MORTGAGE LOAN PURCHASE AGREEMENT

     THIS MORTGAGE LOAN PURCHASE AGREEMENT dated as of July 30,
2004 by and between FIRST TENNESSEE BANK NATIONAL ASSOCIATION
(the "Seller"), and FIRST HORIZON ASSET SECURITIES INC., a
Delaware corporation (the "Purchaser").

     WHEREAS, the Seller owns certain Mortgage Loans (as
hereinafter defined) which Mortgage Loans are more particularly
listed and described in Schedule A attached hereto and made a
part hereof.

     WHEREAS, the Seller and the Purchaser wish to set forth the
terms pursuant to which the Mortgage Loans, excluding the
servicing rights thereto, are to be sold by the Seller to the
Purchaser.

     WHEREAS, First Tennessee Mortgage Services, Inc. ("FTMSI")
owns the servicing rights to the Mortgage Loans pursuant to the
Servicing Rights Transfer and Subservicing Agreement (as
hereinafter defined).

     WHEREAS, the Seller has engaged FTMSI to service the
mortgage Loans pursuant to the Servicing Agreement (as
hereinafter defined).

     NOW, THEREFORE, in consideration of the foregoing, other
good and valuable consideration, and the mutual terms and
covenants contained herein, the parties hereto agree as follows:

                            ARTICLE I
                           Definitions
                           -----------

     AGREEMENT:  This Mortgage Loan Purchase Agreement, as the
same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms hereof.

     CLOSING DATE:  July 30, 2004.

     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.

                               -1-

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     CUSTODIAN:  First Tennessee Bank National Association, and
its successors and assigns, as custodian under the Custodial
Agreement dated as of July 30, 2004 by and among The Bank of New
York, as trustee, First Horizon Home Loan Corporation, as master
servicer, and the Custodian.

     CUT-OFF DATE:  July 1, 2004.

     DELAY DELIVERY MORTGAGE LOANS:  The Mortgage Loans for which
all or a portion of a related Mortgage File is not delivered to
the Trustee or to the Custodian on its behalf 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.

     FHHLC:  First Horizon Home Loan Corporation, a Kansas
corporation, in its capacity as the seller of the Mortgage Loans
pursuant to MLPA I.

     GAAP:  Generally applied accounting principals as in effect
from time to time in the United States of America.

     MLPA I:  The mortgage loan purchase agreement, dated as of
July 30, 2004, between First Horizon Home Loan Corporation, as
seller, and First Tennessee Bank National Association, as
purchaser, as related to the transfer, sale and conveyance of the
Mortgage Loans.

     MERS:  Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of
Delaware, or any successor thereto.

     MERS MORTGAGE LOAN:  Any Mortgage Loan registered with MERS
on the MERS System.

     MERS (R) SYSTEM:  The system of recording transfers of
mortgages electronically maintained by MERS.

     MIN:  The Mortgage Identification Number for any MERS
Mortgage Loan.

     MOM LOAN:  Any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns.

     MORTGAGE:  The mortgage, deed of trust or other instrument
creating a first lien on the property securing a Mortgage Note.

     MORTGAGE FILE:  The mortgage documents listed in Section 3.1
pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Mortgage File pursuant to
this Agreement.

     MORTGAGE LOANS:  The mortgage loans transferred, sold and
conveyed by the Seller to the Purchaser, pursuant to this
Agreement.

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

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     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.

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

     PURCHASE PRICE:  $222,252,552.20.

     PURCHASER:  First Horizon Asset Securities Inc., a Delaware
corporation, in its capacity as purchaser of the Mortgage Loans
from the Seller pursuant to this Agreement.

     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.

     SECURITY AGREEMENT: The security agreement with respect to a
Cooperative Loan.

     SELLER:  First Tennessee Bank National Association, and its
successors and assigns, in its capacity as seller of the Mortgage
Loans pursuant to this Agreement.

     SERVICING AGREEMENT:  The servicing agreement, dated as of
November 26, 2002 by and between First Tennessee Bank National
Association and its assigns, as owner, and First Tennessee
Mortgage Services, Inc., as servicer.

     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.

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

                           ARTICLE II
                        Purchase and Sale
                        -----------------

     Section 2.1    PURCHASE PRICE.  In consideration for the
payment to it of the Purchase Price on the Closing Date, pursuant
to written instructions delivered by the Seller to the Purchaser
on the Closing Date, the Seller does hereby transfer, sell and
convey to the Purchaser on the Closing Date, but with effect from
the Cut-off Date, without recourse, (i) all right, title and
interest of the Seller in the Mortgage Loans, excluding the
servicing rights thereto, and all property securing such Mortgage
Loans, including all interest and principal received or
receivable by the Seller with respect to the Mortgage Loans on or
after the Cut-off Date and all interest and principal payments on
the Mortgage Loans received on or prior to the Cut-off Date in
respect of installments of interest and principal due thereafter,
but not including payments of principal and interest due and
payable on the Mortgage Loans on or before the Cut-off Date, (ii)
all of the Seller's rights as Purchaser under MLPA I including,
without limitation, the rights of

                               -3-

<PAGE>

the Seller to require FHHLC to cure breaches of representations
and warranties with respect to the Mortgage Loans as provided
thereunder, (iii) all right, title and interest of the Seller in,
to and under the Servicing Agreement, and (iv) all proceeds from
the foregoing.  Items (i) through (iv) in the preceding sentence
are herein referred to collectively as "Mortgage Assets."

     Section 2.2    TIMING.  The sale of the Mortgage Assets
hereunder shall take place on the Closing Date.

                           ARTICLE III
                     Conveyance and Delivery
                     -----------------------

     Section 3.1    DELIVERY OF MORTGAGE FILES.  In connection
with the transfer and assignment set forth in Section 2.1 above,
the Seller has delivered or caused to be delivered to the Trustee
or to 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 to the Custodian on its behalf within thirty (30)
days following the Closing Date) the following documents or
instruments with respect to each Mortgage Loan so assigned
(collectively, the "Mortgage Files"):

     (a)       (1)  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

               (2)  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;

     (b)  except as provided below and for each Mortgage Loan
          that is not a MERS Mortgage Loan, the original recorded
          Mortgage or a copy of such Mortgage certified by the
          Seller as being a true and complete copy of the
          Mortgage, and in the case of each MERS Mortgage Loan,
          the original Mortgage, noting the presence of the MIN
          of the Mortgage Loans and either language indicating
          that the Mortgage Loan is a MOM Loan if the Mortgage
          Loan is a MOM Loan or if the Mortgage Loan was not a
          MOM Loan at origination, the original Mortgage and the
          assignment thereof to MERS, with evidence of recording
          indicated thereon, or a copy of the Mortgage certified
          by the public recording office in which such Mortgage
          has been recorded;

     (c)  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

                               -4-

<PAGE>

          returned from the applicable public recording office,
          such assignment of the Mortgage may exclude the
          information to be provided by the recording office;

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

     (e)  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

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

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

               (2)  The executed Security Agreement;

               (3)  The executed Proprietary Lease;

               (4)  The executed Recognition Agreement;

               (5)  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

               (6)  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).

                           ARTICLE IV
                 Representations and Warranties
                 ------------------------------

     Section 4.1    REPRESENTATIONS AND WARRANTIES OF THE SELLER.

          (a)  The Seller hereby represents and warrants to the
     Purchaser, as of the date of execution and delivery hereof,
     that:

               (1)  The Seller is duly organized as a national
          banking association and is validly existing under the
          laws of the United States of America and is duly
          authorized and qualified to transact any and all
          business contemplated by this Agreement to be conducted
          by the Seller in any state in which a Mortgaged
          Property is located or is otherwise not required under
          applicable law to effect such

                               -5-

<PAGE>

          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 and to perform any of its other
          obligations under this Agreement in accordance with the
          terms thereof.

               (2)  The Seller has the requisite power and
          authority to sell each Mortgage Loan, and to execute,
          deliver and perform, and to enter into and consummate
          the transactions contemplated by this Agreement and has
          duly authorized by all necessary action on the part of
          the Seller the execution, delivery and performance of
          this Agreement; and this Agreement, assuming the due
          authorization, execution and delivery thereof by the
          other parties thereto, constitutes a legal, valid and
          binding obligation of the Seller, enforceable against
          the Seller 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 or of creditors of depository institutions,
          the accounts of which are insured by the FDIC, 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 this Agreement
          by the Seller, the sale of the Mortgage Loans by the
          Seller under this Agreement, the consummation of any
          other of the transactions contemplated by this
          Agreement, and the fulfillment of or compliance with
          the terms thereof are in the ordinary course of
          business of the Seller and will not (a) result in a
          material breach of any term or provision of the charter
          or by-laws of the Seller 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 the Seller is a party or by which it may be
          bound, or (c) constitute a material violation of any
          statute, order or regulation applicable to the Seller
          of any court, regulatory body, administrative agency or
          governmental body having jurisdiction over the Seller,
          other than such conflicts, breaches, violations,
          accelerations or defaults which, individually or on a
          cumulative basis, would not have a material adverse
          effect on the Seller and its subsidiaries, taken as a
          whole, or the consummation of the transactions
          contemplated by this Agreement; and the Seller 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 the Seller's ability to
          perform or meet any of its obligations under this
          Agreement.

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

          (b)  The Seller hereby assigns, transfers and conveys
     to the Purchaser all of its rights with respect to the
     Mortgage Loans including, without limitation, the

                               -6-

<PAGE>

     representations and warranties of FHHLC made pursuant to
     MLPA I, together with all rights of the Seller to require
     FHHLC to cure any breach thereof or to repurchase or
     substitute for any affected Mortgage Loan in accordance with
     MLPA I.

     It is understood and agreed that the obligation under MLPA I
of FHHLC to cure, repurchase or replace any Mortgage Loan as to
which a breach has occurred and is continuing shall constitute
the sole remedy, which may be enforced solely against FHHLC and
not the Seller, respecting such breach available to the Purchaser
on its behalf.

     The representations and warranties contained in this
Agreement shall not be construed as a warranty or guaranty by the
Seller as to the future payments by any Mortgagor.

     It is understood and agreed that the representations and
warranties set forth in this Section 4.1 shall survive the sale
of the Mortgage Loans to the Purchaser hereunder.

                            ARTICLE V
                          Miscellaneous
                          -------------

     Section 5.1    TRANSFER INTENDED AS SALE.  It is the express
intent of the parties hereto that the conveyance of the Mortgage
Loans by the Seller to the Purchaser be, and be construed as, an
absolute sale thereof in accordance with GAAP and for regulatory
purposes.  It is, further, not the intention of the parties that
such conveyances be deemed a pledge thereof by the Seller to the
Purchaser.  However, in the event that, notwithstanding the
intent of the parties, the Mortgage Loans are held to be the
property of the Seller or the Purchaser, respectively, 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 Texas and (ii) the
conveyance of the Mortgage Loans provided for in this Agreement
shall be deemed to be an assignment and a grant by the Seller to
the Purchaser of a security interest in all of the Mortgage
Loans, whether now owned or hereafter acquired.

     The Seller and the Purchaser 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 Mortgage Loans, 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 Seller and the Purchaser shall
arrange for filing any Uniform Commercial Code continuation
statements in connection with any security interest granted
hereby.

     Section 5.2    SELLER'S CONSENT TO ASSIGNMENT.  The Seller
hereby acknowledges the Purchaser's right to assign, transfer and
convey all of the Purchaser's rights under this Agreement to a
third party and that the representations and warranties made by
FHHLC to the Seller pursuant to MLPA I will, in the case of such
assignment, transfer and conveyance, be for the benefit of such
third party.  The Seller hereby consents to such assignment,
transfer and conveyance.

     Section 5.3    SPECIFIC PERFORMANCE.  Either party or its
assignees may enforce specific performance of this Agreement.

                               -7-

<PAGE>

     Section 5.4    NOTICES.  All notices, demands and requests
that may be given or that are required to be given hereunder
shall be sent by United States certified mail, postage prepaid,
return receipt requested, to the parties at their respective
addresses as follows:



          If to the Purchaser:     4000 Horizon Way
                                   Irving, Texas 75063
                                   Attn: Larry P. Cole

          If to the Seller:        165 Madison Avenue
                                   Memphis, Tennessee 38103
                                   Attn: Clyde A. Billings, Jr.

     Section 5.5    CHOICE OF LAW.  This Agreement shall be
construed in accordance with and governed by the substantive laws
of the State of Texas applicable to agreements made and to be
performed  in the State of Texas and the obligations, rights and
remedies of the parties hereto shall be determined in accordance
with such laws.

     Section 5.6    ACKNOWLEDGMENT OF FHHLC.  FHHLC hereby
acknowledges the provisions of this Agreement, including the
duties of FHHLC created hereunder and the assignment of the
representations and warranties made by FHHLC to the Seller
pursuant to MLPA I.









                               -8-

<PAGE>

     IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed hereto by their respective officers
thereunto duly authorized as of the 30th day of July, 2004.

                              FIRST TENNESSEE BANK NATIONAL
                              ASSOCIATION, as Seller


                              By:  /s/  WADE WALKER
                                 ----------------------------
                                   Wade Walker
                                   Senior Vice President

                              FIRST HORIZON ASSET SECURITIES
                              INC., as Purchaser


                              By:  /s/  WADE WALKER
                                 ----------------------------
                                   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 the seller pursuant to MLPA I


By: /s/  WADE WALKER
   -----------------------------------
     Wade Walker
     Senior Vice President -
       Asset Securitization





Mortgage Loan Purchase Agreement II - 2004-AA3 Signature Page

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