LOGO) FIRST HORIZON HOME LOANS

Arthur Andersen L.L.P.
100 Peabody Place, Suite 1100
Memphis, TN 38103-3625

Dear Sirs:

As of and for the year ended  December 31, 1999,  FT Mortgage  Companies and its
wholly-owned subsidiary, First Tennessee Mortgage Services, Inc. (the "Company")
has  complied in all  material  respects,  except for the matters  disclosed  in
Exhibit  I, with the  minimum  servicing  standards  set  forth in the  Mortgage
Bankers Association of America's Uniform Single Attestation Program for Mortgage
Bankers.  As of and for this same  period,  the Company had in effect a fidelity
bond policy in the amount of $70,000,000  and an errors and omissions  policy in
the amount of $50,000,000.

Gary B. Klinger
Cheif Financial Officer

February 28, 2000


First Horizon Home Loan Corporation
4000 Horizon Way
Irving, TX 75063
Phone: 214-441-4000
Fax: 214-441-5096


EXHIBIT I

Matter #1:

The Company is required to maintain a loan  servicing file for each of the loans
it services.  During an inventory  of files in prior  years,  the Company  noted
several missing files.

Management Corrective Action:

The  Company  maintains   collateral   documentation  files  with  the  document
custodians.  For the existing  portfolio,  internal loan servicing files will be
recreated as necessary.  During 1998, the Company implemented imaging technology
which has and will continue to substantially  reduce loss of internal  documents
in the future.

Matter #2:

The Company is required to perform  reconciliations  on a monthly  basis for all
custodial  bank accounts and related bank clearing  accounts.  Furthermore,  the
USAP Minimum Servicing  Standards require that these  reconciliations  are to be
mathematically  accurate,  reviewed  and  approved  by  someone  other  than the
preparer, and shall document any explanations for reconciling items (which shall
be resolved within 90 calendar days of their original  identification).  Testing
during the current year  revealed (1) 18 of 35  schedule/schedule  principal and
interest accounts that were not reconciled to the expected minimum principal and
interest, (2) 26 of 391 reconciliations that had unlocated  differences,  (3) 36
of 391 reconciliations that were not independently reviewed by a supervisor, and
(4) 42 of 391 reconciliations that had aged reconciling items over 90 days.

Management Corrective Action:

The Company has established a policy ensuring all schedule/schedule accounts are
reconciled  to  the  expected   minimum   principal   and   interest,   and  all
reconcilements have appropriate  documentation.  In addition,  a policy has been
implemented  requiring  manager  approval  on all  accounts  within  7  days  of
completion  of the  reconciliation.  This  is  managed  via a log  tracking  all
accounts open with outstanding items. Also, the Company has established a system
of management  reporting that emphasizes  accounts with outstanding  reconciling
items and the specific age of those unexplained  differences.  These reports are
submitted to senior management on a weekly basis.


Matter #3:

The Company is required to maintain a system of adequately safeguarding unissued
checks so as to prevent  unauthorized  access.  During  testing,  personnel  had
unsupervised access to the check printing room.

Management Corrective Action:

Subsequent to the testing,  the Company  eliminated access to the check printing
room and check stock for all  non-essential  personnel,  and written  procedures
were given to each department regarding proper security.