
the Certificate Account pursuant to Section 3.5 on or before the
Distribution Account Deposit Date for the Distribution Date in
the month following the month during which the Seller became
obligated hereunder to repurchase or replace such Mortgage Loan
and upon such deposit of the Purchase Price, the delivery of the
Opinion of Counsel required by Section 2.5 and receipt of a
Request for Release in the form of Exhibit M hereto, the Trustee
shall release or shall cause the Custodian to release the related
Mortgage File held for the benefit of the Certificateholders to
such Person, and the Trustee shall execute and deliver or shall
cause the Custodian to execute and deliver at such Person's
direction such instruments of transfer or assignment prepared by
such Person, in each case without recourse, as shall be necessary
to transfer title from the Trustee. It is understood and agreed
that the obligation under this Agreement of the Seller to cure,
repurchase or replace any Mortgage Loan as to which a breach has
occurred and is continuing shall constitute the sole remedy
against the Seller respecting such breach available to
Certificateholders, the Depositor or the Trustee on their behalf.

     After giving effect to the sale of the Certificates by the
Depositor to the Underwriter, and thereafter, so long as any
Certificates remain outstanding, the Seller, its affiliates and
agents, collectively, shall not beneficially own Certificates the
aggregate fair value of which would represent 90% or more of the
beneficial interests in the Trust Fund.

     The representations and warranties made pursuant to this
Section 2.3 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian for the benefit of the
Certificateholders.

          SECTION 2.4  Representations and Warranties of the
     Depositor as to the Mortgage Loans.

     The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the date hereof or such
other date set forth herein that as of the Closing Date, and
following the transfer of the Mortgage Loans to it pursuant to
the MLPA and immediately prior to the conveyance of the Mortgage
Loans by it to the Trustee pursuant to

                              -40-

<PAGE>

Section 2.1(a) hereof, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets,
defenses or counterclaims.

     It is understood and agreed that the representations and
warranties set forth in this Section 2.4 shall survive delivery
of the Mortgage Files to the Trustee. Upon discovery by the
Depositor or the Trustee of a breach of any of the foregoing
representations and warranties set forth in this Section 2.4
(referred to herein as a "breach"), which breach materially and
adversely affects the interest of the Certificateholders, the
party discovering such breach shall give prompt written notice to
the others and to each Rating Agency.

          SECTION 2.5  Delivery of Opinion of Counsel in Connection
     with Substitutions.

     (a)  Notwithstanding any contrary provision of this
          Agreement, no substitution pursuant to Section 2.2 or
          Section 2.3 shall be made more than 90 days after the
          Closing Date unless the Depositor delivers to the
          Trustee an Opinion of Counsel, which Opinion of Counsel
          shall not be at the expense of either the Trustee or
          the Trust Fund, addressed to the Trustee, to the effect
          that such substitution will not (i) result in the
          imposition of the tax on "prohibited transactions" on
          the Trust Fund or contributions after the Startup Date,
          as defined in Sections 860F(a)(2) and 860G(d) of the
          Code, respectively, or (ii) cause any REMIC created
          hereunder to fail to qualify as a REMIC at any time
          that any Certificates are outstanding.

     (b)  Upon discovery by the Depositor, the Master Servicer or
          the Trustee that any Mortgage Loan does not constitute
          a "qualified mortgage" within the meaning of Section
          860G(a)(3) of the Code, the party discovering such fact
          shall promptly (and in any event within five (5)
          Business Days of discovery) give written notice thereof
          to the other parties.  In connection therewith, the
          Trustee shall require the Depositor to cause the
          Seller, pursuant to the MLPA and at the Seller's
          option, to either (i) substitute, if the conditions in
          Section 2.3(b) with respect to substitutions are
          satisfied, a Substitute Mortgage Loan for the affected
          Mortgage Loan, or (ii) repurchase the affected Mortgage
          Loan within 90 days of such discovery in the same
          manner as it would a Mortgage Loan for a breach of
          representation or warranty made pursuant to Section
          2.3.  The Trustee shall reconvey or shall cause the
          Custodian to reconvey to the Seller the Mortgage Loan
          to be released pursuant hereto in the same manner, and
          on the same terms and conditions, as it would a
          Mortgage Loan repurchased for breach of a
          representation or warranty contained in Section 2.3.

          SECTION 2.6  Execution and Delivery of Certificates.

     The Trustee acknowledges the transfer and assignment to it
of the Trust Fund and, concurrently with such transfer and
assignment, has executed and delivered to or upon the order of
the Depositor, the Certificates in authorized denominations
evidencing directly or indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and
exercise the rights referred to above for the benefit of all
present and future Holders of the Certificates

                              -41-

<PAGE>

and to perform the duties set forth in this Agreement to the best
of its ability, to the end that the interests of the Holders of
the Certificates may be adequately and effectively protected.

          SECTION 2.7  REMIC Matters.

     The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes
of all REMIC regular interests created hereby.  Each interest
identified in the table below by a designation beginning with "L"
shall be a "regular interest" in the Lower REMIC and the Class II-
A-RL Certificates shall be the sole class of residual interest in
the Lower REMIC.  The Lower REMIC Interests shall be
uncertificated and shall be held by the Trustee as assets of the
Upper REMIC.  The assets of the Lower REMIC shall be as set forth
in the definition thereof.  The assets of the Upper REMIC shall
be as set forth in the definition thereof. The "Startup Day" for
purposes of the REMIC Provisions shall be the Closing Date. The
Tax Matters Person with respect to each REMIC hereunder shall be
the Trustee and the Trustee shall hold the Tax Matters Person
Certificate.  Each REMIC's taxable year shall be the calendar
year and its accounts shall be maintained using the accrual
method.



                                    Lower     Corresponding Class
 Lower REMIC                        REMIC       of Certificates
 Interest or      Lower REMIC      Interest   -------------------
 Certificate   Interest Balance      Rate    Interest   Principal
-------------  ----------------   ---------  --------   ---------
L-I-A-1        $         86.82       (1)        (4)        (4)
L-I-A-ZZZ      $ 27,130,112.72       (1)        (4)        (4)
L-II-A-1       $        334.37       (2)        (4)        (4)
L-II-A-ZZZ     $104,481,400.94       (2)        (4)        (4)
Class II-A-RL  $         50.00       (2)        N/A        N/A
L-III-A-1      $        145.06       (3)        (4)        (4)
L-III-A-ZZZ    $ 45,335,479.33       (3)        (4)        (4)

(1)  Equals the Pass-Through Rate for the Class I-A-1 Certificates.

(2)  Equals the Pass-Through Rate for the Class II-A-1 Certificates.

(3)  Equals the Pass-Through Rate for the Class III-A-1 Certificates.

(4)  The Lower REMIC Interest L-I-A-1 and Lower REMIC Interest L-
I-A-ZZZ shall be Corresponding Classes to these Classes of
Certificates:  I-A-1, B-1, B-2, B-3, B-4, B-5 and  B-6  (provided
that with respect to the Subordinated Certificates such Lower
REMIC Interests shall only correspond to the portion supported by
Pool I).   The Lower REMIC Interest L-II-A-1 and Lower REMIC
Interest L-II-A-ZZZ shall be Corresponding Classes to these
Classes of Certificates:  II-A-1, II-A-RU, B-1, B-2, B-3, B-4, B-
5 and  B-6  (provided that with respect to the Subordinated
Certificates such Lower REMIC Interests shall only correspond to
the portion supported by Pool II).  The Lower REMIC Interest L-
III-A-1 and Lower REMIC Interest L-III-A-ZZZ shall be
Corresponding Classes to these Classes of Certificates:  III-A-1,
III-A-2, B-1, B-2, B-3, B-4, B-5 and  B-6  (provided that with
respect to the Subordinated Certificates such Lower REMIC
Interests shall only correspond to the portion supported by Pool
III).
     The Pass-Through Rate on each Class of Subordinated
Certificates is variable and will be equal to the weighted
average of the Designated Mortgage Pool Rates, weighted on the
basis of the Group Subordinate Amount for each Mortgage Pool. For
federal income tax purposes, the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates will accrue
interest at a per annum rate equal to the weighted average of the
Lower REMIC Interest Rates on Lower REMIC Interest L-I-A-1, Lower
REMIC Interest L-II-A-1 and Lower REMIC Interest L-III-A-1,
weighted on the basis of the principal balance of each such Lower
REMIC Interest.
                              -42-

<PAGE>

     On each Distribution Date Available Funds shall be
distributed with respect to the Lower REMIC Interests and the
Class II-A-RL Certificate in a manner such that:

          (i)  interest accrued on each Lower REMIC Interest is
               distributed with respect to each such Lower REMIC
               Interest in the same manner that Accrued
               Certificate Interest is distributed with respect
               to the Corresponding Class or Classes of
               Certificates pursuant to Section 4.2(a)(i) and
               (ii);

          (ii) interest accrued on the Class II-A-RU and Class II-
               A-RL Certificates is distributed in the manner
               provided in Section 4.2(a)(i) and (ii);

         (iii) principal is distributed as provided in the
               following paragraph.

          Distributions of principal to the Lower REMIC Interests
and the Class II-A-RL Certificate on each Distribution Date shall
be deemed to be made:

          (i)  first, as to Pool II, to Class II-A-RL Certificate
as provided in Section 4.2(b)(i),

          (ii) second, to the Lower REMIC Interests, in each case
from the related Mortgage Pool, to Lower REMIC Interest L-I-A-1,
Lower REMIC Interest L-II-A-1 and Lower REMIC Interest L-III-A-1,
as applicable, so that the principal balance of each such Lower
REMIC Interest is equal to 0.01% of the Group Subordinate Amount
for the related Mortgage Pool, assuming distributions on the
Certificates (and allocation of Realized Losses) have been made
on such Distribution Date (except that if any such Group
Subordinate Amount is a larger number than on the previous
Distribution Date, the least amount of principal shall be
distributed to such Lower REMIC Interests such that the Lower
REMIC Subordinated Balance Ratio is maintained); and

          (iii) third, any remaining principal in each Mortgage
Pool, to Lower REMIC Interest L-I-A-ZZZ, Lower REMIC Interest L-
II-A-ZZZ and Lower REMIC Interest L-III-A-ZZZ, as applicable.

     Realized Losses from each Mortgage Pool allocated to the
Certificates pursuant to Section 4.4 shall be applied after all
distributions have been made on each Distribution Date, first, to
Lower REMIC Interest L-I-A-1, Lower REMIC Interest L-II-A-1 and
Lower REMIC Interest L-III-A-1, as applicable, so that the
principal balance of each such Lower REMIC Interest is equal to
0.01% of the Group Subordinate Amount for the related Mortgage
Pool, assuming distributions on the Certificates have been made
on such Distribution Date (except that if any such Group
Subordinate Amount is a larger number than on the previous
Distribution Date, the least amount of Realized Losses shall be
applied to such Lower REMIC Interests such that the  Lower REMIC
Subordinated Balance Ratio is maintained); and second, any
remaining Realized Losses from each Mortgage Pool shall be
allocated to Lower REMIC Interest L-I-A-ZZZ, Lower REMIC Interest
L-II-A-ZZZ, and Lower REMIC Interest L-III-A-ZZZ as applicable.

                              -43-

<PAGE>

          SECTION 2.8  Covenants of the Master Servicer.

     The Master Servicer hereby covenants to the Depositor and
the Trustee as follows:

     (a)  the Master Servicer shall comply in the performance of
          its obligations under this Agreement with all
          reasonable rules and requirements of the insurer under
          each Required Insurance Policy; and

     (b)  no written information, certificate of an officer,
          statement furnished in writing or written report
          delivered to the Depositor, any affiliate of the
          Depositor or the Trustee and prepared by the Master
          Servicer pursuant to this Agreement will contain any
          untrue statement of a material fact or omit to state a
          material fact necessary to make such information,
          certificate, statement or report not misleading.

                           ARTICLE III
         ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

          SECTION 3.1  Master Servicer to Service Mortgage Loans.

     For and on behalf of the Certificateholders, the Master
Servicer shall service and administer the Mortgage Loans in
accordance with the terms of (i) the Servicing Rights Transfer
and Subservicing Agreement, pursuant to which First Tennessee
Mortgage Services, Inc. engaged the Master Servicer to subservice
the Mortgage Loans, (ii) this Agreement and (iii) the customary
and usual standards of practice of prudent mortgage loan
servicers; provided that if there is a conflict between the terms
of the Servicing Agreement and the Servicing Rights Transfer and
Subservicing Agreement, on the one hand, and this Agreement, on
the other hand, the terms of this Agreement shall prevail.  In
connection with such servicing and administration, the Master
Servicer shall have full power and authority, acting alone and/or
through Subservicers as provided in Section 3.2 hereof, to do or
cause to be done any and all things that it may deem necessary or
desirable in connection with such servicing and administration,
including but not limited to, the power and authority, subject to
the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers
and other instruments and documents, (ii) to consent to transfers
of any Mortgaged Property and assumptions of the Mortgage Notes
and related Mortgages (but only in the manner provided in this
Agreement), (iii) to collect any Insurance Proceeds and other
Liquidation Proceeds, and (iv) to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property securing
any Mortgage Loan; provided that the Master Servicer shall not
take any action that is inconsistent with or prejudices the
interests of the Trust Fund or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor, the
Trustee and the Certificateholders under this Agreement. The
Master Servicer shall represent and protect the interests of the
Trust Fund in the same manner as it protects its own interests in
mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan, and shall not make or
permit any modification, waiver or amendment of any Mortgage Loan
which would cause any REMIC created hereunder to fail to qualify
as a REMIC or result in the imposition of any tax under Section
860F(a) or Section 860G(d) of the Code. Without limiting the
generality of the foregoing, the Master Servicer, in its own name
or in the name of the Depositor and the Trustee,

                              -44-

<PAGE>

is hereby authorized and empowered by the Depositor and the
Trustee, when the Master Servicer believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them,
any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable
instruments, with respect to the Mortgage Loans, and with respect
to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver
to the Depositor and/or the Trustee such documents requiring
execution and delivery by either or both of them as are necessary
or appropriate to enable the Master Servicer to service and
administer the Mortgage Loans to the extent that the Master
Servicer is not permitted to execute and deliver such documents
pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such
documents and deliver them to the Master Servicer.

     In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds
as necessary for the purpose of effecting the payment of taxes
and assessments on the Mortgaged Properties, which advances shall
be reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.6, and further as
provided in Section 3.8. The costs incurred by the Master
Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance
premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated
Principal Balances of the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit.

          SECTION 3.2  Subservicing; Enforcement of the Obligations
     of Servicers.

     (a)  The Master Servicer may arrange for the subservicing of
          any Mortgage Loan by a Subservicer pursuant to a
          subservicing agreement; provided, however, that such
          subservicing arrangement and the terms of the related
          subservicing agreement must provide for the servicing
          of such Mortgage Loans in a manner consistent with the
          servicing arrangements contemplated hereunder. Unless
          the context otherwise requires, references in this
          Agreement to actions taken or to be taken by the Master
          Servicer in servicing the Mortgage Loans include
          actions taken or to be taken by a Subservicer on behalf
          of the Master Servicer. Notwithstanding the provisions
          of any subservicing agreement, any of the provisions of
          this Agreement relating to agreements or arrangements
          between the Master Servicer and a Subservicer or
          reference to actions taken through a Subservicer or
          otherwise, the Master Servicer shall remain obligated
          and liable to the Depositor, the Trustee and the
          Certificateholders for the servicing and administration
          of the Mortgage Loans in accordance with the provisions
          of this Agreement without diminution of such obligation
          or liability by virtue of such subservicing agreements
          or arrangements or by virtue of indemnification from
          the Subservicer and to the same extent and under the
          same terms and conditions as if the Master Servicer
          alone were servicing and administering the Mortgage
          Loans. All actions of each Subservicer performed
          pursuant to the related subservicing agreement shall be
          performed as an agent of the Master Servicer with the
          same force and effect as if performed directly by the
          Master Servicer.

                              -45-

<PAGE>

     (b)  For purposes of this Agreement, the Master Servicer
          shall be deemed to have received any collections,
          recoveries or payments with respect to the Mortgage
          Loans that are received by a Subservicer regardless of
          whether such payments are remitted by the Subservicer
          to the Master Servicer.

          SECTION 3.3  Rights of the Depositor and the Trustee in
     Respect of the Master Servicer.

     The Depositor may, but is not obligated to, enforce the
obligations of the Master Servicer hereunder and may, but is not
obligated to, perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer hereunder and in
connection with any such defaulted obligation to exercise the
related rights of the Master Servicer hereunder; provided that
the Master Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance by the
Depositor or its designee. Neither the Trustee nor the Depositor
shall have any responsibility or liability for any action or
failure to act by the Master Servicer nor shall the Trustee or
the Depositor be obligated to supervise the performance of the
Master Servicer hereunder or otherwise.

          SECTION 3.4  Trustee to Act as Master Servicer.

     In the event that the Master Servicer shall for any reason
no longer be the Master Servicer hereunder (including by reason
of an Event of Default), the Trustee or its successor shall
thereupon assume all of the rights and obligations of the Master
Servicer hereunder arising thereafter (except that the Trustee
shall not be (i) liable for losses of the Master Servicer
pursuant to Section 3.9 hereof or any acts or omissions of the
predecessor Master Servicer hereunder), (ii) obligated to make
Advances if it is prohibited from doing so by applicable law,
(iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder including, but not limited to,
repurchases or substitutions of Mortgage Loans pursuant to
Section 2.2 or 2.3 hereof, (iv) responsible for expenses of the
Master Servicer pursuant to Section 2.3 or (v) deemed to have
made any representations and warranties of the Master Servicer
hereunder). Any such assumption shall be subject to Section 7.2
hereof. If the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Event of
Default), the Trustee or its successor shall succeed to any
rights and obligations of the Master Servicer under each
subservicing agreement.

     The Master Servicer shall, upon request of the Trustee, but
at the expense of the Master Servicer, deliver to the assuming
party all documents and records relating to each subservicing
agreement or substitute subservicing agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts
collected or held by it and otherwise use its best efforts to
effect the orderly and efficient transfer of the substitute
subservicing agreement to the assuming party.

          SECTION 3.5  Collection of Mortgage Loan Payments;
     Certificate Account; Distribution Account.

     (a)  The Master Servicer shall make reasonable efforts in
          accordance with the customary and usual standards of
          practice of prudent mortgage servicers to collect

                              -46-

<PAGE>

          all payments called for under the terms and provisions
          of the Mortgage Loans to the extent such procedures
          shall be consistent with this Agreement and the terms
          and provisions of any related Required Insurance
          Policy. Consistent with the foregoing, the Master
          Servicer may in its discretion (i) waive any late
          payment charge or any prepayment charge or penalty
          interest in connection with the prepayment of a
          Mortgage Loan and (ii) extend the due dates for
          payments due on a Mortgage Note for a period not
          greater than 180 days; provided, however, that the
          Master Servicer cannot extend the maturity of any such
          Mortgage Loan past the date on which the final payment
          is due on the latest maturing Mortgage Loan as of the
          Cut-off Date. In the event of any such arrangement, the
          Master Servicer shall make Advances on the related
          Mortgage Loan in accordance with the provisions of
          Section 4.1 during the scheduled period in accordance
          with the amortization schedule of such Mortgage Loan
          without modification thereof by reason of such
          arrangements. The Master Servicer shall not be required
          to institute or join in litigation with respect to
          collection of any payment (whether under a Mortgage,
          Mortgage Note or otherwise or against any public or
          governmental authority with respect to a taking or
          condemnation) if it reasonably believes that enforcing
          the provision of the Mortgage or other instrument
          pursuant to which such payment is required is
          prohibited by applicable law.

     (b)  The Master Servicer shall establish and maintain the
          Certificate Account.  The Certificate Account shall
          consist of three separate subaccounts, each of which
          shall relate to a particular Mortgage Pool. The Master
          Servicer shall deposit or cause to be deposited into
          the appropriate subaccount of the Certificate Account
          no later than two Business Days after receipt, except
          as otherwise specifically provided herein, the
          following payments and collections remitted by
          Subservicers or received by it in respect of the
          Mortgage Loans subsequent to the Cut-off Date (other
          than in respect of principal and interest due on the
          Mortgage Loans on or before the Cut-off Date) and the
          following amounts required to be deposited hereunder:

          (i)  all payments on account of principal on the
               Mortgage Loans in the related Mortgage Pool,
               including Principal Prepayments;

          (ii) all payments on account of interest on the
               Mortgage Loans in the related Mortgage Pool, net
               of the related Master Servicing Fee and any
               Prepayment Interest Excess;

         (iii) all Insurance Proceeds and Liquidation Proceeds in
               respect of the related Mortgage Loans in the
               related Mortgage Pool, other than proceeds to be
               applied to the restoration or repair of the
               Mortgaged Property or released to the Mortgagor in
               accordance with the Master Servicer's normal
               servicing procedures;

          (iv) any amount required to be deposited by the Master
               Servicer in respect of the related Mortgage Pool
               pursuant to Section 3.5(c) in connection with any
               losses on Permitted Investments;

                              -47-

<PAGE>

          (v)  any amounts required to be deposited by the Master
               Servicer in respect of the related Mortgage Pool
               pursuant to Section 3.9(b), 3.9(d), and in respect
               of net monthly rental income from any related REO
               Property pursuant to Section 3.11 hereof;

          (vi) all Substitution Adjustment Amounts in respect of
               the related Mortgage Pool;

         (vii) all Advances in respect of the related Mortgage
               Pool made by the Master Servicer pursuant to
               Section 4.1; and

        (viii) any other amounts required to be deposited
               hereunder in respect of the related Mortgage Pool.

          In addition, with respect to any Mortgage Loan that is
     subject to a buydown agreement, on each Due Date for such
     Mortgage Loan, in addition to the monthly payment remitted
     by the Mortgagor, the Master Servicer shall cause funds to
     be deposited into the applicable subaccount of the
     Certificate Account in an amount required to cause an amount
     of interest to be paid with respect to such Mortgage Loan
     equal to the amount of interest that has accrued on such
     Mortgage Loan from the preceding Due Date at the related
     Adjusted Mortgage Rate on such date.

          The foregoing requirements for remittance by the Master
     Servicer shall be exclusive, it being understood and agreed
     that, without limiting the generality of the foregoing,
     payments in the nature of prepayment penalties, late payment
     charges, assumption fees or amounts attributable to
     reimbursements of Advances, if collected, need not be
     remitted by the Master Servicer. In the event that the
     Master Servicer shall remit any amount not required to be
     remitted, it may at any time withdraw or direct the
     institution maintaining the Certificate Account to withdraw
     such amount from the Certificate Account, any provision
     herein to the contrary notwithstanding. Such withdrawal or
     direction may be accomplished by delivering written notice
     thereof to the Trustee or such other institution maintaining
     the Certificate Account which describes the amounts
     deposited in error in the Certificate Account. The Master
     Servicer shall maintain adequate records with respect to all
     withdrawals made pursuant to this Section. All funds
     deposited in the Certificate Account shall be held in trust
     for the Certificateholders until withdrawn in accordance
     with Section 3.8.

     (c)  The Trustee shall establish and maintain, on behalf of
          the Certificateholders, the Distribution Account.  The
          Distribution Account shall consist of three separate
          subaccounts, each of which shall relate to a particular
          Mortgage Pool.  The Trustee shall, promptly upon
          receipt, deposit in the Distribution Account and retain
          therein the following:

          (i)  the aggregate amount remitted by the Master
               Servicer to the Trustee in respect of a Mortgage
               Pool pursuant to Section 3.8(a)(ix);

          (ii) any amount deposited by the Master Servicer
               pursuant to this Section 3.5(c) in connection with
               any losses on Permitted Investments; and

                              -48-

<PAGE>

         (iii) any other amounts deposited hereunder which are
               required to be deposited in the Distribution
               Account.

          In the event that the Master Servicer shall remit any
     amount not required to be remitted, it may at any time
     direct the Trustee to withdraw such amount from the
     applicable subaccount of the Distribution Account, any
     provision herein to the contrary notwithstanding.  Such
     direction may be accomplished by delivering an Officer's
     Certificate to the Trustee which describes the amounts
     deposited in error in the Distribution Account.  All funds
     deposited in the Distribution Account shall be held by the
     Trustee in trust for the related Certificateholders until
     disbursed in accordance with this Agreement or withdrawn in
     accordance with Section 3.8. In no event shall the Trustee
     incur liability for withdrawals from the Distribution
     Account at the direction of the Master Servicer.

          (iv) The institutions at which the Certificate Account
               and the Distribution Account are maintained shall
               invest funds as directed by the Master Servicer in
               Permitted Investments which in both cases shall
               mature not later than (i) in the case of the
               Certificate Account, the second Business Day next
               preceding the related Distribution Account Deposit
               Date (except that if such Permitted Investment is
               an obligation of the institution that maintains
               such account, then such Permitted Investment shall
               mature not later than the Business Day next
               preceding such Distribution Account Deposit Date)
               and (ii) in the case of the Distribution Account,
               the Business Day next preceding the Distribution
               Date (except that if such Permitted Investment is
               an obligation of the institution that maintains
               such fund or account, then such Permitted
               Investment shall mature not later than such
               Distribution Date) and, in each case, shall not be
               sold or disposed of prior to its maturity. All
               such Permitted Investments shall be made in the
               name of the Trustee, for the benefit of the
               Certificateholders.  All income and gain net of
               any losses realized from any such investment of
               funds on deposit in the Certificate Account shall
               be for the benefit of the Master Servicer as
               servicing compensation  and all income and gain
               net of any losses realized from any such
               investment of funds on deposit in the Distribution
               Account shall be for the benefit of the Trustee.
               The amount of any Realized Losses in the
               Certificate Account in respect of any such
               investments shall promptly be deposited by the
               Master Servicer in the Certificate Account and the
               amount of any Realized Losses in the Distribution
               Account in respect of any such investments shall
               promptly be deposited by the Trustee into the
               Distribution Account.  All reinvestment income
               earned on amounts on deposit in the Distribution
               Account shall be for the benefit of the Trustee.
               The Trustee in its fiduciary capacity shall not be
               liable for the amount of any loss incurred in
               respect of any investment or lack of investment of
               funds held in the Certificate Account and made in
               accordance with this Section 3.5.

          (v)  The Master Servicer shall give notice to the
               Trustee, the Seller, each Rating Agency and the
               Depositor of any proposed change of the location

                              -49-

<PAGE>

               of the Certificate Account prior to any change
               thereof. The Trustee shall give notice to the
               Master Servicer, the Seller, each Rating Agency
               and the Depositor of any proposed change of the
               location of the Distribution Account prior to any
               change thereof.

          SECTION 3.6  Collection of Taxes, Assessments and Similar
     Items; Escrow Accounts.

     (a)  To the extent required by the related Mortgage Note and
          not violative of current law, the Master Servicer shall
          establish and maintain one or more accounts (each, an
          "Escrow Account") and deposit and retain therein all
          collections from the Mortgagors (or advances by the
          Master Servicer) for the payment of taxes, assessments,
          hazard insurance premiums or comparable items for the
          account of the Mortgagors. Nothing herein shall require
          the Master Servicer to compel a Mortgagor to establish
          an Escrow Account in violation of applicable law.

     (b)  Withdrawals of amounts so collected from the Escrow
          Accounts may be made only to effect timely payment of
          taxes, assessments, hazard insurance premiums,
          condominium or PUD association dues, or comparable
          items, to reimburse the Master Servicer out of related
          collections for any payments made pursuant to Sections
          3.1 hereof (with respect to taxes and assessments and
          insurance premiums) and 3.9 hereof (with respect to
          hazard insurance), to refund to any Mortgagors any sums
          determined to be overages, to pay interest, if required
          by law or the terms of the related Mortgage or Mortgage
          Note, to Mortgagors on balances in the Escrow Account
          or to clear and terminate the Escrow Account at the
          termination of this Agreement in accordance with
          Section 9.1 hereof. The Escrow Accounts shall not be a
          part of the Trust Fund.

     (c)  The Master Servicer shall advance any payments referred
          to in Section 3.6(a) that are not timely paid by the
          Mortgagors on the date when the tax, premium or other
          cost for which such payment is intended is due, but the
          Master Servicer shall be required so to advance only to
          the extent that such advances, in the good faith
          judgment of the Master Servicer, will be recoverable by
          the Master Servicer out of Insurance Proceeds,
          Liquidation Proceeds or otherwise.

          SECTION 3.7  Access to Certain Documentation and
     Information Regarding the Mortgage Loans.

     The Master Servicer shall afford the Depositor and the
Trustee reasonable access to all records and documentation
regarding the Mortgage Loans and all accounts, insurance
information and other matters relating to this Agreement, such
access being afforded without charge, but only upon reasonable
request and during normal business hours at the office designated
by the Master Servicer.

     Upon reasonable advance notice in writing, the Master
Servicer will provide to each Certificateholder or Certificate
Owner which is a savings and loan association, bank or insurance
company certain reports and reasonable access to information and
documentation regarding the

                              -50-

<PAGE>

Mortgage Loans sufficient to permit such Certificateholder or
Certificate Owner to comply with applicable regulations of the
OTS or other regulatory authorities with respect to investment in
the Certificates; provided that the Master Servicer shall be
entitled to be reimbursed by each such Certificateholder or
Certificate Owner for actual expenses incurred by the Master
Servicer in providing such reports and access.

          SECTION 3.8  Permitted Withdrawals from the Certificate
     Account and Distribution Account.

     (a)  The Master Servicer may from time to time make
          withdrawals from the applicable subaccount of the
          Certificate Account for the following purposes:

          (i)  to the extent not previously retained by the
               Master Servicer, to pay to the Master Servicer the
               master servicing compensation to which it is
               entitled pursuant to Section 3.14, and earnings on
               or investment income with respect to funds in or
               credited to the Certificate Account as additional
               master servicing compensation;

          (ii) to the extent not previously retained by the
               Master Servicer, to reimburse the Master Servicer
               for unreimbursed Advances made by it in respect of
               the related Mortgage Pool, such right of
               reimbursement pursuant to this subclause (ii)
               being limited to amounts received on the Mortgage
               Loan(s) in respect of which  any such Advance was
               made;

         (iii) to reimburse the Master Servicer for any
               Nonrecoverable Advance previously made in respect
               of the related Mortgage Pool;

          (iv) to reimburse the Master Servicer for Insured
               Expenses from the  related Insurance Proceeds in
               respect of the related Mortgage Pool;

          (v)  to reimburse the Master Servicer for (a)
               unreimbursed Servicing Advances in respect of the
               related Mortgage Pool, the Master Servicer's right
               to reimbursement pursuant to this clause (a) with
               respect to any Mortgage Loan being limited to
               amounts received on such Mortgage Loan(s) which
               represent late recoveries of the payments for
               which such advances were made pursuant to Section
               3.1 or Section 3.6 and (b) for unpaid Master
               Servicing Fees as provided in Section 3.11 hereof;

          (vi) to pay to the Seller or Master Servicer, as
               applicable, with respect to each Mortgage Loan in
               respect of the related Mortgage Pool or property
               acquired in respect thereof that has been
               purchased pursuant to Section 2.2, 2.3 or 3.11,
               all amounts received thereon after the date of
               such purchase;

         (vii) to reimburse the Seller, the Master Servicer or
               the Depositor for expenses incurred by any of them
               and reimbursable pursuant to Section 6.3 hereof;

                              -51-

<PAGE>

        (viii) to withdraw any amount deposited in the
               Certificate Account and not required to be
               deposited therein;

          (ix) on or prior to the Distribution Account Deposit
               Date, to withdraw an amount equal to the related
               Available Funds and the Trustee Fee for such
               Distribution Date and remit such amount to the
               Trustee for deposit in the Distribution Account;
               and

          (x)  to clear and terminate the Certificate Account
               upon termination of this Agreement pursuant to
               Section 9.1 hereof.

          The Master Servicer shall keep and maintain separate
     accounting, on a Mortgage Loan-by-Mortgage Loan basis and on
     a Mortgage Pool-by-Mortgage Pool basis, for the purpose of
     justifying any withdrawal from the Certificate Account
     pursuant to such subclauses (i), (ii), (iv), (v) and (vi).
     Prior to making any withdrawal from the Certificate Account
     pursuant to subclause (iii), the Master Servicer shall
     deliver to the Trustee an Officer's Certificate of a
     Servicing Officer indicating the amount of any previous
     Advance determined by the Master Servicer to be a
     Nonrecoverable Advance and identifying the related Mortgage
     Loans(s), and their respective portions of such
     Nonrecoverable Advance.

     (b)  The Trustee shall withdraw funds from the applicable
          subaccount of the Distribution Account for
          distributions to the related Certificateholders in the
          manner specified in this Agreement (and to withhold
          from the amounts so withdrawn, the amount of any taxes
          that it is authorized to withhold pursuant to the last
          paragraph of Section 8.11). In addition, the Trustee
          may prior to making the distribution pursuant to
          Section 4.2 from time to time make withdrawals from the
          Distribution Account for the following purposes:

          (i)  to pay to itself the Trustee Fee for the related
               Distribution Date;

          (ii) to pay to itself earnings on or investment income
               with respect to funds in the Distribution Account;

         (iii) to withdraw and return to the Master Servicer any
               amount deposited in the Distribution Account and
               not required to be deposited therein; and

          (iv) to clear and terminate the Distribution Account
               upon termination of the Agreement pursuant to
               Section 9.1 hereof.

          SECTION 3.9  Maintenance of Hazard Insurance; Maintenance
     of Primary Insurance Policies.

     (a)  The Master Servicer shall cause to be maintained, for
          each Mortgage Loan, hazard insurance with extended
          coverage in an amount that is at least equal to the
          lesser of (i) the maximum insurable value of the
          improvements securing such Mortgage Loan or (ii) the
          greater of (y) the outstanding principal balance of the
          Mortgage Loan and (z) an amount such that the proceeds
          of such policy shall be

                              -52-

<PAGE>

          sufficient to prevent the Mortgagor and/or the
          mortgagee from becoming a co-insurer. Each such policy
          of standard hazard insurance shall contain, or have an
          accompanying endorsement that contains, a standard
          mortgagee clause. Any amounts collected by the Master
          Servicer under any such policies (other than the
          amounts to be applied to the restoration or repair of
          the related Mortgaged Property or amounts released to
          the Mortgagor in accordance with the Master Servicer's
          normal servicing procedures) shall be deposited in the
          applicable subaccount of the Certificate Account. Any
          cost incurred by the Master Servicer in maintaining any
          such insurance shall not, for the purpose of
          calculating monthly distributions to the
          Certificateholders or remittances to the Trustee for
          their benefit, be added to the principal balance of the
          Mortgage Loan, notwithstanding that the terms of the
          Mortgage Loan so permit. Such costs shall be
          recoverable by the Master Servicer out of late payments
          by the related Mortgagor or out of Liquidation Proceeds
          to the extent permitted by Section 3.8 hereof. It is
          understood and agreed that no earthquake or other
          additional insurance is to be required of any Mortgagor
          or maintained on property acquired in respect of a
          Mortgage other than pursuant to such applicable laws
          and regulations as shall at any time be in force and as
          shall require such additional insurance. If the
          Mortgaged Property is located at the time of
          origination of the Mortgage Loan in a federally
          designated special flood hazard area and such area is
          participating in the national flood insurance program,
          the Master Servicer shall cause flood insurance to be
          maintained with respect to such Mortgage Loan. Such
          flood insurance shall be in an amount equal to the
          least of (i) the original principal balance of the
          related Mortgage Loan, (ii) the replacement value of
          the improvements which are part of such Mortgaged
          Property, and (iii) the maximum amount of such
          insurance available for the related Mortgaged Property
          under the national flood insurance program.

     (b)  In the event that the Master Servicer shall obtain and
          maintain a blanket policy insuring against hazard
          losses on all of the Mortgage Loans, it shall
          conclusively be deemed to have satisfied its
          obligations as set forth in the first sentence of this
          Section, it being understood and agreed that such
          policy may contain a deductible clause on terms
          substantially equivalent to those commercially
          available and maintained by comparable servicers.  If
          such policy contains a deductible clause, the Master
          Servicer shall, in the event that there shall not have
          been maintained on the related Mortgaged Property a
          policy complying with the first sentence of this
          Section, and there shall have been a loss that would
          have been covered by such policy, deposit in the
          applicable subaccount of the Certificate Account the
          amount not otherwise payable under the blanket policy
          because of such deductible clause.  In connection with
          its activities as Master Servicer of the Mortgage
          Loans, the Master Servicer agrees to present, on behalf
          of itself, the Depositor, and the Trustee for the
          benefit of the Certificateholders, claims under any
          such blanket policy.

     (c)  The Master Servicer shall not take any action which
          would result in non-coverage under any applicable
          Primary Insurance Policy of any loss which, but for the
          actions of the Master Servicer, would have been covered
          thereunder.  The Master

                              -53-

<PAGE>

          Servicer shall not cancel or refuse to renew any such
          Primary Insurance Policy that is in effect at the date
          of the initial issuance of the Certificates and is
          required to be kept in force hereunder unless the
          replacement Primary Insurance Policy for such canceled
          or non-renewed policy is maintained with a Qualified
          Insurer.

     The Master Servicer shall not be required to maintain any
Primary Insurance Policy (i) with respect to any Mortgage Loan
with a Loan-to-Value Ratio less than or equal to 80% as of any
date of determination or, based on a new appraisal, the principal
balance of such Mortgage Loan represents 80% or less of the new
appraised value or (ii) if maintaining such Primary Insurance
Policy is prohibited by applicable law.

     The Master Servicer agrees to effect the timely payment of
the premiums on each Primary Insurance Policy, and such costs not
otherwise recoverable shall be recoverable by the Master Servicer
from the related liquidation proceeds.

     (d)  In connection with its activities as Master Servicer of
          the Mortgage Loans, the Master Servicer agrees to
          present on behalf of itself, the Trustee and
          Certificateholders, claims to the insurer under any
          Primary Insurance Policies and, in this regard, to take
          such reasonable action as shall be necessary to permit
          recovery under any Primary Insurance Policies
          respecting defaulted Mortgage Loans. Any amounts
          collected by the Master Servicer under any Primary
          Insurance Policies shall be deposited in the applicable
          subaccount of the Certificate Account.

          SECTION 3.10  Enforcement of Due-on-Sale Clauses;
     Assumption Agreements.

     (a)  Except as otherwise provided in this Section, when any
          property subject to a Mortgage has been conveyed by the
          Mortgagor, the Master Servicer shall to the extent that
          it has knowledge of such conveyance, enforce any due-on-
          sale clause contained in any Mortgage Note or Mortgage,
          to the extent permitted under applicable law and
          governmental regulations, but only to the extent that
          such enforcement will not adversely affect or
          jeopardize coverage under any Required Insurance
          Policy. Notwithstanding the foregoing, the Master
          Servicer is not required to exercise such rights with
          respect to a Mortgage Loan if the Person to whom the
          related Mortgaged Property has been conveyed or is
          proposed to be conveyed satisfies the terms and
          conditions contained in the Mortgage Note and Mortgage
          related thereto and the consent of the mortgagee under
          such Mortgage Note or Mortgage is not otherwise so
          required under such Mortgage Note or Mortgage as a
          condition to such transfer. In the event that the
          Master Servicer is prohibited by law from enforcing any
          such due-on-sale clause, or if coverage under any
          Required Insurance Policy would be adversely affected,
          or if nonenforcement is otherwise permitted hereunder,
          the Master Servicer is authorized, subject to Section
          3.10(b), to take or enter into an assumption and
          modification agreement from or with the person to whom
          such property has been or is about to be conveyed,
          pursuant to which such person becomes liable under the
          Mortgage Note and, unless prohibited by applicable
          state law, the Mortgagor remains liable thereon,
          provided that the Mortgage Loan shall continue to be

                              -54-

<PAGE>

          covered (if so covered before the Master Servicer
          enters such agreement) by the applicable Required
          Insurance Policies. The Master Servicer, subject to
          Section 3.10(b), is also authorized with the prior
          approval of the insurers under any Required Insurance
          Policies to enter into a substitution of liability
          agreement with such Person, pursuant to which the
          original Mortgagor is released from liability and such
          Person is substituted as Mortgagor and becomes liable
          under the Mortgage Note. Notwithstanding the foregoing,
          the Master Servicer shall not be deemed to be in
          default under this Section by reason of any transfer or
          assumption which the Master Servicer reasonably
          believes it is restricted by law from preventing, for
          any reason whatsoever.

     (b)  Subject to the Master Servicer's duty to enforce any
          due-on-sale clause to the extent set forth in Section
          3.10(a) hereof, in any case in which a Mortgaged
          Property has been conveyed to a Person by a Mortgagor,
          and such Person is to enter into an assumption
          agreement or modification agreement or supplement to
          the Mortgage Note or Mortgage that requires the
          signature of the Trustee, or if an instrument of
          release signed by the Trustee is required releasing the
          Mortgagor from liability on the Mortgage Loan, the
          Master Servicer shall prepare and deliver or cause to
          be prepared and delivered to the Trustee for signature
          and shall direct, in writing, the Trustee to execute
          the assumption agreement with the Person to whom the
          Mortgaged Property is to be conveyed and such
          modification agreement or supplement to the Mortgage
          Note or Mortgage or other instruments as are reasonable
          or necessary to carry out the terms of the Mortgage
          Note or Mortgage or otherwise to comply with any
          applicable laws regarding assumptions or the transfer
          of the Mortgaged Property to such Person. In connection
          with any such assumption, no material term of the
          Mortgage Note may be changed. In addition, the
          substitute Mortgagor and the Mortgaged Property must be
          acceptable to the Master Servicer in accordance with
          its underwriting standards as then in effect. Together
          with each such substitution, assumption or other
          agreement or instrument delivered to the Trustee for
          execution by it, the Master Servicer shall deliver an
          Officer's Certificate signed by a Servicing Officer
          stating that the requirements of this subsection have
          been met in connection therewith. The Master Servicer
          shall notify the Trustee that any such substitution or
          assumption agreement has been completed by forwarding
          to the Trustee the original of such substitution or
          assumption agreement, which in the case of the original
          shall be added to the related Mortgage File and shall,
          for all purposes, be considered a part of such Mortgage
          File to the same extent as all other documents and
          instruments constituting a part thereof. Any fee
          collected by the Master Servicer for entering into an
          assumption or substitution of liability agreement will
          be retained by the Master Servicer as additional
          servicing compensation.

          SECTION 3.11  Realization Upon Defaulted Mortgage Loans;
     Repurchase of Certain Mortgage Loans.

     The Master Servicer shall use reasonable efforts to
foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements
can be made for

                              -55-

<PAGE>

collection of delinquent payments. In connection with such
foreclosure or other conversion, the Master Servicer shall follow
such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general
mortgage servicing activities and meet the requirements of the
insurer under any Required Insurance Policy; provided, however,
that the Master Servicer shall not be required to expend its own
funds in connection with any foreclosure or towards the
restoration of any property unless it shall determine (i) that
such restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan after reimbursement to itself of
such expenses and (ii) that such expenses will be recoverable to
it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Certificate
Account). The Master Servicer shall be responsible for all other
costs and expenses incurred by it in any such proceedings;
provided, however, that it shall be entitled to reimbursement
thereof from the liquidation proceeds with respect to the related
Mortgaged Property, as provided in the definition of Liquidation
Proceeds. If the Master Servicer has knowledge that a Mortgaged
Property which the Master Servicer is contemplating acquiring in
foreclosure or by deed in lieu of foreclosure is located within a
1 mile radius of any site listed in the Expenditure Plan for the
Hazardous Substance Clean Up Bond Act of 1984 or other site with
environmental or hazardous waste risks known to the Master
Servicer, the Master Servicer will, prior to acquiring the
Mortgaged Property, consider such risks and only take action in
accordance with its established environmental review procedures.

     With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trust Fund for the benefit
of the Certificateholders, or its nominee, on behalf of the
Certificateholders. The Master Servicer shall ensure that the
title to such REO Property references the Pooling and Servicing
Agreement and the Trust Fund's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer
protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and
protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Master Servicer deems to be in
the best interest of the Certificateholders for the period prior
to the sale of such REO Property. The Master Servicer shall
prepare for and deliver to the Trustee a statement with respect
to each REO Property that has been rented showing the aggregate
rental income received and all expenses incurred in connection
with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the
reporting requirements of the REMIC Provisions. The net monthly
rental income, if any, from such REO Property shall be deposited
in the Certificate Account no later than the close of business on
each Determination Date. The Master Servicer shall perform the
tax reporting and withholding required by Sections 1445 and 6050J
of the Code with respect to foreclosures and abandonments, the
tax reporting required by Section 6050H of the Code with respect
to the receipt of mortgage interest from individuals and any tax
reporting required by Section 6050P of the Code with respect to
the cancellation of indebtedness by certain financial entities,
by preparing such tax and information returns as may be required,
in the form required, and delivering the same to the Trustee for
filing.

     In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default
or imminent default on a Mortgage Loan, the Master Servicer shall
dispose of such Mortgaged Property prior to the close of the
third taxable year after the taxable year of its acquisition by
the Trust Fund unless the Trustee shall have been

                              -56-

<PAGE>

supplied with an Opinion of Counsel to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent
to such three-year period will not result in the imposition of
taxes on "prohibited transactions" of any REMIC hereunder as
defined in Section 860F of the Code or cause any REMIC created
hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may
continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or (ii)
subject any REMIC hereunder to the imposition of any federal,
state or local income taxes on the income earned from such
Mortgaged Property under Section 860G(c) of the Code or
otherwise, unless the Master Servicer has agreed to indemnify and
hold harmless the Trust Fund with respect to the imposition of
any such taxes.

     In the event of a default on a Mortgage Loan one or more of
whose obligor is not a United States Person, as that term is
defined in Section 7701(a)(30) of the Code, in connection with
any foreclosure or acquisition of a deed in lieu of foreclosure
(together, "foreclosure") in respect of such Mortgage Loan, the
Master Servicer will cause compliance with the provisions of
Treasury Regulation Section 1.1445-2(d)(3) (or any successor
thereto) necessary to assure that no withholding tax obligation
arises with respect to the proceeds of such foreclosure except to
the extent, if any, that proceeds of such foreclosure are
required to be remitted to the obligors on such Mortgage Loan.

     The decision of the Master Servicer to foreclose on a
defaulted Mortgage Loan shall be subject to a determination by
the Master Servicer that the proceeds of such foreclosure would
exceed the costs and expenses of bringing such a proceeding. The
income earned from the management of any REO Properties, net of
reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such
management and net of unreimbursed Master Servicing Fees,
Advances and Servicing Advances, shall be applied to the payment
of principal of and interest on the related defaulted Mortgage
Loans (with interest accruing as though such Mortgage Loans were
still current) and all such income shall be deemed, for all
purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be
deposited into the applicable subaccount of the Certificate
Account.  To the extent the net income received during any
calendar month is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage
Rate on the related Mortgage Loan for such calendar month, such
excess shall be considered to be a partial prepayment of
principal of the related Mortgage Loan.

     The proceeds from any liquidation of a Mortgage Loan, as
well as any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Master
Servicer for any related unreimbursed Servicing Advances and
Master Servicing Fees; second, to reimburse the Master Servicer
for any unreimbursed Advances; third, to reimburse the applicable
subaccount of the Certificate Account for any Nonrecoverable
Advances (or portions thereof) that were previously withdrawn by
the Master Servicer pursuant to Section 3.8(a)(iii) that related
to such Mortgage Loan; fourth, to accrued and unpaid interest (to
the extent no Advance has been made for such amount or any such
Advance has been reimbursed) on the Mortgage Loan or

                              -57-

<PAGE>

related REO Property, at the Adjusted Net Mortgage Rate to the
Due Date occurring in the month in which such amounts are
required to be distributed; and fifth, as a recovery of principal
of the Mortgage Loan. Excess Proceeds, if any, from the
liquidation of a Liquidated Mortgage Loan will be retained by the
Master Servicer as additional servicing compensation pursuant to
Section 3.14.

     The Master Servicer, with the consent of the Trustee, shall
have the right to purchase for its own account from the Trust
Fund any Mortgage Loan which is 91 days or more delinquent at a
price equal to the Purchase Price. The Purchase Price for any
Mortgage Loan purchased hereunder shall be deposited in the
applicable subaccount of the Certificate Account and the Trustee,
upon receipt of a certificate from the Master Servicer in the
form of Exhibit M hereto, shall release or cause to be released
to the purchaser of such Mortgage Loan the related Mortgage File
and shall execute and deliver such instruments of transfer or
assignment prepared by the purchaser of such Mortgage Loan, in
each case without recourse, as shall be necessary to vest in the
purchaser of such Mortgage Loan any Mortgage Loan released
pursuant hereto and the purchaser of such Mortgage Loan shall
succeed to all the Trustee's right, title and interest in and to
such Mortgage Loan and all security and documents related
thereto. Such assignment shall be an assignment outright and not
for security. The purchaser of such Mortgage Loan shall thereupon
own such Mortgage Loan, and all security and documents, free of
any further obligation to the Trustee or the Certificateholders
with respect thereto.

          SECTION 3.12  Trustee to Cooperate; Release of Mortgage
     Files.

     Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in
full will be escrowed in a manner customary for such purposes,
the Master Servicer will immediately notify the Trustee by
delivering, or causing to be delivered a "Request for Release"
substantially in the form of Exhibit M. Upon receipt of such
request, the Trustee shall or shall cause the Custodian to
promptly release the related Mortgage File to the Master
Servicer, and the Trustee shall at the Master Servicer's
direction execute and deliver to the Master Servicer the request
for reconveyance, deed of reconveyance or release or satisfaction
of mortgage or such instrument releasing the lien of the Mortgage
in each case provided by the Master Servicer, together with the
Mortgage Note with written evidence of cancellation thereon.
Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the
related Mortgagor. From time to time and as shall be appropriate
for the servicing or foreclosure of any Mortgage Loan, including
for such purpose, collection under any policy of flood insurance,
any fidelity bond or errors or omissions policy, or for the
purposes of effecting a partial release of any Mortgaged Property
from the lien of the Mortgage or the making of any corrections to
the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Trustee shall, upon delivery
to the Trustee of a Request for Release in the form of Exhibit L
signed by a Servicing Officer, release the Mortgage File to the
Master Servicer. Subject to the further limitations set forth
below, the Master Servicer shall cause the Mortgage File or
documents so released to be returned to the Trustee or its
Custodian when the need therefor by the Master Servicer no longer
exists, unless the Mortgage Loan is liquidated and the proceeds
thereof are deposited in the applicable subaccount of the
Certificate Account, in which case the Master Servicer shall
deliver to the Trustee a Request for Release in the form of
Exhibit M, signed by a Servicing Officer.

                              -58-

<PAGE>

     If the Master Servicer at any time seeks to initiate a
foreclosure proceeding in respect of any Mortgaged Property as
authorized by this Agreement, the Master Servicer shall deliver
or cause to be delivered to the Trustee, for signature, as
appropriate, any court pleadings, requests for trustee's sale or
other documents necessary to effectuate such foreclosure or any
legal action brought to obtain judgment against the Mortgagor on
the Mortgage Note or the Mortgage or to obtain a deficiency
judgment or to enforce any other remedies or rights provided by
the Mortgage Note or the Mortgage or otherwise available at law
or in equity.

          SECTION 3.13  Documents Records and Funds in Possession
     of Master Servicer to be Held for the Trustee.

     Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Trustee as required by this
Agreement all documents and instruments in respect of a Mortgage
Loan coming into the possession of the Master Servicer from time
to time and shall account fully to the Trustee for any funds
received by the Master Servicer or which otherwise are collected
by the Master Servicer as Liquidation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Master
Servicer in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation
Proceeds, including but not limited to, any funds on deposit in
the Certificate Account, shall be held by the Master Servicer for
and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable
provisions of this Agreement. The Master Servicer also agrees
that it shall not create, incur or subject any Mortgage File or
any funds that are deposited in the Certificate Account,
Distribution Account or any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the
benefit of the Certificateholders, to any claim, lien, security
interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or
right of setoff against any Mortgage File or any funds collected
on, or in connection with, a Mortgage Loan, except, however, that
the Master Servicer shall be entitled to set off against and
deduct from any such funds any amounts that are properly due and
payable to the Master Servicer under this Agreement.

          SECTION 3.14  Master Servicing Compensation.

     As compensation for its activities as Master Servicer
hereunder and as a subservicer pursuant to the Servicing Rights
Transfer and Subservicing Agreement, the Master Servicer shall be
entitled to retain or withdraw from the Certificate Account an
amount equal to the Master Servicing Fee for each Mortgage Loan,
provided that the aggregate Master Servicing Fee with respect to
any Distribution Date shall be reduced (i) by the amount of any
Compensating Interest paid by the Master Servicer with respect to
such Distribution Date, and (ii) with respect to the first
Distribution Date, an amount equal to any amount to be deposited
into the Distribution Account by the Depositor pursuant to
Section 2.1(a) and not so deposited.

     Additional servicing compensation in the form of (i) Excess
Proceeds, Prepayment Interest Excess and all income and gain net
of any losses realized from Permitted Investments and (ii)
prepayment penalties, assumption fees and late payment charges in
each case under the circumstances and in the manner set forth in
the applicable Mortgage Note or Mortgage shall be retained by the
Master Servicer to the extent not required to be deposited in the
Certificate

                              -59-

<PAGE>

Account pursuant to Section 3.5 hereof. The Master Servicer shall
be required to pay all expenses incurred by it in connection with
its master servicing activities hereunder (including payment of
any premiums for hazard insurance and any Primary Insurance
Policy and maintenance of the other forms of insurance coverage
required by this Agreement) and shall not be entitled to
reimbursement therefor except as specifically provided in this
Agreement.

          SECTION 3.15  Access to Certain Documentation.

     The Master Servicer shall provide to the OTS and the FDIC
and to comparable regulatory authorities supervising Holders of
Certificates or Certificate Owners and the examiners and
supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage
Loans required by applicable regulations of the OTS and the FDIC.
Such access shall be afforded without charge, but only upon
reasonable and prior written request and during normal business
hours at the offices designated by the Master Servicer. Nothing
in this Section shall limit the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in this Section as
a result of such obligation shall not constitute a breach of this
Section.

          SECTION 3.16  Annual Statement as to Compliance.

     The Master Servicer shall deliver to the Depositor and the
Trustee on or before 120 days after the end of the Master
Servicer's fiscal year, commencing with its 2004 fiscal year, an
Officer's Certificate stating, as to the signer thereof, that (i)
a review of the activities of the Master Servicer during the
preceding calendar year and of the performance of the Master
Servicer under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge,
based on such review, the Master Servicer has fulfilled all 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 officer
and the nature and status thereof. The Trustee shall forward a
copy of each such statement to each Rating Agency.

          SECTION 3.17  Annual Independent Public Accountants'
     Servicing Statement; Financial Statements.

     On or before 120 days after the end of the Master Servicer's
fiscal year, commencing with its 2004 fiscal year, the Master
Servicer at its expense shall cause a nationally or regionally
recognized firm of independent public accountants (who may also
render other services to the Master Servicer, the Seller or any
affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the
Trustee and the Depositor to the effect that-such firm has
examined certain documents and records relating to the servicing
of the Mortgage Loans under this Agreement or of mortgage loans
under pooling and servicing agreements substantially similar to
this Agreement (such statement to have attached thereto a
schedule setting forth the pooling and servicing agreements
covered thereby) and that, on the basis of such examination,
conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC, such servicing has been
conducted in compliance with such pooling and

                              -60-

<PAGE>

servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform
Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages serviced for FNMA and FHLMC requires it to
report. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of mortgage loans by
Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC (rendered within one year
of such statement) of independent public accountants with respect
to the related Subservicer. Copies of such statement shall be
provided by the Trustee to any Certificateholder or Certificate
Owner upon request at the Master Servicer's expense, provided
such statement is delivered by the Master Servicer to the
Trustee.

          SECTION 3.18  Errors and Omissions Insurance; Fidelity
     Bonds.

     The Master Servicer shall for so long as it acts as master
servicer under this Agreement, obtain and maintain in force (a) a
policy or policies of insurance covering errors and omissions in
the performance of its obligations as Master Servicer hereunder
and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC
for persons performing servicing for mortgage loans purchased by
FNMA or FHLMC. In the event that any such policy or bond ceases
to be in effect, the Master Servicer shall obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.

          SECTION 3.19  Notification of Adjustments.

     On each Adjustment Date, the Master Servicer shall make
interest rate adjustments for each Mortgage Loan in compliance
with the requirements of the related Mortgage and Mortgage Note
and applicable regulations.  The Master Servicer shall execute
and deliver the notices required by each Mortgage and Mortgage
Note and applicable regulations regarding interest rate
adjustments.  The Master Servicer also shall provide timely
notification to the Trustee of all applicable data and
information regarding such interest rate adjustments and the
Master Servicer's methods of implanting such interest rate
adjustments.  Upon the discovery by the Master Servicer or the
Trustee that the Master Servicer has failed to adjust or has
incorrectly adjusted a Mortgage Rate or a monthly payment
pursuant to the terms of the related Mortgage Note and Mortgage,
the Master Servicer shall immediately deposit in the Certificate
Account from its own funds the amount of any interest loss caused
thereby without reimbursement therefor; provided, however, the
Master Servicer shall be held harmless with respect to any
interest rate adjustments made by any servicer prior to the
Master Servicer.

                           ARTICLE IV
        DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER

          SECTION 4.1  Advances.

     The Master Servicer shall determine on the Business Day
prior to each Master Servicer Advance Date whether it is required
to make an Advance pursuant to the definition thereof. If the

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<PAGE>

Master Servicer determines it is required to make an Advance, it
shall, on or before the Master Servicer Advance Date, either (i)
deposit into the applicable subaccount of the Certificate Account
an amount equal to the Advance or (ii) make an appropriate entry
in its records relating to the applicable subaccount of the
Certificate Account that any Amount Held for Future Distribution
has been used by the Master Servicer in discharge of its
obligation to make any such Advance. Any funds so applied shall
be replaced by the Master Servicer by deposit in the applicable
subaccount of the Certificate Account no later than the close of
business on the Business Day preceding the next Master Servicer
Advance Date. The Master Servicer shall be entitled to be
reimbursed from the applicable subaccount of the Certificate
Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.8.  The obligation to make
Advances with respect to any Mortgage Loan shall continue until
the ultimate disposition of the REO Property or Mortgaged
Property relating to such Mortgage Loan.  As to any Distribution
Date, the Master Servicer shall inform the Trustee in writing of
the amount of the Advance to be made by the Master Servicer on
each Master Servicer Advance Date no later 1:30 p.m. Central time
on the second Business Day immediately preceding such
Distribution Date.

     The Master Servicer shall deliver to the Trustee on the
related Master Servicer Advance Date an Officer's Certificate of
a Servicing Officer indicating the amount of any proposed Advance
determined by the Master Servicer to be a Nonrecoverable Advance.

          SECTION 4.2  Priorities of Distribution.

     (a)  On each Distribution Date, the Trustee shall withdraw
          the Available Funds for each Certificate Group from the
          applicable subaccount of the Distribution Account and
          apply such funds to distributions on the Certificates
          of the related Certificate Group in the following order
          and priority and, in each case, to the extent of
          Available Funds remaining:

          (i)  to the Classes of Senior Certificates of the
               related Certificate Group, the Accrued Certificate
               Interest on each such Class for such Distribution
               Date;

          (ii) to the Classes of Senior Certificates of the
               related Certificate Group, any Accrued Certificate
               Interest thereon remaining undistributed from
               previous Distribution Dates, to the extent of
               remaining Available Funds from the related
               Mortgage Pool;

        (iii)  to the Classes of Senior Certificates of the
               related Certificate Group, to the extent of
               remaining Available Funds from the related
               Mortgage Pool, the related Senior Optimal
               Principal Amount for such Distribution Date and,
               in the case of the Group II Senior Certificates
               and Group III Senior Certificates, in the order of
               priority set forth below in Sections 4.2(b) and
               4.2(c), respectively, until the respective Class
               Certificate Balances thereof have been reduced to
               zero;

          (iv) to the Class B-1 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools,
               but subject to the prior payment of amounts

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<PAGE>

               described under Section 4.2(h), in the following
               order: (1) the Accrued Certificate Interest
               thereon for such Distribution Date, (2) any
               Accrued Certificate Interest thereon remaining
               undistributed from previous Distribution Dates and
               (3) such Class' Allocable Share for such
               Distribution Date;

          (v)  to the Class B-2 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools,
               but subject to the prior payment of amounts
               described under Section 4.2(h), in the following
               order: (1) the Accrued Certificate Interest
               thereon for such Distribution Date, (2) any
               Accrued Certificate Interest thereon remaining
               undistributed from previous Distribution Dates and
               (3) such Class' Allocable Share for such
               Distribution Date;

          (vi) to the Class B-3 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools,
               but subject to the prior payment of amounts
               described under Section 4.2(h), in the following
               order: (1) the Accrued Certificate Interest
               thereon for such Distribution Date, (2) any
               Accrued Certificate Interest thereon remaining
               undistributed from previous Distribution Dates and
               (3) such Class' Allocable Share for such
               Distribution Date;

         (vii) to the Class B-4 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools,
               but subject to the prior payment of amounts
               described under Section 4.2(h), in the following
               order: (1) the Accrued Certificate Interest
               thereon for such Distribution Date, (2) any
               Accrued Certificate Interest thereon remaining
               undistributed from previous Distribution Dates and
               (3) such Class' Allocable Share for such
               Distribution Date;

        (viii) to the Class B-5 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools,
               but subject to the prior payment of amounts
               described under Section 4.2(h), in the following
               order: (1) the Accrued Certificate Interest
               thereon for such Distribution Date, (2) any
               Accrued Certificate Interest thereon remaining
               undistributed from previous Distribution Dates and
               (3) such Class' Allocable Share for such
               Distribution Date; and

          (ix) to the Class B-6 Certificates, to the extent of
               remaining Available Funds for each Mortgage Pool,
               but subject to the prior payment of amounts
               described under Section 4.2(h), in the following
               order: (1) the Accrued Certificate Interest
               thereon for such Distribution Date, (2) any
               Accrued Certificate Interest thereon remaining
               undistributed from previous Distribution Dates and
               (3) such Class' Allocable Share for such
               Distribution Date.

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<PAGE>

     (b)  Amounts allocated to the Group II Senior Certificates
          pursuant to Section 4.2(a)(iii) above will be
          distributed in the following order of priority:

          (i)  concurrently, to the Class II-A-RU and Class II-A-
               RL Certificates, pro rata, until their respective
               Class Certificate Balances have each been reduced
               to zero; and

          (ii) to the Class II-A-1 Certificates, until the Class
               Certificate Balance thereof has been reduced to
               zero.

     (c)  Amounts allocated to the Group III Senior Certificates
          pursuant to Section 4.2(a)(iii) above will be
          distributed, concurrently, to the Class III-A-1 and
          Class III-A-2 Certificates, pro rata, until their
          respective Class Certificate Balances have each been
          reduced to zero.

     (d)  On each Distribution Date, the Trustee shall distribute
          to the Holders of the Class II-A-RU and Class II-A-RL
          Certificates any Available Funds remaining in the
          related REMIC created hereunder for such Distribution
          Date after application of all amounts described in
          clauses (a), (b) and (c) of this Section 4.2.  Any
          distributions pursuant to this subsection (d) shall not
          reduce the respective Class Certificate Balances of the
          Class II-A-RU and Class II-A-RL Certificates.

     (e)  On and after the Cross-Over Date, the amount
          distributable to the Group II Senior Certificates
          pursuant to Section 4.2(a)(iii) for the related
          Distribution Date shall be allocated among the related
          Classes of Senior Certificates, pro rata, on the basis
          of their respective Class Certificate Balances
          immediately prior to such Distribution Date, regardless
          of the priorities and amounts set forth in Section 4.2.

     (f)  If (i) on any Distribution Date the Class Certificate
          Balance of any Class of Subordinated Certificates
          (other than the Class of Subordinated Certificates with
          the highest priority of distribution) for which the
          related Class Prepayment Distribution Trigger was
          satisfied on such Distribution Date is reduced to zero
          and amounts distributable to such Class or Classes of
          Subordinated Certificates pursuant to clauses (2), (3)
          and (5) of the applicable Subordinated Optimal
          Principal Amount remain undistributed on such
          Distribution Date after all amounts otherwise
          distributable on such date pursuant to clauses (iv)
          through (ix) of Section 4.2(a) have been distributed,
          such amounts, to the extent of such Class' remaining
          Allocable Share, shall be distributed on such
          Distribution Date to the remaining Classes of
          Subordinated Certificates in order of priority, such
          that no such distribution shall be made to any Class of
          Subordinated Certificates while a Class of Subordinated
          Certificates having a distribution priority higher than
          such Class is outstanding; and (ii) notwithstanding the
          priorities and allocations contained in Section 4.2(a),
          (b) and (c), with respect to any Certificate Group, the
          Two Times Test is not satisfied, each Class of
          Subordinated Certificates will be entitled to receive,
          in respect of clauses (2), (3) and (5) of the
          definition of Subordinated Optimal Principal Amount for
          each mortgage pool, an amount equal

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<PAGE>

          to the product of (x) their Allocable Share and (y) the
          percentages set forth in the following table:

Distribution Date occurring in                 Percentage
---------------------------------------------  ----------
February 2004 through January 2009                 0%
February 2009 through January 2010                30%
February 2010 through January 2011                40%
February 2011 through January 2012                60%
February 2012 through January 2013                80%
February 2013 and thereafter                     100%

     (g)  In the event that in any calendar month the Master
          Servicer recovers an amount (an "Unanticipated
          Recovery") in respect of principal of a Mortgage Loan
          which had previously been allocated as a Realized Loss
          to any Class of Certificates pursuant to Section 4.4,
          on the Distribution Date in the next succeeding
          calendar month, the Trustee shall withdraw from the
          Distribution Account and sequentially increase the
          Class Certificate Balance of each Class of Certificates
          to which such Realized Losses were previously
          allocated, in the order of payment priority described
          in this Agreement, by the amount of Unscheduled
          Recoveries in an amount not to exceed the amount of
          such Realized Loss previously allocated to such Class.
          When the Class Certificate Balance of a Class of
          Certificates has been reduced to zero, the Holders of
          such Class shall not be entitled to any share of an
          Unanticipated Recovery, and such Unanticipated Recovery
          shall be allocated among all outstanding Classes of
          Certificates entitled thereto in accordance with the
          preceding sentence, subject to the remainder of this
          subsection (g).  In the event that (i) any
          Unanticipated Recovery remains undistributed in
          accordance with the preceding sentence or (ii) the
          amount of an Unanticipated Recovery exceeds the amount
          of the Realized Loss previously allocated to any
          outstanding Classes with respect to the related
          Mortgage Loan, on the applicable Distribution Date the
          Trustee shall distribute such Unanticipated Recoveries
          in accordance with the priorities set forth in Section
          4.2(a).  Any distributions made pursuant to this
          subsection (g) shall not be deemed to be a distribution
          of principal in reduction of the Class Certificate
          Balance of the related Certificate.

               For purposes of the preceding paragraph, the share
          of an Unanticipated Recovery allocable to any Class of
          Certificates with respect to a Mortgage Loan shall be
          based on its pro rata share (in proportion to the Class
          Certificate Balances thereof with respect to such
          Distribution Date) of the principal portion of any such
          Realized Loss previously allocated with respect to such
          Mortgage Loan (or Loans).

     (h)  On any Distribution Date on which any Certificate Group
          constitutes an Undercollateralized Group, all amounts
          otherwise distributable as principal on the
          Subordinated Certificates, in reverse order of priority
          (or, following the Cross-

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<PAGE>

          over Date, such other amounts described in the
          immediately following sentence), will be distributed as
          principal to the Senior Certificates of such
          Undercollateralized Group in accordance with the
          priorities set forth in Section 4.2(b) or (c), as
          applicable, until the total Class Certificate Balance
          of such Senior Certificates equals the Pool Principal
          Balance of the related Mortgage Pool (such
          distribution, an "Undercollateralization
          Distribution").  If the Senior Certificates of a
          Certificate Group constitute an Undercollateralized
          Group on any Distribution Date following the Cross-over
          Date, Undercollateralization Distributions will be made
          from the excess of the Available Funds for the Mortgage
          Pool not related to an Undercollateralized Group
          remaining after all required amounts for that
          Distribution Date have been distributed to the Senior
          Certificates of  such other Certificate Group.  In
          addition, the amount of any unpaid Net Interest
          Shortfalls with respect to any Undercollateralized
          Group on any Distribution Date (including any Net
          Interest Shortfalls for the related Distribution Date)
          will be distributed to the Senior Certificates of such
          Undercollateralized Group prior to the payment of any
          Undercollateralization Distributions from amounts
          otherwise distributable as principal on the
          Subordinated Certificates, in reverse order of priority
          (or, following the Cross-over Date, as provided in the
          preceding sentence).  Except as provided otherwise in
          this Section 4.2(h), no distribution of principal will
          be made to any Class of Subordinated Certificates until
          each Undercollateralized Group is no longer
          undercollateralized.  If more than one
          Undercollateralized Group on any Distribution Date is
          entitled to an Undercollateralization Distribution,
          such Undercollateralization Distribution shall be
          allocated among the Undercollateralized Groups, pro
          rata, on the basis of the amount by which the aggregate
          Class Certificate Balance of the related Senior
          Certificates is greater than the aggregate Stated
          Principal Balance of the Mortgage Loans in the related
          Undercollateralized Groups.  If more than one
          Certificate Group on any Distribution Date is required
          to make an Undercollateralization Distribution to an
          Undercollateralized Group, the payment of such
          Undercollateralization Distributions shall be allocated
          among such Certificate Groups, pro rata, on the basis
          of the aggregate Class Certificate Balance of the
          related Senior Certificates.

          In addition, if on any Distribution Date the total
          Class Certificate Balance of the Senior Certificates of
          a Certificate Group (after giving effect to
          distributions to be made on that Distribution Date) has
          been reduced to zero, all amounts otherwise
          distributable as prepayments of principal to the
          Subordinated Certificates, in reverse order of
          priority, will instead be distributed as principal to
          the Senior Certificates of the other Certificate Groups
          pro rata, on the basis of the aggregate Class
          Certificate Balance of the related Senior Certificates,
          unless (a) the weighted average of the Subordinated
          Percentages for the Mortgage Pools, weighted on the
          basis of the Stated Principal Balance of the Mortgage
          Loans in the related Mortgage Pool, is at least two
          times the weighted average of the initial Subordinate
          Percentage for the Mortgage Pools (calculated on such
          basis) and (b) the aggregate Stated Principal Balance
          of all of the Mortgage Loans in the Mortgage Pools
          delinquent 60 days or more (including for this purpose
          any such Mortgage Loans in foreclosure or subject to
          bankruptcy proceedings and
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<PAGE>

          Mortgage Loans with respect to which the related
          Mortgaged Property has been acquired by the Trust
          Fund), averaged over the preceding six month period, as
          a percentage of the then current aggregate Class
          Certificate Balance of the Subordinated Certificates,
          is less than 50%.  Except as provided otherwise in this
          Section 4.2(h), all distributions described above will
          be made in accordance with the priorities set forth in
          Section 4.2(a), (b) and (c).
          SECTION 4.3  Method of Distribution.

     (a)  All distributions with respect to each Class of
          Certificates on each Distribution Date shall be made
          pro rata among the outstanding Certificates of such
          Class, based on the Percentage Interest in such Class
          represented by each Certificate.  Payments to the
          Certificateholders on each Distribution Date will be
          made by the Trustee to the Certificateholders of record
          on the related Record Date by check or money order
          mailed to a Certificateholder at the address appearing
          in the Certificate Register, or upon written request by
          such Certificateholder to the Trustee made not later
          than the applicable Record Date, by wire transfer to a
          U.S. depository institution acceptable to the Trustee,
          or by such other means of payment as such
          Certificateholder and the Trustee shall agree.

     (b)  Each distribution with respect to a Book-Entry
          Certificate shall be paid to the Depository, which
          shall credit the amount of such distribution to the
          accounts of its Depository Participants in accordance
          with its normal procedures.  Each Depository
          Participant shall be responsible for disbursing such
          distribution to the Certificate Owners that it
          represents and to each financial intermediary for which
          it acts as agent.  Each such financial intermediary
          shall be responsible for disbursing funds to the
          Certificate Owners that it represents.  All such
          credits and disbursements with respect to a Book-Entry
          Certificate are to be made by the Depository and the
          Depository Participants in accordance with the
          provisions of the applicable Certificates.  Neither the
          Trustee nor the Master Servicer shall have any
          responsibility therefor except as otherwise provided by
          applicable law.

     (c)  The Trustee shall withhold or cause to be withheld such
          amounts as it reasonably determines are required by the
          Code (giving full effect to any exemptions from
          withholding and related certifications required to be
          furnished by Certificateholders or Certificate Owners
          and any reductions to withholding by virtue of any
          bilateral tax treaties and any applicable certification
          required to be furnished by Certificateholders or
          Certificate Owners with respect thereto) from
          distributions to be made to Non-U.S. Persons.  If the
          Trustee reasonably determines that a more accurate
          determination of the amount required to be withheld for
          a distribution can be made within a reasonable period
          after the scheduled date for such distribution, it may
          hold such distribution in trust for a Holder of a
          Residual Certificate until such determination can be
          made.  For the purposes of this paragraph, a "Non-U.S.
          Person" is (i) an individual other than a citizen or
          resident of the United States, (ii) a partnership,
          corporation or entity treated as a partnership or
          corporation for U.S. federal income tax purposes not
          formed under the laws of the United States, any state
          thereof or the District of

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<PAGE>

          Columbia (unless, in the case of a partnership,
          Treasury regulations provide otherwise), (iii) any
          estate, the income of which is not subject to U.S.
          federal income taxation, regardless of source, and (iv)
          any trust, other than a trust that a court within the
          United States is able to exercise primary supervision
          over the administration of the trust and one or more
          U.S. Persons have the authority to control all
          substantial decisions of the trust.

          SECTION 4.4  Allocation of Losses.

     (a)  On or prior to each Determination Date, the Master
          Servicer shall determine the amount of any Realized
          Loss in respect of each Mortgage Loan that occurred
          during the immediately preceding calendar month.

     (b)  With respect to any Distribution Date, the principal
          portion of each Realized Loss (other than any Excess
          Loss) shall be allocated in the following order of
          priority:

          (i)  to the Class B-6 Certificates until the Class
               Certificate Balance thereof has been reduced to
               zero;

          (ii) to the Class B-5 Certificates until the Class
               Certificate Balance thereof has been reduced to
               zero;

         (iii) to the Class B-4 Certificates until the Class
               Certificate Balance thereof has been reduced to
               zero;

          (iv) to the Class B-3 Certificates until the Class
               Certificate Balance thereof has been reduced to
               zero;

          (v)  to the Class B-2 Certificates until the Class
               Certificate Balance thereof has been reduced to
               zero;

          (vi) to the Class B-1 Certificates until the Class
               Certificate Balance thereof has been reduced to
               zero;

         (vii) to the Classes of Senior Certificates of the
               related Certificate Group, pro rata, in accordance
               with their Class Certificate Balances; provided
               that the principal portion of Realized Losses
               (other than Excess Losses) on the Mortgage Loans
               in Pool III allocable to the Super Senior
               Certificates will instead be allocated to the
               Senior Support Certificates (in addition to other
               Realized Losses allocated to the Senior Support
               Certificates), and not to the Super Senior
               Certificates, for so long as the Class Certificate
               Balance of the Senior Support Certificates is
               greater than zero.

     (c)  With respect to any Distribution Date, the principal
          portion of any Excess Loss with respect to a Mortgage
          Pool (other than Excess Bankruptcy Losses attributable
          to Debt Service Reductions) shall be allocated pro rata
          to each Class of Certificates of the related
          Certificate Group based on their respective Class

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<PAGE>

          Certificate Balances (in the case of the Senior
          Certificates) or Apportioned Principal Balances (in the
          case of the Subordinated Certificates).

     (d)  Any Realized Losses allocated to a Class of
          Certificates pursuant to Section 4.4(b) or (c) shall be
          allocated among the Certificates of such Class in
          proportion to their respective Certificate Principal
          Balances.  Any allocation of Realized Losses pursuant
          to this paragraph (d) shall be accomplished by reducing
          the Certificate Principal Balances of the related
          Certificates on the related Distribution Date in
          accordance with Section 4.4(e).

     (e)  Realized Losses allocated in accordance with this
          Section 4.4 shall be allocated on the Distribution Date
          in the month following the month in which such loss was
          incurred and, in the case of the principal portion
          thereof, after giving effect to the distributions made
          on such Distribution Date.

     (f)  On each Distribution Date, the Master Servicer shall
          determine the Subordinated Certificate Writedown
          Amount, if any.  Any such Subordinated Certificate
          Writedown Amount shall effect, without duplication of
          any other provision in this Section 4.4 that provides
          for a reduction in the Class Certificate Balance of the
          Subordinated Certificates, a corresponding reduction in
          the Class Certificate Balance of the Subordinated
          Certificates, which reduction shall occur on such
          Distribution Date after giving effect to distributions
          made on such Distribution Date.

     (g)  Notwithstanding the foregoing, no such allocation of
          any Realized Loss shall be made on a Distribution Date
          to a Class of Certificates to the extent that such
          allocation would result in the reduction of the
          aggregate Class Certificate Balances of all the Senior
          Certificates of a related Certificate Group as of such
          Distribution Date plus the Apportioned Principal
          Balances of the Subordinated Certificates of such
          Certificate Group as of such Distribution Date, after
          giving effect to all distributions and prior
          allocations of Realized Losses on such date, to an
          amount less than the aggregate Stated Principal Balance
          of the Mortgage Loans in the related Mortgage Pool as
          of the first day of the month of such Distribution
          Date, less any Deficient Valuations occurring on or
          prior to the Bankruptcy Coverage Termination Date (such
          limitation, the "Loss Allocation Limitation").

          SECTION 4.5  Reserved.

          SECTION 4.6  Monthly Statements to Certificateholders.

     (a)  Not later than each Distribution Date, the Trustee
          shall prepare and cause to be forwarded by first class
          mail to each Certificateholder, the Master Servicer,
          the Depositor and each Rating Agency a statement
          setting forth with respect to the related distribution
          and/or may post such statement on its website located
          at www.mbsreporting.com:

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<PAGE>

          (i)  the amount thereof allocable to principal,
               separately identifying the aggregate amount of any
               Principal Prepayments and Liquidation Proceeds
               included therein;

          (ii) the amount thereof allocable to interest, the
               amount of any Compensating Interest included in
               such distribution and any remaining Net Interest
               Shortfalls after giving effect to such
               distribution;

         (iii) if the distribution to the Holders of such Class
               of Certificates is less than the full amount that
               would be distributable to such Holders if there
               were sufficient funds available therefor, the
               amount of the shortfall and the allocation thereof
               as between principal and interest;

          (iv) the Class Certificate Balance of each Class of
               Certificates after giving effect to the
               distribution of principal on such Distribution
               Date;

          (v)  the Pool Principal Balance for each Mortgage Pool
               for the following Distribution Date;

          (vi) the Senior Percentage and Subordinated Percentage
               for each Certificate Group for the following
               Distribution Date;

         (vii) the amount of the Master Servicing Fees paid to or
               retained by the Master Servicer with respect to
               such Distribution Date;

        (viii) the Pass-Through Rate for each such Class of
               Certificates with respect to such Distribution
               Date;

          (ix) the amount of Advances for each Mortgage Pool
               included in the distribution on such Distribution
               Date and the aggregate amount of Advances for each
               Mortgage Pool outstanding as of the close of
               business on such Distribution Date;

          (x)  the number and aggregate principal amounts of
               Mortgage Loans (A) delinquent (exclusive of
               Mortgage Loans in foreclosure) (1) 1 to 30 days
               (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or
               more days and (B) in foreclosure and delinquent
               (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90
               days and (4) 91 or more days, as of the close of
               business on the last day of the calendar month
               preceding such Distribution Date;

          (xi) with respect to any Mortgage Loan in a Mortgage
               Pool that became an REO Property during the
               preceding calendar month, the loan number and
               Stated Principal Balance of such Mortgage Loan as
               of the close of business on the Determination Date
               preceding such Distribution Date and the date of
               acquisition thereof;

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<PAGE>

         (xii) the total number and principal balance of any REO
               Properties (and market value, if available) in
               each Mortgage Pool as of the close of business on
               the Determination Date preceding such Distribution
               Date;

        (xiii) the Senior Prepayment Percentage for each
               Certificate Group for the following Distribution
               Date;

         (xiv) the aggregate amount of Realized Losses incurred
               in respect of each Mortgage Pool during the
               preceding calendar month;

          (xv) the cumulative amount of Realized Losses applied
               in reduction of the principal balance of each
               class of Certificates since the Closing Date;

         (xvi) the Special Hazard Loss Coverage Amount, the Fraud
               Loss Coverage Amount and the Bankruptcy Loss
               Coverage Amount, in each case as of the related
               Determination Date; and

        (xvii) with respect to the second Distribution Date, the
               number and aggregate balance of any Delay Delivery
               Mortgage Loans in each Mortgage Pool not delivered
               within thirty days after the Closing Date.

     (b)  The Trustee's responsibility for disbursing the above
          information to the Certificateholders is limited to the
          availability, timeliness and accuracy of the
          information provided by the Master Servicer.

     (c)  On or before the fifth Business Day following the end
          of each Prepayment Period (but in no event later than
          the third Business Day prior to the related
          Distribution Date), the Master Servicer shall deliver
          to the Trustee (which delivery may be by electronic
          data transmission) a report in substantially the form
          set forth as Schedule III hereto.

     (d)  Within a reasonable period of time after the end of
          each calendar year, the Trustee shall cause to be
          furnished to each Person who at any time during the
          calendar year was a Certificateholder, a statement
          containing the information set forth in clauses (a)(i),
          (a)(ii) and (a)(vii) of this Section 4.6 aggregated for
          such calendar year or applicable portion thereof during
          which such Person was a Certificateholder. Such
          obligation of the Trustee shall be deemed to have been
          satisfied to the extent that substantially comparable
          information shall be provided by the Trustee pursuant
          to any requirements of the Code as from time to time in
          effect.

                              -71-

<PAGE>

          SECTION 4.7  Reserved.

                            ARTICLE V
                        THE CERTIFICATES

          SECTION 5.1  The Certificates.

     The Certificates shall be substantially in the forms
attached hereto as exhibits. The Certificates shall be issuable
in registered form, in the minimum denominations, integral
multiples in excess thereof (except that one Certificate in each
Class may be issued in a different amount which must be in excess
of the applicable minimum denomination) and aggregate
denominations per Class set forth in the Preliminary Statement.

     Subject to Section 9.2 hereof respecting the final
distribution on the Certificates, on each Distribution Date the
Trustee shall make distributions to each Certificateholder of
record on the preceding Record Date either (x) by wire transfer
in immediately available funds to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if
(i) such Holder has so notified the Trustee at least five
Business Days prior to the related Record Date and (ii) such
Holder shall hold (A) 100% of the Class Certificate Balance of
any Class of Certificates or (B) Certificates of any Class with
aggregate principal Denominations of not less than $1,000,000 or
(y) by check mailed by first class mail to such Certificateholder
at the address of such Holder appearing in the Certificate
Register.

     The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer.
Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the countersignature and
delivery of such Certificates or did not hold such offices at the
date of such Certificate. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless
countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been
duly executed and delivered hereunder. All Certificates shall be
dated the date of their countersignature. On the Closing Date,
the Trustee shall countersign the Certificates to be issued at
the direction of the Depositor, or any affiliate thereof.

     The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of
Certificates to facilitate transfers.

          SECTION 5.2  Certificate Register; Registration of
     Transfer and Exchange of Certificates.

     (a)  The Trustee shall maintain, or cause to be maintained
          in accordance with the provisions of Section 5.6
          hereof, a Certificate Register for the Trust Fund in
          which, subject to the provisions of subsections (b) and
          (c) below and to such reasonable regulations as it may
          prescribe, the Trustee shall provide for the
          registration of Certificates and of transfers and
          exchanges of Certificates as herein provided. Upon
          surrender for registration of transfer of any
          Certificate, the

                              -72-

<PAGE>

          Trustee shall execute and deliver, in the name of the
          designated transferee or transferees, one or more new
          Certificates of the same Class and aggregate Percentage
          Interest.

          At the option of a Certificateholder, Certificates may
     be exchanged for other Certificates of the same Class in
     authorized denominations and evidencing the same aggregate
     Percentage Interest upon surrender of the Certificates to be
     exchanged at the office or agency of the Trustee. Whenever
     any Certificates are so surrendered for exchange, the
     Trustee shall execute, authenticate, and deliver the
     Certificates which the Certificateholder making the exchange
     is entitled to receive. Every Certificate presented or
     surrendered for registration of transfer or exchange shall
     be accompanied by a written instrument of transfer in form
     satisfactory to the Trustee duly executed by the Holder
     thereof or his attorney duly authorized in writing.

          No service charge to the Certificateholders shall be
     made for any registration of transfer or exchange of
     Certificates, but payment of a sum sufficient to cover any
     tax or governmental charge that may be imposed in connection
     with any transfer or exchange of Certificates may be
     required.

          All Certificates surrendered for registration of
     transfer or exchange shall be cancelled and subsequently
     destroyed by the Trustee in accordance with the Trustee's
     customary procedures.

     (b)  No transfer of a Private Certificate shall be made
          unless such transfer is made pursuant to an effective
          registration statement under the Securities Act and any
          applicable state securities laws or is exempt from the
          registration requirements under said Act and such state
          securities laws. In the event that a transfer is to be
          made in reliance upon an exemption from the Securities
          Act and such laws, in order to assure compliance with
          the Securities Act and such laws, the Certificateholder
          desiring to effect such transfer and such
          Certificateholder's prospective transferee shall each
          certify to the Trustee in writing the facts surrounding
          the transfer in substantially the forms set forth in
          Exhibit I (the "Transferor Certificate") and (i)
          deliver a letter in substantially the form of either
          Exhibit J (the "Investment Letter") or Exhibit K (the
          "Rule 144A Letter") or (ii) there shall be delivered to
          the Trustee at the expense of the transferor an Opinion
          of Counsel that such transfer may be made pursuant to
          an exemption from the Securities Act. The Depositor
          shall provide to any Holder of a Private Certificate
          and any prospective transferee designated by any such
          Holder, information regarding the related Certificates
          and the Mortgage Loans and such other information as
          shall be necessary to satisfy the condition to
          eligibility set forth in Rule 144A(d)(4) for transfer
          of any such Certificate without registration thereof
          under the Securities Act pursuant to the registration
          exemption provided by Rule 144A. The Trustee and the
          Master Servicer shall cooperate with the Depositor in
          providing the Rule 144A information referenced in the
          preceding sentence, including providing to the
          Depositor such information regarding the Certificates,
          the Mortgage Loans and other matters regarding the
          Trust Fund as the Depositor shall reasonably request to
          meet its obligation under the preceding sentence. Each

                              -73-

<PAGE>

          Holder of a Private Certificate desiring to effect such
          transfer shall, and does hereby agree to, indemnify the
          Trustee and the Depositor, the Seller and the Master
          Servicer against any liability that may result if the
          transfer is not so exempt or is not made in accordance
          with such federal and state laws.

          No transfer of an ERISA-Restricted Certificate shall be
     made unless the Trustee shall have received a Transferor
     Certificate from the related transferor and either (i) a
     representation from the transferee of such Certificate
     acceptable to and in form and substance satisfactory to the
     Trustee (in the event such Certificate is a Private
     Certificate, such requirement is satisfied only by the
     Trustee's receipt of a representation letter from the
     transferee substantially in the form of Exhibit J or Exhibit
     K), to the effect that such transferee is not an employee
     benefit plan or arrangement subject to Section 406 of ERISA
     or a plan or arrangement subject to Section 4975 of the
     Code, nor a person acting on behalf of any such plan or
     arrangement, nor using the assets of any such plan or
     arrangement to effect such transfer, (ii) in the case of a
     Private Certificate (that has been subject to an ERISA-
     Qualified Underwriting) or a Residual Certificate, if the
     purchaser is an insurance company, a representation that the
     purchaser is an insurance company which is purchasing such
     Certificates with funds contained in an "insurance company
     general account" (as such term is defined in Section V(e) of
     Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"))
     and that the purchase and holding of such Certificates are
     covered under Sections I and III of PTCE 95-60 or (iii) in
     the case of any such ERISA-Restricted Certificate presented
     for registration in the name of an employee benefit plan
     subject to ERISA, or a plan or arrangement subject to
     Section 4975 of the Code (or comparable provisions of any
     subsequent enactments), or a trustee of any such plan or any
     other person acting on behalf of any such plan or
     arrangement, or using such plan's or arrangement's assets,
     an Opinion of Counsel satisfactory to the Trustee, which
     Opinion of Counsel shall not be an expense of either the
     Trustee, the Depositor, the Master Servicer or the Trust
     Fund, addressed to the Trustee to the effect that the
     purchase or holding of such ERISA-Restricted Certificate
     will not result in prohibited transactions under Section 406
     of ERISA and Section 4975 of the Code and will not subject
     the Trustee, the Depositor or the Master Servicer to any
     obligation in addition to those expressly undertaken in this
     Agreement or to any liability.  Notwithstanding anything
     else to the contrary herein, any purported transfer of an
     ERISA-Restricted Certificate to or on behalf of an employee
     benefit plan subject to ERISA or to the Code without the
     delivery to the Trustee of an Opinion of Counsel
     satisfactory to the Trustee as described above shall be void
     and of no effect.

          To the extent permitted under applicable law
     (including, but not limited to, ERISA), the Trustee shall be
     under no liability to any Person for any registration of
     transfer of any ERISA-Restricted Certificate that is in fact
     not permitted by this Section 5.2(b) or for making any
     payments due on such Certificate to the Holder thereof or
     taking any other action with respect to such Holder under
     the provisions of this Agreement so long as the transfer was
     registered by the Trustee in accordance with the foregoing
     requirements.

     (c)  Each Person who has or who acquires any Ownership
          Interest in a Residual Certificate shall be deemed by
          the acceptance or acquisition of such Ownership

                              -74-

<PAGE>

          Interest to have agreed to be bound by the following
          provisions, and the rights of each Person acquiring any
          Ownership Interest in a Residual Certificate are
          expressly subject to the following provisions:

          (i)  Each Person holding or acquiring any Ownership
               Interest in a Residual Certificate shall be a
               Permitted Transferee and shall promptly notify the
               Trustee of any change or impending change in its
               status as a Permitted Transferee.

          (ii) No Ownership Interest in a Residual Certificate
               may be registered on the Closing Date or
               thereafter transferred, and the Trustee shall not
               register the Transfer of any Residual Certificate
               unless, in addition to the certificates required
               to be delivered to the Trustee under subparagraph
               (b) above, the Trustee shall have been furnished
               with an affidavit (a "Transfer Affidavit") of the
               initial owner or the proposed transferee in the
               form attached hereto as Exhibit H.

         (iii) Each Person holding or acquiring any Ownership
               Interest in a Residual Certificate shall agree (A)
               to obtain a Transfer Affidavit from any other
               Person to whom such Person attempts to Transfer
               its Ownership Interest in a Residual Certificate,
               (B) to obtain a Transfer Affidavit from any Person
               for whom such Person is acting as nominee, trustee
               or agent in connection with any Transfer of a
               Residual Certificate and (C) not to Transfer its
               Ownership Interest in a Residual Certificate or to
               cause the Transfer of an Ownership Interest in a
               Residual Certificate to any other Person if it has
               actual knowledge that such Person is not a
               Permitted Transferee.

          (iv) Any attempted or purported Transfer of any
               Ownership Interest in a Residual Certificate in
               violation of the provisions of this Section 5.2(c)
               shall be absolutely null and void and shall vest
               no rights in the purported Transferee. If any
               purported transferee shall become a Holder of a
               Residual Certificate in violation of the
               provisions of this Section 5.2(c), then the last
               preceding Permitted Transferee shall be restored
               to all rights as Holder thereof retroactive to the
               date of registration of Transfer of such Residual
               Certificate. The Trustee shall be under no
               liability to any Person for any registration of
               Transfer of a Residual Certificate that is in fact
               not permitted by Section 5.2(b) and this Section
               5.2(c) or for making any payments due on such
               Certificate to the Holder thereof or taking any
               other action with respect to such Holder under the
               provisions of this Agreement so long as the
               Transfer was registered after receipt of the
               related Transfer Affidavit, Transferor Certificate
               and, in the case of a Residual Certificate which
               is also a Private Certificate, either the Rule
               144A Letter or the Investment Letter. The Trustee
               shall be entitled but not obligated to recover
               from any Holder of a Residual Certificate that was
               in fact not a Permitted Transferee at the time it
               became a Holder or, at such subsequent time as it
               became other than a Permitted Transferee, all
               payments made on such Residual Certificate at and
               after either such time. Any such payments

                              -75-

<PAGE>

               so recovered by the Trustee shall be paid and
               delivered by the Trustee to the last preceding
               Permitted Transferee of such Certificate.

          (v)  The Depositor shall use its best efforts to make
               available, upon receipt of written request from
               the Trustee, all information necessary to compute
               any tax imposed under Section 860E(e) of the Code
               as a result of a Transfer of an Ownership Interest
               in a Residual Certificate to any Holder who is not
               a Permitted Transferee.

          The restrictions on Transfers of a Residual Certificate
     set forth in this Section 5.2(c) shall cease to apply (and
     the applicable portions of the legend on a Residual
     Certificate may be deleted) with respect to Transfers
     occurring after delivery to the Trustee of an Opinion of
     Counsel, which Opinion of Counsel shall not be an expense of
     the Trust Fund, the Trustee, the Seller or the Master
     Servicer, to the effect that the elimination of such
     restrictions will not cause any REMIC created hereunder to
     fail to qualify as a REMIC at any time that the Certificates
     are outstanding or result in the imposition of any tax on
     the Trust Fund, a Certificateholder or another Person. Each
     Person holding or acquiring any Ownership Interest in a
     Residual Certificate hereby consents to any amendment of
     this Agreement which, based on an Opinion of Counsel
     furnished to the Trustee, is reasonably necessary (a) to
     ensure that the record ownership of, or any beneficial
     interest in, a Residual Certificate is not transferred,
     directly or indirectly, to a Person that is not a Permitted
     Transferee and (b) to provide for a means to compel the
     Transfer of a Residual Certificate which is held by a Person
     that is not a Permitted Transferee to a Holder that is a
     Permitted Transferee.

     (d)  The preparation and delivery of all certificates and
          opinions referred to above in this Section 5.2 in
          connection with transfer shall be at the expense of the
          parties to such transfers.

     (e)  Except as provided below, the Book-Entry Certificates
          shall at all times remain registered in the name of the
          Depository or its nominee and at all times: (i)
          registration of the Certificates may not be transferred
          by the Trustee except to another Depository; (ii) the
          Depository shall maintain book-entry records with
          respect to the Certificate Owners and with respect to
          ownership and transfers of such Book-Entry
          Certificates; (iii) ownership and transfers of
          registration of the Book-Entry Certificates on the
          books of the Depository shall be governed by applicable
          rules established by the Depository; (iv) the
          Depository may collect its usual and customary fees,
          charges and expenses from its Depository Participants;
          (v) the Trustee shall deal with the Depository,
          Depository Participants and indirect participating
          firms as representatives of the Certificate Owners of
          the Book-Entry Certificates for purposes of exercising
          the rights of holders under this Agreement, and
          requests and directions for and votes of such
          representatives shall not be deemed to be inconsistent
          if they are made with respect to different Certificate
          Owners; and (vi) the Trustee may rely and shall be
          fully protected in relying upon information furnished
          by the Depository with respect

                              -76-

<PAGE>

          to its Depository Participants and furnished by the
          Depository Participants with respect to indirect
          participating firms and persons shown on the books of
          such indirect participating firms as direct or indirect
          Certificate Owners.

          All transfers by Certificate Owners of Book-Entry
     Certificates shall be made in accordance with the procedures
     established by the Depository Participant or brokerage firm
     representing such Certificate Owner. Each Depository
     Participant shall only transfer Book-Entry Certificates of
     Certificate Owners it represents or of brokerage firms for
     which it acts as agent in accordance with the Depository's
     normal procedures.

          If (x) (i) the Depository or the Depositor advises the
     Trustee in writing that the Depository is no longer willing
     or able to properly discharge its responsibilities as
     Depository, and (ii) the Trustee or the Depositor is unable
     to locate a qualified successor, (y) the Depositor at its
     option advises the Trustee in writing that it elects to
     terminate the book-entry system through the Depository or
     (z) after the occurrence of an Event of Default, Certificate
     Owners representing at least 51% of the Class Certificate
     Balance of the Book-Entry Certificates together advise the
     Trustee and the Depository through the Depository
     Participants in writing that the continuation of a book-
     entry system through the Depository is no longer in the best
     interests of the Certificate Owners, the Trustee shall
     notify all Certificate Owners, through the Depository, of
     the occurrence of any such event and of the availability of
     definitive, fully-registered Certificates (the "Definitive
     Certificates") to Certificate Owners requesting the same.
     Upon surrender to the Trustee of the related Class of
     Certificates by the Depository, accompanied by the
     instructions from the Depository for registration, the
     Trustee shall issue the Definitive Certificates. Neither the
     Master Servicer, the Depositor nor the Trustee shall be
     liable for any delay in delivery of such instruction and
     each may conclusively rely on, and shall be protected in
     relying on, such instructions. The Master Servicer shall
     provide the Trustee with an adequate inventory of
     certificates to facilitate the issuance and transfer of
     Definitive Certificates. Upon the issuance of Definitive
     Certificates all references herein to obligations imposed
     upon or to be performed by the Depository shall be deemed to
     be imposed upon and performed by the Trustee, to the extent
     applicable with respect to such Definitive Certificates and
     the Trustee shall recognize the Holders of the Definitive
     Certificates as Certificateholders hereunder; provided that
     the Trustee shall not by virtue of its assumption of such
     obligations become liable to any party for any act or
     failure to act of the Depository.

          SECTION 5.3  Mutilated, Destroyed, Lost or Stolen
     Certificates.

     If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) there
is delivered to the Master Servicer and the Trustee such security
or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, countersign and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and
Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.3, the Trustee may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the
Trustee) connected therewith.

                              -77-

<PAGE>

Any replacement Certificate issued pursuant to this Section 5.3
shall constitute complete and indefeasible evidence of ownership,
as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

          SECTION 5.4  Persons Deemed Owners.

     The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the
Master Servicer the Trustee nor any agent of the Master Servicer
or the Trustee shall be affected by any notice to the contrary.

          SECTION 5.5  Access to List of Certificateholders' Names
     and Addresses.

     If three or more Certificateholders or Certificate Owners
(a) request such information in writing from the Trustee, (b)
state that such Certificateholders or Certificate Owners desire
to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates, and
(c) provide a copy of the communication which such
Certificateholders or Certificate Owners propose to transmit, or
if the Depositor or Master Servicer shall request such
information in writing from the Trustee, then the Trustee shall,
within ten Business Days after the receipt of such request,
provide the Depositor, the Master Servicer or such
Certificateholders or Certificate Owners at such recipients'
expense the most recent list of the Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder or Certificate Owner, by receiving and holding
a Certificate, agree that the Trustee shall not be held
accountable by reason of the disclosure of any such information
as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.

          SECTION 5.6  Maintenance of Office or Agency.

     The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in New York
City where Certificates may be surrendered for registration of
transfer or exchange.  The Trustee initially designates its
Corporate Trust Office for such purposes. The Trustee will give
prompt written notice to the Certificateholders of any change in
such location of any such office or agency.

                           ARTICLE VI
              THE DEPOSITOR AND THE MASTER SERVICER

          SECTION 6.1  Respective Liabilities of the Depositor and
     the Master Servicer.

     The Depositor and the Master Servicer shall each be liable
in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them
herein.

                              -78-

<PAGE>

          SECTION 6.2  Merger or Consolidation of the Depositor or
     the Master Servicer.

     The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation
under the laws of the United States or under the laws of one of
the states thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary
to protect the validity and enforceability of this Agreement, or
any of the Mortgage Loans and to perform its respective duties
under this Agreement.

     Any Person into which the Depositor or the Master Servicer
may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Depositor or the Master
Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case
may be, hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master
Servicer shall be qualified to sell mortgage loans to, and to
service mortgage loans on behalf of, FNMA or FHLMC.

          SECTION 6.3  Limitation on Liability of the Depositor,
     the Master Servicer and Others.

     None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the
Master Servicer shall be under any liability to the
Certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Master
Servicer or any such Person against any breach of representations
or warranties made by it herein or protect the Depositor, the
Master Servicer or any such Person from any liability which would
otherwise be imposed by reasons of willful misfeasance, bad faith
or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder.  The
Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer may
rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any
matters arising hereunder.  The Depositor, the Master Servicer
and any director, officer, employee or agent of the Depositor or
the Master Servicer shall be indemnified by the Trust Fund and
held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding
relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any
loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and
any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of
duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.  Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to
its respective duties hereunder and which in its opinion may
involve it in any expense or liability; provided, however, that
either the Depositor, or the Master Servicer may in its
discretion undertake any such action that it may deem necessary
or desirable in respect of this Agreement and the rights and
duties of the parties hereto and interests of the Trustee and the
Certificateholders hereunder.  In such event, the legal

                              -79-

<PAGE>

expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust
Fund, and the Depositor, and the Master Servicer shall be
entitled to be reimbursed therefor out of the applicable
subaccount of the Certificate Account.

          SECTION 6.4  Limitation on Resignation of Master
     Servicer.

     The Master Servicer shall not resign from the obligations
and duties hereby imposed on it except (a) upon appointment of a
successor servicer and receipt by the Trustee of a letter from
each Rating Agency that such a resignation and appointment will
not result in a downgrading of the rating of any of the
Certificates, or (b) upon determination that its duties hereunder
are no longer permissible under applicable law.  Any such
determination under clause (b) permitting the resignation of the
Master Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Trustee.  No such resignation shall
become effective until the Trustee or a successor master servicer
shall have assumed the Master Servicer's responsibilities,
duties, liabilities and obligations hereunder.

                           ARTICLE VII
                             DEFAULT

          SECTION 7.1  Events of Default.

     "Event of Default," wherever used herein, means any one of
the following events:

          (i)  any failure by the Master Servicer to deposit in
               the applicable subaccount of the Certificate
               Account or remit to the Trustee any payment
               required to be made under the terms of this
               Agreement, which failure shall continue unremedied
               for five days after the date upon which written
               notice of such failure shall have been given to
               the Master Servicer by the Trustee or the
               Depositor or to the Master Servicer and the
               Trustee by the Holders of Certificates having not
               less than 25% of the Voting Rights evidenced by
               the Certificates; or

          (ii) any failure by the Master Servicer to observe or
               perform in any material respect any other of the
               covenants or agreements on the part of the Master
               Servicer contained in this Agreement, which
               failure materially affects the rights of
               Certificateholders, which failure continues
               unremedied for a period of 60 days after the date
               on which written notice of such failure shall have
               been given to the Master Servicer by the Trustee
               or the Depositor, or to the Master Servicer and
               the Trustee by the Holders of Certificates
               evidencing not less than 25% of the Voting Rights
               evidenced by the Certificates; provided, however,
               that the 60-day cure period shall not apply to the
               initial delivery of the Mortgage File for Delay
               Delivery Mortgage Loans nor the failure to
               substitute or repurchase in lieu thereof; or

        (iii)  a decree or order of a court or agency or
               supervisory authority having jurisdiction in the
               premises for the appointment of a receiver or
               liquidator in any insolvency, readjustment of
               debt, marshalling of assets and

                              -80-

<PAGE>

               liabilities or similar proceedings, or for the
               winding-up or liquidation of its affairs, shall
               have been entered against the Master Servicer and
               such decree or order shall have remained in force
               undischarged or unstayed for a period of 60
               consecutive days; or

          (iv) the Master Servicer shall consent to the
               appointment of a receiver or liquidator in any
               insolvency, readjustment of debt, marshalling of
               assets and liabilities or similar proceedings of
               or relating to the Master Servicer or all or
               substantially all of the property of the Master
               Servicer; or

          (v)  the Master Servicer shall admit in writing its
               inability to pay its debts generally as they
               become due, file a petition to take advantage of,
               or commence a voluntary case under, any applicable
               insolvency or reorganization statute, make an
               assignment for the benefit of its creditors, or
               voluntarily suspend payment of its obligations; or

          (vi) the failure of the Master Servicer to remit any
               Advance required to be remitted by the Master
               Servicer pursuant to Section 4.1 which failure
               continues unremedied at 11:00 a.m., Central time,
               on the related Distribution Date.

     If an Event of Default described in clauses (i) to (v) of
this Section shall occur, then, and in each and every such case,
so long as such Event of Default shall not have been remedied,
the Trustee may, or at the direction of the Holders of
Certificates evidencing not less than 66 2/3% of the Voting
Rights evidenced by the Certificates, the Trustee shall by notice
in writing to the Master Servicer (with a copy to each Rating
Agency), terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder.  If an Event of Default described in
clause (vi) of this Section shall occur, the Trustee shall
immediately, by notice in writing to the Master Servicer (with a
copy to each Rating Agency), terminate all of the rights and
obligations of the Master Servicer under this Agreement and in
and to the Mortgage Loans and proceeds thereof, other than its
rights as a Certificateholder hereunder.  On and after the
receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer hereunder, whether
with respect to the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee or another successor to the Master
Servicer appointed by the Trustee pursuant to Section 7.2.  The
Trustee, in its capacity as successor to the Master Servicer,
shall thereupon make any Advance which the Master Servicer failed
to make subject to Section 4.1 hereof.  The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the
Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise.  Unless expressly provided in
such written notice, no such termination shall affect any
obligation of the Master Servicer to pay amounts owed pursuant to
Article VIII.  The Master Servicer agrees to cooperate with the
Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which
shall at the time be credited to the Certificate Account, or
thereafter be received with respect to the Mortgage Loans.  All

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expenses incurred in the transferring of the servicing duties
from the Master Servicer to a Successor Servicer shall be paid by
the Master Servicer, and if not paid by the Master Servicer,
shall be paid from amounts on deposit in the Certificate Account.

     Notwithstanding any termination of the activities of the
Master Servicer hereunder, the Master Servicer shall be entitled
to receive, out of any late collection of a Scheduled Payment on
a Mortgage Loan which was due prior to the notice terminating
such Master Servicer's rights and obligations as Master Servicer
hereunder and received after such notice, that portion thereof to
which such Master Servicer would have been entitled pursuant to
Sections 3.8(a)(i) through (viii),and any other amounts payable
to such Master Servicer hereunder the entitlement to which arose
prior to the termination of its activities hereunder.  Any
termination of the activities of the Master Servicer hereunder
will simultaneously result in the termination of the Master
Servicer's duties as a subservicer pursuant to the Servicing
Rights Transfer and Subservicing Agreement.

          SECTION 7.2  Trustee to Act; Appointment of Successor.

     On and after the time the Master Servicer receives a notice
of termination pursuant to Section 7.1 hereof, the Trustee shall,
subject to and to the extent provided in Section 3.4, be the
successor to the Master Servicer under this Agreement and the
transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including the obligation to
make Advances pursuant to Section 4.1. As compensation therefor,
the Trustee shall be entitled to all funds relating to the
Mortgage Loans that the Master Servicer would have been entitled
to charge to the Certificate Account or Distribution Account if
the Master Servicer had continued to act hereunder.
Notwithstanding the foregoing, if the Trustee has become the
successor to the Master Servicer in accordance with Section 7.1
hereof, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.1 hereof or if it is otherwise unable to so
act, appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current
rating of the Certificates by each Rating Agency as the successor
to the Master Servicer hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the Master
Servicer hereunder. Any successor to the Master Servicer shall be
an institution which is a FNMA and FHLMC approved seller/servicer
in good standing, which has a net worth of at least $10,000,000,
and which is willing to service the Mortgage Loans and executes
and delivers to the Depositor and the Trustee an agreement
accepting such delegation and assignment, which contains an
assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of the Master
Servicer (other than liabilities of the Master Servicer under
Section 6.3 hereof incurred prior to termination of the Master
Servicer under Section 7.1), with like effect as if originally
named as a party to this Agreement; and provided further that
each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and
delegation will not be qualified or reduced, as a result of such
assignment and delegation. Pending appointment of a successor to
the Master Servicer hereunder, the Trustee, unless the Trustee is
prohibited by law from so acting, shall, subject to Section 3.4
hereof, act in such capacity as  provided above. In connection
with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess
of the Master

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<PAGE>

Servicing Fee permitted the Master Servicer hereunder. The
Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor master
servicer shall be deemed to be in default hereunder by reason of
any failure to make, or any delay in making, any distribution
hereunder or any portion thereof or any failure to perform, or
any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Master
Servicer to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.

     Any successor to the Master Servicer as master servicer
shall give notice to the Mortgagors of such change of servicer
and shall, during the term of its service as master servicer
maintain in force the policy or policies that the Master Servicer
is required to maintain pursuant to Section 3.18.

          SECTION 7.3  Notification to Certificateholders.

     (a)  Upon any termination of or appointment of a successor
          to the Master Servicer, the Trustee shall give prompt
          written notice thereof to Certificateholders and to
          each Rating Agency.

     (b)  Within 60 days after the occurrence of any Event of
          Default, the Trustee shall transmit by mail to all
          Certificateholders notice of each such Event of Default
          hereunder known to the Trustee, unless such Event of
          Default shall have been cured or waived.

                          ARTICLE VIII
                     CONCERNING THE TRUSTEE

          SECTION 8.1  Duties of Trustee.

     The Trustee, prior to the occurrence of an Event of Default
of which a Responsible Officer of the Trustee has actual
knowledge and after the curing of all Events of Default that may
have occurred, shall undertake to perform such duties and only
such duties as are specifically set forth in this Agreement. In
case an Event of Default of which a Responsible Officer of the
Trustee has actual knowledge has occurred and remains uncured,
the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and
skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person's own
affairs.

     The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee that are specifically
required to be furnished pursuant to any provision of this
Agreement shall examine them to determine whether they are in the
form required by this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of
any such resolution, certificate, statement, opinion, report,
document, order or other instrument.  If any such instrument is
found not to conform in any material respect to the requirements
of this Agreement, the Trustee shall notify the
Certificateholders of such instrument in the event that the
Trustee, after so requesting, does not receive a satisfactorily
corrected instrument.

                              -83-

<PAGE>

     No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided,
however, that:

          (i)  unless an Event of Default of which a Responsible
               Officer of the Trustee has actual knowledge shall
               have occurred and be continuing, the duties and
               obligations of the Trustee shall be determined
               solely by the express provisions of this
               Agreement, the Trustee shall not be liable except
               for the performance of such duties and obligations
               as are specifically set forth in this Agreement,
               no implied covenants or obligations shall be read
               into this Agreement against the Trustee and the
               Trustee may conclusively rely, as to the truth of
               the statements and the correctness of the opinions
               expressed therein, upon any certificates or
               opinions furnished to the Trustee and conforming
               to the requirements of this Agreement which it
               believed in good faith to be genuine and to have
               been duly executed by the proper authorities
               respecting any matters arising hereunder;

          (ii) the Trustee shall not be liable for an error of
               judgment made in good faith by a Responsible
               Officer or Responsible Officers of the Trustee,
               unless it shall be finally proven that the Trustee
               was negligent in ascertaining the pertinent facts;

         (iii) the Trustee shall not be liable with respect to
               any action taken, suffered or omitted to be taken
               by it in good faith in accordance with the
               direction of Holders of Certificates evidencing
               not less than 25% of the Voting Rights of
               Certificates relating to the time, method and
               place of conducting any proceeding for any remedy
               available to the Trustee, or exercising any trust
               or power conferred upon the Trustee under this
               Agreement;

          (iv) the Trustee shall not be required to expend or
               risk its own funds or otherwise incur financial
               liability in the performance of any of its duties
               hereunder or the exercise of any of its rights or
               powers if there is reasonable ground for believing
               that the repayment of such funds or adequate
               indemnity against such risk or liability is not
               assured to it, and none of the provisions
               contained in this Agreement shall in any event
               require the Trustee to perform, or be responsible
               for the manner of performance of, any of the
               obligations of the Master Servicer under this
               Agreement except during such time, if any, as the
               Trustee shall be the successor to, and be vested
               with the rights, duties, powers and privileges of,
               the Master Servicer; and

          (v)  without limiting the generality of this Section
               8.1, the Trustee shall have no duty (A) to see to
               any recording, filing, or depositing of this
               Agreement or any agreement referred to herein or
               any financing statement or continuation statement
               evidencing a security interest, or to see to the
               maintenance of any such recording or filing or
               deposit or to any rerecording, refiling or
               redepositing of any thereof, (B) to see to any

                              -84-

<PAGE>

               insurance, (C) to see to the payment or discharge
               of any tax, assessment, or other governmental
               charge or any lien or encumbrance of any kind
               owing with respect to, assessed or levied against,
               any part of the Trust Fund other than from funds
               available in the Distribution Account (D) to
               confirm or verify the contents of any reports or
               certificates of the Servicer delivered to the
               Trustee pursuant to this Agreement believed by the
               Trustee to be genuine and to have been signed or
               presented by the proper party or parties.

          SECTION 8.2  Certain Matters Affecting the Trustee.

     Except as otherwise provided in Section 8.1:

          (i)  the Trustee may request and rely upon and shall be
               protected in acting or refraining from acting upon
               any resolution, Officers' Certificate, certificate
               of auditors or any other certificate, statement,
               instrument, opinion, report, notice, request,
               consent, order, appraisal, bond or other paper or
               document believed by it to be genuine and to have
               been signed or presented by the proper party or
               parties and the Trustee shall have no
               responsibility to ascertain or confirm the
               genuineness of any signature of any such party or
               parties;

          (ii) the Trustee may consult with counsel, financial
               advisers or accountants and the advice of any such
               counsel, financial advisers or accountants and any
               Opinion of Counsel shall be full and complete
               authorization and protection in respect of any
               action taken or suffered or omitted by it
               hereunder in good faith and in accordance with
               such Opinion of Counsel;

         (iii) the Trustee shall not be liable for any action
               taken, suffered or omitted by it in good faith and
               believed by it to be authorized or within the
               discretion or rights or powers conferred upon it
               by this Agreement;

          (iv) the Trustee shall not be bound to make any
               investigation into the facts or matters stated in
               any resolution, certificate, statement,
               instrument, opinion, report, notice, request,
               consent, order, approval, bond or other paper or
               document, unless requested in writing so to do by
               Holders of Certificates evidencing not less than
               25% of the Voting Rights allocated to each Class
               of Certificates; provided, however, that if the
               payment within a reasonable time to the Trustee of
               the costs, expenses or liabilities likely to be
               incurred by it in the making of such investigation
               is, in the opinion of the Trustee, not assured to
               the Trustee by the security afforded to it by the
               terms of this Agreement, the Trustee may require
               indemnity satisfactory to the Trustee against such
               cost, expense or liability as a condition to
               taking any such action.  The reasonable expense of
               every such examination shall be paid by the Master
               Servicer or, if paid by the Trustee, shall be
               repaid by the Master Servicer upon demand from the
               Servicer's own funds.

                              -85-

<PAGE>

          (v)  the Trustee may execute any of the trusts or
               powers hereunder or perform any duties hereunder
               either directly or by or through agents,
               accountants or attorneys and the Trustee shall not
               be responsible for any misconduct or negligence on
               the part of such agent, accountant or attorney
               appointed by the Trustee with due care;

          (vi) the Trustee shall not be required to risk or
               expend its own funds or otherwise incur any
               financial liability in the performance of any of
               its duties or in the exercise of any of its rights
               or powers hereunder if it shall have reasonable
               grounds for believing that repayment of such funds
               or adequate indemnity against such risk or
               liability is not assured to it;

         (vii) the Trustee shall not be liable for any loss on
               any investment of funds pursuant to this Agreement
               (other than as issuer of the investment security);

        (viii) the Trustee shall not be deemed to have knowledge
               of an Event of Default until a Responsible Officer
               of the Trustee shall have received written notice
               thereof and in the absence of such notice, the
               Trustee may conclusively assume that there is no
               Event of Default;

          (ix) the Trustee shall be under no obligation to
               exercise any of the trusts, rights or powers
               vested in it by this Agreement or to institute,
               conduct or defend any litigation hereunder or in
               relation hereto at the request, order or direction
               of any of the Certificateholders, pursuant to the
               provisions of this Agreement, unless such
               Certificateholders shall have offered to the
               Trustee reasonable security or indemnity
               satisfactory to the Trustee against the costs,
               expenses and liabilities which may be incurred
               therein or thereby;

          (x)  the right of the Trustee to perform any
               discretionary act enumerated in this Agreement
               shall not be construed as a duty, and the Trustee
               shall not be answerable for other than its
               negligence or willful misconduct in the
               performance of such act; and

          (xi) the Trustee shall not be required to give any bond
               or surety in respect of the execution of the Trust
               Fund created hereby or the powers granted
               hereunder.

          SECTION 8.3  Trustee Not Liable for Certificates or
     Mortgage Loans.

     The recitals contained herein and in the Certificates shall
be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness.  The Trustee
makes no representations as to the validity or sufficiency of
this Agreement or of the Certificates or of any Mortgage Loan or
related document other than with respect to the Trustee's
execution and counter-signature of the Certificates.  The Trustee
shall not be accountable for the use or application by the
Depositor or the Master Servicer of any funds paid to the
Depositor or the

                              -86-

<PAGE>

Master Servicer in respect of the Mortgage Loans or deposited in
or withdrawn from the Certificate Account by the Depositor or the
Master Servicer.

          SECTION 8.4  Trustee May Own Certificates.

     The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights
as it would have if it were not the Trustee.

          SECTION 8.5  Trustee's Fees and Expenses.

     The Trustee, as compensation for its activities prior to
making the distributions pursuant to Section 4.2 hereunder, shall
be entitled to withdraw from the Distribution Account on each
Distribution Date an amount equal to the Trustee Fee for such
Distribution Date. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the
Master Servicer and held harmless against any loss, liability or
expense (including reasonable attorney's fees) (i) incurred in
connection with any claim or legal action relating to (a) this
Agreement, (b) the Certificates or (c) in connection with the
performance of any of the Trustee's duties hereunder, other than
any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of any of
the Trustee's duties hereunder or incurred by reason of any
action of the Trustee taken at the direction of the
Certificateholders and (ii) resulting from any error in any tax
or information return prepared by the Master Servicer. Such
indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee hereunder. Without limiting
the foregoing, the Master Servicer covenants and agrees, except
as otherwise agreed upon in writing by the Depositor and the
Trustee, and except for any such expense, disbursement or advance
as may arise from the Trustee's negligence, bad faith or willful
misconduct, to pay or reimburse the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this
Agreement with respect to: (A) the reasonable compensation and
the expenses and disbursements of its counsel not associated with
the closing of the issuance of the Certificates, (B) the
reasonable compensation, expenses and disbursements of any
accountant, engineer or appraiser that is not regularly employed
by the Trustee, to the extent that the Trustee must engage such
persons to perform acts or services hereunder and (C) printing
and engraving expenses in connection with preparing any
Definitive Certificates. Except as otherwise provided herein, the
Trustee shall not be entitled to payment or reimbursement for any
routine ongoing expenses incurred by the Trustee in the ordinary
course of its duties as Trustee, Registrar, Tax Matters Person or
Paying Agent hereunder or for any other expenses.

          SECTION 8.6  Eligibility Requirements for Trustee.

     The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a
state or the United States of America, authorized under such laws
to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit
rating which would not cause either of the Rating Agencies to
reduce their respective then current ratings of the Certificates
(or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or
association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid
supervising or

                              -87-

<PAGE>

examining authority, then for the purposes of this Section 8.6
the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 8.6,
the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.7 hereof. The entity serving as
Trustee may have normal banking and trust relationships with the
Depositor and its affiliates or the Master Servicer and its
affiliates; provided, however, that such entity cannot be an
affiliate of the Master Servicer other than the Trustee in its
role as successor to the Master Servicer.

          SECTION 8.7  Resignation and Removal of Trustee.

     The Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice of resignation
to the Depositor and the Master Servicer and each Rating Agency
not less than 60 days before the date specified in such notice
when, subject to Section 8.8, such resignation is to take effect,
and acceptance by a successor trustee in accordance with Section
8.8 meeting the qualifications set forth in Section 8.6. If no
successor trustee meeting such qualifications shall have been so
appointed and have accepted appointment within 30 days after the
giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment
of a successor trustee.

     If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.6 hereof and shall
fail to resign after written request thereto by the Depositor, or
if at any time the Trustee shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation, or a tax is imposed with respect to
the Trust Fund by any state in which the Trustee or the Trust
Fund is located and the imposition of such tax would be avoided
by the appointment of a different trustee, then the Depositor or
the Master Servicer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, one copy
of which instrument shall be delivered to the Trustee, one copy
of which shall be delivered to the Master Servicer and one copy
to the successor trustee.

     The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be
delivered by the successor Trustee to the Master Servicer, one
complete set to the Trustee so removed and one complete set to
the successor so appointed. Notice of any removal of the Trustee
shall be given to each Rating Agency by the Successor Trustee.

     Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this
Section 8.7 shall become effective upon acceptance of appointment
by the successor trustee as provided in Section 8.8 hereof.

                              -88-

<PAGE>

          SECTION 8.8  Successor Trustee.

     Any successor trustee appointed as provided in Section 8.7
hereof shall execute, acknowledge and deliver to the Depositor
and to its predecessor trustee and the Master Servicer an
instrument accepting such appointment hereunder and thereupon the
resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee
herein. The Depositor, the Master Servicer and the predecessor
trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all
such rights, powers, duties, and obligations.

     No successor trustee shall accept appointment as provided in
this Section 8.8 unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of
Section 8.6 hereof and its appointment shall not adversely affect
the then current rating of the Certificates.

     Upon acceptance of appointment by a successor trustee as
provided in this Section 8.8, the Depositor shall mail notice of
the succession of such trustee hereunder to all Holders of
Certificates. If the Depositor fails to mail such notice within
10 days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.

          SECTION 8.9  Merger or Consolidation of Trustee.

     Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation
resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to
the business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 8.6 hereof without the
execution or filing of any paper or further act on the part of
any of the parties hereto, anything herein to the contrary
notwithstanding.

          SECTION 8.10  Appointment of Co-Trustee or Separate
     Trustee.

     Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust Fund or property
securing any Mortgage Note may at the time be located, the Master
Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-
trustees jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to
vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund
or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days
after the receipt by it of a request to do so, or in

                              -89-

<PAGE>

the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee
under Section 8.6 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be
required under Section 8.8.

     Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following
provisions and conditions:

          (i)  To the extent necessary to effectuate the purposes
               of this Section 8.10, all rights, powers, duties
               and obligations conferred or imposed upon the
               Trustee shall be conferred or imposed upon and
               exercised or performed by the Trustee and such
               separate trustee or co-trustee jointly (it being
               understood that such separate trustee or co-
               trustee is not authorized to act separately
               without the Trustee joining in such act), except
               to the extent that under any law of any
               jurisdiction in which any particular act or acts
               are to be performed (whether as Trustee hereunder
               or as successor to the Master Servicer hereunder),
               the Trustee shall be incompetent or unqualified to
               perform such act or acts, in which event such
               rights, powers, duties and obligations (including
               the holding of title to the applicable Trust Fund
               or any portion thereof in any such jurisdiction)
               shall be exercised and performed singly by such
               separate trustee or co-trustee, but solely at the
               direction of the Trustee;

          (ii) No trustee hereunder shall be held personally
               liable by reason of any act or omission of any
               other trustee hereunder and such appointment shall
               not, and shall not be deemed to, constitute any
               such separate trustee or co-trustee as agent of
               the Trustee;

         (iii) The Trustee may at any time accept the resignation
               of or remove any separate trustee or co-trustee;
               and

          (iv) The Master Servicer, and not the Trustee, shall be
               liable for the payment of reasonable compensation,
               reimbursement and indemnification to any such
               separate trustee or co-trustee.

     Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the separate
trustees and co-trustees, when and as effectively as if given to
each of them. Every instrument appointing any separate trustee or
co-trustee shall refer to this Agreement and the conditions of
this Article VIII. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating
to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Master Servicer
and the Depositor.

                              -90-

<PAGE>

     Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full
power and authority, to the extent not prohibited by law, to do
any lawful act under or in respect of this Agreement on its
behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted
by law, without the appointment of a new or successor trustee.

          SECTION 8.11  Tax Matters.

     It is intended that the assets with respect to which each
REMIC election is to be made, as set forth in the preliminary
statement shall constitute, and that the conduct of matters
relating to such assets shall be such as to qualify such assets
as, a "real estate mortgage investment conduit" as defined in and
in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall act as
agent (and the Trustee is hereby appointed to act as agent) on
behalf of any such REMIC and that in such capacity it shall: (a)
prepare and file, or cause to be prepared and filed, in a timely
manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066 or any successor form adopted by the Internal
Revenue Service) and prepare and file or cause to be prepared and
filed with the Internal Revenue Service and applicable state or
local tax authorities income tax or information returns for each
taxable year with respect to any such REMIC, containing such
information and at the times and in the manner as may be required
by the Code or state or local tax laws, regulations, or rules,
and furnish or cause to be furnished to Certificateholders the
schedules, statements or information at such times and in such
manner as may be required thereby; (b) within thirty days of the
Closing Date, furnish or cause to be furnished to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by
the Code, the name, title, address, and telephone number of the
person that the Holders of the Certificates may contact for tax
information relating thereto, together with such additional
information as may be required by such Form, and update such
information at the time or times in the manner required by the
Code; (c) make or cause to be made elections that such assets be
treated as a REMIC on the federal tax return for its first
taxable year (and, if necessary, under applicable state law); (d)
prepare and forward, or cause to be prepared and forwarded, to
the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance
with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the prepayment
assumption; (e) provide information necessary for the computation
of tax imposed on the transfer of a Residual Certificate to a
Person that is not a Permitted Transferee, or an agent (including
a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable
cost of computing and furnishing such information may be charged
to the Person liable for such tax); (f) to the extent that they
are under its control conduct matters relating to such assets at
all times that any Certificates are outstanding so as to maintain
the status as a REMIC under the REMIC Provisions; (g) not
knowingly or intentionally take any action or omit to take any
action that would cause the termination of any REMIC status; (h)
pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including
prohibited transaction taxes as described below, imposed on any
such REMIC prior to its termination when and as the same shall be
due and payable (but such obligation shall not prevent the
Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall

                              -91-

<PAGE>

not prevent the Trustee from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (i)
ensure that federal, state or local income tax or information
returns shall be signed by the Trustee or such other person as
may be required to sign such returns by the Code or state or
local laws, regulations or rules; (j) maintain records relating
to any such REMIC, including but not limited to the income,
expenses, assets and liabilities thereof and the fair market
value and adjusted basis of the assets determined at such
intervals as may be required by the Code, as may be necessary to
prepare the foregoing returns, schedules, statements or
information; and (k) as and when necessary and appropriate,
represent any such REMIC in any administrative or judicial
proceedings relating to an examination or audit by any
governmental taxing authority, request an administrative
adjustment as to any taxable year of any such REMIC, enter into
settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any tax item of any such
REMIC, and otherwise act on behalf of any such REMIC in relation
to any tax matter or controversy involving it.

     In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be
provided, to the Trustee within ten (10) days after the Closing
Date all information or data that the Trustee requests in writing
and determines to be relevant for tax purposes to the valuations
and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected
cash flows of the Certificates and the Mortgage Loans.
Thereafter, the Depositor shall provide to the Trustee promptly
upon written request therefor, any such additional information or
data that the Trustee may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth
herein. The Depositor hereby indemnifies the Trustee for any
losses, liabilities, damages, claims or expenses of the Trustee
arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause
to be provided, accurate information or data to the Trustee on a
timely basis.

     In the event that any tax is imposed on "prohibited
transactions" of any REMIC as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of any
REMIC as defined in Section 860G(c) of the Code, on any
contribution to any REMIC after the Startup Day pursuant to
Section 860G(d) of the Code, or any other tax is imposed, if not
paid as otherwise provided for herein, such tax shall be paid by
(i) the Trustee, if any such other tax arises out of or results
from a breach by the Trustee of any of its obligations under this
Agreement which breach was caused by its negligence or willful
misconduct, (ii) the Master Servicer, in the case of any such
minimum tax, or if such tax arises out of or results from a
breach by the Master Servicer of any of their obligations under
this Agreement, (iii) the Seller, if any such tax arises out of
or results from the Seller's obligation to repurchase a Mortgage
Loan pursuant to Section 2.2 or 2.3 or (iv) in all other cases,
or in the event that the Trustee, the Master Servicer or the
Seller fails to honor its obligations under the preceding clauses
(i), (ii) or (iii), any such tax will be paid with amounts
otherwise to be distributed to the Certificateholders, as
provided in Section 3.8(b).

          SECTION 8.12  Periodic Filings.

     The Depositor hereby directs the Trustee to prepare, execute
(pursuant to a limited power of attorney given to the Trustee by
the Depositor) and file on behalf of the Depositor all periodic
reports required under the Securities Exchange Act of 1934 in
conformity with the terms of the

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<PAGE>

"no-action" relief granted by the SEC to issuers of asset-backed
securities such as the Certificates and the Trustee hereby agrees
to do so.  The Master Servicer will also prepare and execute any
certifications to be filed with the Form 10-K as required under
the Sarbanes-Oxley Act of 2002.  In connection with the
preparation and filing of such periodic reports, the Depositor
and the Master Servicer shall timely provide to the Trustee all
material information available to them which is required to be
included in such reports and not known to them to be in the
possession of the Trustee and such other information as the
Trustee reasonably may request from either of them and otherwise
reasonably shall cooperate with the Trustee. The Trustee shall
have no liability with respect to any failure to properly prepare
or file such periodic reports resulting from or relating to the
Trustee's inability or failure to obtain any information not
resulting from its own negligence or willful misconduct.

                           ARTICLE IX
                           TERMINATION

          SECTION 9.1  Termination upon Liquidation or Purchase of
     all Mortgage Loans.

     Subject to Section 9.3, the obligations and responsibilities
of the Depositor, the Master Servicer and the Trustee created
hereby with respect to the Trust Fund shall terminate upon the
earlier of (a) the purchase by the Master Servicer of all
Mortgage Loans (and REO Properties) remaining in the Trust Fund
at the price equal to the sum of (i) 100% of the Stated Principal
Balance of each Mortgage Loan (other than a Mortgage Loan that
has been foreclosed and subject to clause (ii)) plus one month's
accrued interest thereon at the applicable Adjusted Mortgage
Rate, (ii) the lesser of (x) the appraised value of any REO
Property as determined by the higher of two appraisals completed
by two independent appraisers selected by the Master Servicer at
the expense of the Master Servicer and (y) the Stated Principal
Balance of each Mortgage Loan related to any REO Property plus
accrued and unpaid interest thereon at the applicable Adjusted
Mortgage Rate, and (iii) any costs and damages incurred by the
Trust in connection with the noncompliance of such Mortgage Loan
with any specifically applicable predatory or abusive lending
law, and (b) the later of (i) the maturity or other liquidation
(or any Advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all
amounts required to be distributed to them pursuant to this
Agreement. In no event shall the trusts created hereby continue
beyond the earlier of (i) the expiration of 21 years from the
death of the survivor of the descendants of Joseph P. Kennedy,
the late Ambassador of the United States to the Court of St.
James's, living on the date hereof, and (ii) the Latest Possible
Maturity Date. The right to purchase all Mortgage Loans and REO
Properties pursuant to clause (a) above shall be conditioned upon
the Pool Principal Balance for each Mortgage Pool, at the time of
any such repurchase, aggregating less than ten percent of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans.

          SECTION 9.2  Final Distribution on the Certificates.

     If on any Determination Date, the Master Servicer determines
that there are no Outstanding Mortgage Loans and no other funds
or assets in the Trust Fund other than the funds in the
Certificate Account, the Master Servicer shall direct the Trustee
promptly to send a final distribution notice to each
Certificateholder. If the Master Servicer elects to terminate the
Trust

                              -93-

<PAGE>

Fund pursuant to clause (a) of Section 9.1, at least 20 days
prior to the date notice is to be mailed to the affected
Certificateholders, the Master Servicer shall notify the
Depositor and the Trustee of the date the Master Servicer intends
to terminate the Trust Fund and of the applicable repurchase
price of the Mortgage Loans and REO Properties.

     Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their
Certificates for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 10th day and no
later than the 15th day of the month next preceding the month of
such final distribution. Any such notice shall specify (a) the
Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of
Certificates at the office therein designated, (b) the amount of
such final distribution, (c) the location of the office or agency
at which such presentation and surrender must be made, and (d)
that the Record Date otherwise applicable to such Distribution
Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office
therein specified. The Master Servicer will give such notice to
each Rating Agency at the time such notice is given to
Certificateholders.

     In the event such notice is given, the Master Servicer shall
cause all funds in the Certificate Account to be remitted to the
Trustee for deposit in the applicable subaccounts of the
Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect
to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the
Master Servicer the Mortgage Files for the Mortgage Loans.

     Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to the Certificateholders
of each Class, in the order set forth in Section 4.2 hereof, on
the final Distribution Date, in the case of the
Certificateholders, in proportion to their respective Percentage
Interests, with respect to Certificateholders of the same Class,
an amount equal to (i) as to each Class of Regular Certificates,
the Class Certificate Balance thereof plus accrued interest
thereon in the case of an interest bearing Certificate, and (ii)
as to the Residual Certificates, the amount, if any, which
remains on deposit in the Distribution Account (other than the
amounts retained to meet claims) after application pursuant to
clause (i) above.

     In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after
the date specified in the above mentioned written notice, the
Trustee shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the
applicable Certificates shall not have been surrendered for
cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds
and other assets which remain a part of the Trust Fund. If within
one year after the second notice all Certificates shall not have
been surrendered for cancellation, the Holders of each of the
Class II-A-RU and Class II-A-RL Certificates shall be entitled to
all unclaimed funds and other assets of the Trust Fund, held for
distribution to such Certificateholders, which remain subject
hereto.

                              -94-

<PAGE>

          SECTION 9.3  Additional Termination Requirements.

     (a)  In the event the Master Servicer exercises its purchase
          option as provided in Section 9.1, the Trust Fund and
          each REMIC created hereunder shall be terminated in
          accordance with the following additional requirements,
          unless the Trustee has been supplied with an Opinion of
          Counsel, at the expense of the Master Servicer, to the
          effect that the failure to comply with the requirements
          of this Section 9.3 will not (i) result in the
          imposition of taxes on "prohibited transactions" on any
          REMIC as defined in Section 860F of the Code, or (ii)
          cause any REMIC to fail to qualify as a REMIC at any
          time that any Certificates are outstanding:

                    (1)   Within  90  days  prior  to  the  final
               Distribution Date set forth in the notice given by
               the  Master Servicer under Section 9.2, the Master
               Servicer  shall  prepare and the Trustee,  at  the
               expense of the "tax matters person," shall adopt a
               plan of complete liquidation within the meaning of
               Section  860F(a)(4)  of the Code  for  each  REMIC
               created  hereunder  which,  as  evidenced  by   an
               Opinion of Counsel addressed to the Trustee (which
               opinion shall not be an expense of the Trustee  or
               the Tax Matters Person), meets the requirements of
               a qualified liquidation; and

                    (2)   Within  90  days  after  the  time   of
               adoption  of  such plans of complete  liquidation,
               the  Trustee shall sell all of the assets  of  the
               Trust  Fund  to the Master Servicer  for  cash  in
               accordance with Section 9.1.

     (b)  The Trustee as agent for any REMIC established
          hereunder hereby agrees to adopt and sign such a plan
          of complete liquidation upon the written request of the
          Master Servicer, and the receipt of the Opinion of
          Counsel referred to in Section 9.3(a)(1) and to take
          such other action in connection therewith as may be
          reasonably requested by the Master Servicer.

     (c)  By their acceptance of the Certificates, the Holders
          thereof hereby authorize the Master Servicer to prepare
          and the Trustee to adopt and sign plans of complete
          liquidation.

                            ARTICLE X
                           [RESERVED]

                           ARTICLE XI
                    MISCELLANEOUS PROVISIONS

          SECTION 11.1  Amendment.

     This Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee without the
consent of any of the Certificateholders (i) to cure any
ambiguity or mistake, (ii) to correct any defective provision
herein or to supplement any provision herein which may be
inconsistent with any other provision herein, (iii) to add to the
duties of the Depositor, the Seller or the Master Servicer, (iv)
to add any other provisions with

                              -95-

<PAGE>

respect to matters or questions arising hereunder or (v) to
modify, alter, amend, add to or rescind any of the terms or
provisions contained in this Agreement; provided that any action
pursuant to clauses (iv) or (v) above shall not, as evidenced by
an Opinion of Counsel delivered to the Trustee (which Opinion of
Counsel shall not be an expense of the Trustee or the Trust
Fund), adversely affect in any material respect the interests of
any Certificateholder; provided, however, that the amendment
shall not be deemed to adversely affect in any material respect
the interests of the Certificateholders if the Person requesting
the amendment obtains a letter from each Rating Agency stating
that the amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the
Certificates; it being understood and agreed that any such letter
in and of itself will not represent a determination as to the
materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such
rating.  The Trustee, the Depositor and the Master Servicer also
may at any time and from time to time amend this Agreement
without the consent of the Certificateholders to modify,
eliminate or add to any of its provisions to such extent as shall
be necessary or helpful to (i) maintain the qualification of any
REMIC established hereunder as a REMIC under the Code, (ii) avoid
or minimize the risk of the imposition of any tax on any REMIC
established hereunder pursuant to the Code that would be a claim
at any time prior to the final redemption of the Certificates or
(iii) comply with any other requirements of the Code, provided
that the Trustee has been provided an Opinion of Counsel, which
opinion shall be an expense of the party requesting such opinion
but in any case shall not be an expense of the Trustee or the
Trust Fund, to the effect that such action is necessary or
helpful to, as applicable, (i) maintain such qualification, (ii)
avoid or minimize the risk of the imposition of such a tax or
(iii) comply with any such requirements of the Code.

     This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent
of the Holders of a Majority in Interest of each Class of
Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the
rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the
interests of the Holders of any Class of Certificates in a manner
other than as described in (i), without the consent of the
Holders of Certificates of such Class evidencing, as to such
Class, Percentage Interests aggregating 66%, or (iii) reduce the
aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment, without the consent of
the Holders of all such Certificates then outstanding.

     Notwithstanding any contrary provision of this Agreement,
the Trustee shall not consent to any amendment to this Agreement
unless it shall have first received an Opinion of Counsel, which
opinion shall not be an expense of the Trustee or the Trust Fund,
to the effect that such amendment will not cause the imposition
of any tax on the REMIC established hereunder or the
Certificateholders or cause any REMIC established hereunder to
fail to qualify as a REMIC at any time that any Certificates are
outstanding.

     Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the
Trustee shall furnish written notification of the substance or a
copy of such amendment to each Certificateholder and each Rating
Agency.

                              -96-

<PAGE>

     It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular
form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.

     Nothing in this Agreement shall require the Trustee to enter
into an amendment without receiving an Opinion of Counsel (which
Opinion shall not be an expense of the Trustee or the Trust
Fund), satisfactory to the Trustee that (i) such amendment is
permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with;
and (ii) either (A) the amendment does not adversely affect in
any material respect the interests of any Certificateholder or
(B) the conclusion set forth in the immediately preceding clause
(A) is not required to be reached pursuant to this Section 11.1.

          SECTION 11.2  Recordation of Agreement; Counterparts.

     This Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or
other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any
other appropriate public recording office or elsewhere, such
recordation to be effected by the Master Servicer at its expense,
but only upon direction a majority of the Certificateholders to
the effect that such recordation materially and beneficially
affects the interests of the Certificateholders.

     For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this
Agreement may be executed (by facsimile or otherwise)
simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.

          SECTION 11.3  Governing Law.

     THIS AGREEMENT (OTHER THAN SECTION 2.1 HEREOF) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.  SECTION 2.1 OF
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND
THE CERTIFICATEHOLDERS UNDER SUCH SECTION SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

          SECTION 11.4  Intention of Parties.

     (a)  It is the express intent of the parties hereto that the
          conveyance of the Trust Fund by the Depositor to the
          Trustee be, and be construed as, absolute sales thereof
          to the Trustee. It is, further, not the intention of
          the parties that such conveyances be

                              -97-

<PAGE>

          deemed a pledge thereof by the Depositor to the
          Trustee.  However, in the event that, notwithstanding
          the intent of the parties, such assets are held to be
          the property of the Depositor, or if for any other
          reason this Agreement is held or deemed to create a
          security interest in such assets, then (i) this
          Agreement shall be deemed to be a security agreement
          within the meaning of the Uniform Commercial Code of
          the State of New York and (ii) the conveyance provided
          for in this Agreement shall be deemed to be an
          assignment and a grant by the Depositor to the Trustee,
          for the benefit of the Certificateholders, of a
          security interest in all of the assets that constitute
          the Trust Fund, whether now owned or hereafter
          acquired.

               The Depositor, for the benefit of the
          Certificateholders, shall, to the extent consistent
          with this Agreement, take such actions as may be
          necessary to ensure that, if this Agreement were deemed
          to create a security interest in the Trust Fund, such
          security interest would be deemed to be a perfected
          security interest of first priority under applicable
          law and will be maintained as such throughout the term
          of the Agreement. The Depositor shall arrange for
          filing any Uniform Commercial Code continuation
          statements in connection with any security interest
          granted or assigned to the Trustee for the benefit of
          the Certificateholders.

          SECTION 11.5  Notices.

     (a)  The Trustee shall use its best efforts to promptly
          provide notice to each Rating Agency with respect to
          each of the following of which it has actual knowledge:

               (1)  Any material change or amendment to this
                    Agreement;

               (2)  The occurrence of any Event of Default that
                    has not been cured;

               (3)  The resignation or termination of the Master
                    Servicer or the Trustee and the appointment
                    of any successor;

               (4)  The repurchase or substitution of Mortgage
                    Loans pursuant to Section 2.3; and

               (5)  The final payment to Certificateholders.

               (6)  Any rating action involving the long-term
                    credit rating of the Master Servicer, which
                    notice shall be made by first-class mail
                    within two Business Days after the Trustee
                    gains actual knowledge thereof.

     In addition, the Trustee shall promptly furnish to each
Rating Agency copies of the following:

               (7)  Each report to Certificateholders described
                    in Section 4.6;

               (8)  Each annual statement as to compliance
                    described in Section 3.16;

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<PAGE>

               (9)  Each annual independent public accountants'
                    servicing report described in Section 3.17;
                    and

               (10) Any notice of a purchase of a Mortgage Loan
                    pursuant to Section 2.2, 2.3 or 3.11.

     (b)  All directions, demands, authorizations, consents,
          waivers, communications and notices hereunder shall be
          in writing and shall be deemed to have been duly given
          when delivered to by first class mail, facsimile or
          courier (a) in the case of the Depositor, First Horizon
          Asset Securities Inc., 4000 Horizon Way, Irving, Texas
          75063, Attention: Wade Walker; (b) in the case of the
          Master Servicer, First Horizon Home Loan Corporation,
          4000 Horizon Way, Irving, Texas 75063, Attention: Larry
          P. Cole or such other address as may be hereafter
          furnished to the Depositor and the Trustee by the
          Master Servicer in writing; (c) in the case of the
          Trustee, The Bank of New York, 101 Barclay Street, 8W,
          New York, New York 10286, Attention: Diane Pickett, or
          such other address as the Trustee may hereafter furnish
          to the Depositor or Master Servicer; and (d) in the
          case of the Rating Agencies, the address specified
          therefor in the definition corresponding to the name of
          such Rating Agency. Notices to Certificateholders shall
          be deemed given when mailed, first class postage
          prepaid, to their respective addresses appearing in the
          Certificate Register.

          SECTION 11.6  Severability of Provisions.

     If any one or more of the covenants, agreements, provisions
or terms of this Agreement shall be for any reason whatsoever
held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the
Holders thereof.

          SECTION 11.7  Assignment.

     Notwithstanding anything to the contrary contained herein,
except as provided in Section 6.2, this Agreement may not be
assigned by the Master Servicer without the prior written consent
of the Trustee and Depositor.

          SECTION 11.8  Limitation on Rights of Certificateholders.

     The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the trust created hereby,
nor entitle such Certificateholder's legal representative or
heirs to claim an accounting or to take any action or commence
any proceeding in any court for a petition or winding up of the
trust created hereby, or otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.

     No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the
parties hereto, nor shall anything herein set forth or contained
in the terms of the Certificates be construed so as to constitute
the Certificateholders from time to time as partners or members

                              -99-

<PAGE>

of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.

     No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute
any suit, action or proceeding in equity or at law upon or under
or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of an Event of
Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates shall also
have made written request to the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity
as it may require against the costs, expenses, and liabilities to
be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action,
suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder or to
enforce any right under this Agreement, except in the manner
herein provided and for the common benefit of all
Certificateholders. For the protection and enforcement of the
provisions of this Section 11.8, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

          SECTION 11.9  Inspection and Audit Rights.

     The Master Servicer agrees that, on reasonable prior notice,
it will permit and will cause each Subservicer to permit any
representative of the Depositor or the Trustee during the Master
Servicer's normal business hours, to examine all the books of
account, records, reports and other papers of the Master Servicer
relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent
certified public accountants selected by the Depositor or the
Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees and
independent public accountants (and by this provision the Master
Servicer hereby authorizes said accountants to discuss with such
representative such affairs, finances and accounts), all at such
reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Depositor
or the Trustee of any right under this Section 11.9 shall be
borne by the party requesting such inspection; all other such
expenses shall be borne by the Master Servicer or the related
Subservicer.

          SECTION 11.10  Certificates Nonassessable and Fully Paid.

     It is the intention of the Depositor that Certificateholders
shall not be personally liable for obligations of the Trust Fund,
that the interests in the Trust Fund represented by the
Certificates shall be nonassessable for any reason whatsoever,
and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully
paid.

                              -100-

<PAGE>

          SECTION 11.11  Limitations on Actions; No Proceedings.

     (a)  Other than pursuant to this Agreement, or in connection
          with or incidental to the provisions or purposes of
          this Agreement, the trust created hereunder shall not
          (i) issue debt or otherwise borrow money, (ii) merge or
          consolidate with any other entity reorganize, liquidate
          or transfer all or substantially all of its assets to
          any other entity, or (iii) otherwise engage in any
          activity or exercise any power not provided for in this
          Agreement.

     (b)  Notwithstanding any prior termination of this
          Agreement, the Trustee, the Master Servicer and the
          Depositor shall not, prior to the date which is one
          year and one day after the termination of this
          Agreement, acquiesce, petition or otherwise invoke or
          cause any Person to invoke the process of any court or
          government authority for the purpose of commencing or
          sustaining a case against the Depositor or the Trust
          Fund under any federal or state bankruptcy, insolvency
          or other similar law or appointing a receiver,
          liquidator, assignee, trustee, custodian, sequestrator
          or other similar official of the Depositor or the Trust
          Fund or any substantial part of their respective
          property, or ordering the winding up or liquidation of
          the affairs of the Depositor or the Trust Fund.

          SECTION 11.12  Acknowledgment of Seller.

     Seller hereby acknowledges the provisions of this Agreement,
including the obligations under Sections 2.1(a), 2.2, 2.3(b) and
8.11 of this Agreement and further acknowledges the Depositor's
assignment of its rights and remedies for the breach of the
representations and warranties made by the Seller under the MLPA.


                           * * * * * *













                              -101-

<PAGE>

     IN WITNESS WHEREOF, the Depositor, the Trustee and the
Master Servicer have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day
and year first above written.

                              FIRST HORIZON ASSET SECURITIES
                              INC.,
                              as Depositor


                              By:_______________________________
                                   Wade Walker
                                    Senior Vice President -
                                    Asset Securitization


                              THE BANK OF NEW YORK,
                              not in its individual capacity, but
                              solely as Trustee


                              By:_______________________________
                                   Diane Pickett
                                   Vice President


                              FIRST HORIZON HOME LOAN
                              CORPORATION, in its capacity as
                              Master Servicer


                              By:_______________________________
                                   Wade Walker
                                    Senior Vice President -
                                    Asset Securitization

The foregoing agreement is hereby
acknowledged and accepted as of the
date first above written:

FIRST HORIZON HOME LOAN CORPORATION,
in its capacity as Seller

By: ________________________________
     Wade Walker
     Senior Vice President - Asset Securitization








FHASI 2004-1

Pooling and Servicing Agreement - Signature Page



<PAGE>

                           SCHEDULE I

               First Horizon Asset Securities Inc.
       Mortgage Pass-Through Certificates Series 2004-AR1

                     Mortgage Loan Schedule
                     ----------------------

              [Available Upon Request from Trustee]











                               I-1

<PAGE>

                           SCHEDULE II

               First Horizon Asset Securities Inc.
       Mortgage Pass-Through Certificates Series 2004-AR1

      Representations and Warranties of the Master Servicer
      -----------------------------------------------------

     First Horizon Home Loan Corporation ("First Horizon") hereby
makes the representations and warranties set forth in this
Schedule II to the Depositor and the Trustee, as of the Closing
Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule
II shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement")
relating to the above-referenced Series, among First Horizon, as
master servicer, First Horizon Asset Securities Inc., as
depositor, and The Bank of New York, as trustee.

          (1)  First Horizon is duly organized as a Kansas
     corporation and is validly existing and in good standing
     under the laws of the State of Kansas and is duly authorized
     and qualified to transact any and all business contemplated
     by the Pooling and Servicing Agreement to be conducted by
     First Horizon in any state in which a Mortgaged Property is
     located or is otherwise not required under applicable law to
     effect such qualification and, in any event, is in
     compliance with the doing business laws of any such state,
     to the extent necessary to ensure its ability to enforce
     each Mortgage Loan, to service the Mortgage Loans in
     accordance with the terms of the Pooling and Servicing
     Agreement and to perform any of its other obligations under
     the Pooling and Servicing Agreement in accordance with the
     terms thereof.

          (2)   First Horizon has the full corporate power and
     authority to service each Mortgage Loan, and to execute,
     deliver and perform, and to enter into and consummate the
     transactions contemplated by the Pooling and Servicing
     Agreement and has duly authorized by all necessary corporate
     action on the part of First Horizon the execution, delivery
     and performance of the Pooling and Servicing Agreement; and
     the Pooling and Servicing Agreement, assuming the due
     authorization, execution and delivery thereof by the other
     parties thereto, constitutes a legal, valid and binding
     obligation of First Horizon, enforceable against First
     Horizon in accordance with its terms, except that (a) the
     enforceability thereof may be limited by bankruptcy,
     insolvency, moratorium, receivership and other similar laws
     relating to creditors' rights generally and (b) the remedy
     of specific performance and injunctive and other forms of
     equitable relief may be subject to equitable defenses and to
     the discretion of the court before which any proceeding
     therefor may be brought.

          (3)  The execution and delivery of the Pooling and
     Servicing Agreement by First Horizon, the servicing of the
     Mortgage Loans by First Horizon under the Pooling and
     Servicing Agreement, the consummation of any other of the
     transactions contemplated by the Pooling and Servicing
     Agreement, and the fulfillment of or compliance with the
     terms thereof are in the ordinary course of business of
     First Horizon and will not (A) result in a material breach
     of any term or provision of the charter or by-laws of First
     Horizon or (B) materially conflict with, result in a
     material breach, violation or acceleration of, or result in
     a material default under, the terms of any other material
     agreement or instrument to which First Horizon is a party or
     by which it may be bound,

                              II-1

<PAGE>

     or (C) constitute a material violation of any statute, order
     or regulation applicable to First Horizon of any court,
     regulatory body, administrative agency or governmental body
     having jurisdiction over First Horizon; and First Horizon is
     not in breach or violation of any material indenture or
     other material agreement or instrument, or in violation of
     any statute, order or regulation of any court, regulatory
     body, administrative agency or governmental body having
     jurisdiction over it which breach or violation may
     materially impair First Horizon's ability to perform or meet
     any of its obligations under the Pooling and Servicing
     Agreement.

          (4)  No litigation is pending or, to the best of First
     Horizon's knowledge, threatened against First Horizon that
     would prohibit the execution or delivery of, or performance
     under, the Pooling and Servicing Agreement by First Horizon.







                              II-2

<PAGE>

                          SCHEDULE III

               First Horizon Asset Securities Inc.
       Mortgage Pass-Through Certificates Series 2004-AR1

             Form of Monthly Master Servicer Report
             --------------------------------------

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                              III-1