Exhibit 4.1 



	
 


	
FIRST HORIZON ASSET
  SECURITIES INC.


	
 


	
Depositor


	
 


	
FIRST HORIZON HOME
  LOANS


	
 


	
Master Servicer


	
 


	
and


	
 


	
THE BANK OF NEW YORK


	
 


	
Trustee


	
 


	



	
 


	
POOLING AND SERVICING
  AGREEMENT


	
 


	
Dated as of June 1,
  2007


	
 


	




	
 


	
FIRST HORIZON
  ALTERNATIVE MORTGAGE SECURITIES TRUST 2007-AA2


	
 


	
MORTGAGE PASS-THROUGH
  CERTIFICATES, SERIES 2007-AA2










TABLE OF CONTENTS


	
 

	
 

	
 

	
 


	
ARTICLE I DEFINITIONS

	
 

	
5


	
 

	
 

	
 


	
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
  REPRESENTATIONS AND WARRANTIES

	
 

	
36


	
SECTION 2.1

	
Conveyance of Mortgage Loans

	
 

	
36


	
SECTION 2.2

	
Acceptance by Trustee of the Mortgage Loans

	
 

	
40


	
SECTION 2.3

	
Representations and Warranties of the Master
  Servicer;  Covenants of the Seller

	
 

	
43


	
SECTION 2.4

	
Representations and Warranties of the Depositor as
  to the Mortgage Loans

	
 

	
45


	
SECTION 2.5

	
Delivery of Opinion of Counsel in Connection with
  Substitutions

	
 

	
45


	
SECTION 2.6

	
Execution and Delivery of Certificates

	
 

	
46


	
SECTION 2.7

	
REMIC Matters

	
 

	
46


	
SECTION 2.8

	
Covenants of the Master Servicer

	
 

	
46


	
 

	
 

	
 

	
 


	
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE
  LOANS

	
 

	
50


	
SECTION 3.1

	
Master Servicer to Service Mortgage Loans

	
 

	
50


	
SECTION 3.2

	
Subservicing; Enforcement of the Obligations of
  Servicers

	
 

	
51


	
SECTION 3.3

	
Rights of the Depositor and the Trustee in Respect
  of the Master Servicer

	
 

	
52


	
SECTION 3.4

	
Trustee to Act as Master Servicer

	
 

	
52


	
SECTION 3.5

	
Collection of Mortgage Loan Payments; Certificate
  Account; Distribution Account

	
 

	
53


	
SECTION 3.6

	
Collection of Taxes, Assessments and Similar Items;
  Escrow Accounts

	
 

	
56


	
SECTION 3.7

	
Access to Certain Documentation and Information
  Regarding the Mortgage Loans

	
 

	
56


	
SECTION 3.8

	
Permitted Withdrawals from the Certificate Account
  and Distribution Account

	
 

	
57


	
SECTION 3.9

	
Maintenance of Hazard Insurance; Maintenance of
  Primary Insurance Policies

	
 

	
58


	
SECTION 3.10

	
Enforcement of Due-on-Sale Clauses; Assumption
  Agreements

	
 

	
60


	
SECTION 3.11

	
Realization Upon Defaulted Mortgage Loans;
  Repurchase of Certain Mortgage Loans

	
 

	
61


	
SECTION 3.12

	
Trustee to Cooperate; Release of Mortgage Files

	
 

	
64


	
SECTION 3.13

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

	
 

	
64


	
SECTION 3.14

	
Master Servicing Compensation

	
 

	
65


	
SECTION 3.15

	
Access to Certain Documentation

	
 

	
65


	
SECTION 3.16

	
Annual Statement as to Compliance

	
 

	
66


	
SECTION 3.17

	
Errors and Omissions Insurance; Fidelity Bonds

	
 

	
66


	
SECTION 3.18

	
Notification of Adjustments

	
 

	
66


	
 

	
 

	
 

	
 


	
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER
  SERVICER

	
 

	
67


	
SECTION 4.1

	
Advances

	
 

	
67


	
SECTION 4.2

	
Priorities of Distribution

	
 

	
67


	
SECTION 4.3

	
Method of Distribution

	
 

	
71





i






	
 

	
 

	
 

	
 


	
SECTION 4.4

	
Allocation of Losses

	
 

	
72


	
SECTION 4.5

	
[RESERVED]

	
 

	
74


	
SECTION 4.6

	
Monthly Statements to Certificateholders

	
 

	
74


	
 

	
 

	
 

	
 


	
ARTICLE V THE CERTIFICATES

	
 

	
76


	
SECTION 5.1

	
The Certificates

	
 

	
76


	
SECTION 5.2

	
Certificate Register; Registration of Transfer and
  Exchange of Certificates

	
 

	
77


	
SECTION 5.3

	
Mutilated, Destroyed, Lost or Stolen Certificates

	
 

	
83


	
SECTION 5.4

	
Persons Deemed Owners

	
 

	
84


	
SECTION 5.5

	
Access to List of Certificateholders’ Names and
  Addresses

	
 

	
84


	
SECTION 5.6

	
Maintenance of Office or Agency

	
 

	
84


	
 

	
 

	
 

	
 


	
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER

	
 

	
84


	
SECTION 6.1

	
Respective Liabilities of the Depositor and the
  Master Servicer

	
 

	
84


	
SECTION 6.2

	
Merger or Consolidation of the Depositor or the
  Master Servicer

	
 

	
84


	
SECTION 6.3

	
Limitation on Liability of the Depositor, the Master
  Servicer and Others

	
 

	
85


	
SECTION 6.4

	
Limitation on Resignation of Master Servicer

	
 

	
86


	
 

	
 

	
 

	
 


	
ARTICLE VII DEFAULT

	
 

	
86


	
SECTION 7.1

	
Events of Default

	
 

	
86


	
SECTION 7.2

	
Trustee to Act; Appointment of Successor

	
 

	
88


	
SECTION 7.3

	
Notification to Certificateholders

	
 

	
90


	
 

	
 

	
 

	
 


	
ARTICLE VIII CONCERNING THE TRUSTEE

	
 

	
90


	
SECTION 8.1

	
Duties of Trustee

	
 

	
90


	
SECTION 8.2

	
Certain Matters Affecting the Trustee

	
 

	
92


	
SECTION 8.3

	
Trustee Not Liable for Certificates or Mortgage
  Loans

	
 

	
93


	
SECTION 8.4

	
Trustee May Own Certificates

	
 

	
93


	
SECTION 8.5

	
Trustee’s Fees and Expenses

	
 

	
94


	
SECTION 8.6

	
Eligibility Requirements for Trustee

	
 

	
94


	
SECTION 8.7

	
Resignation and Removal of Trustee

	
 

	
95


	
SECTION 8.8

	
Successor Trustee

	
 

	
96


	
SECTION 8.9

	
Merger or Consolidation of Trustee

	
 

	
96


	
SECTION 8.10

	
Appointment of Co-Trustee or Separate Trustee

	
 

	
96


	
SECTION 8.11

	
Tax Matters

	
 

	
98


	
 

	
 

	
 

	
 


	
ARTICLE IX TERMINATION

	
 

	
100


	
SECTION 9.1

	
Termination upon Liquidation or Purchase of all
  Mortgage Loans

	
 

	
100


	
SECTION 9.2

	
Final Distribution on the Certificates

	
 

	
100


	
SECTION 9.3

	
Additional Termination Requirements

	
 

	
101


	
 

	
 

	
 

	
 


	
ARTICLE X EXCHANGE ACT REPORTING

	
 

	
102


	
SECTION 10.1

	
Filing Obligations

	
 

	
102


	
SECTION 10.2

	
Form 10-D Filings

	
 

	
102


	
SECTION 10.3

	
Form 8-K Filings

	
 

	
103


	
SECTION 10.4

	
Form 10-K Filings

	
 

	
104





ii






	
 

	
 

	
 

	
 


	
SECTION 10.5

	
Sarbanes-Oxley Certification

	
 

	
104


	
SECTION 10.6

	
Form 15 Filing

	
 

	
105


	
SECTION 10.7

	
Report on Assessment of Compliance and Attestation

	
 

	
105


	
SECTION 10.8

	
Use of Subservicers and Subcontractors

	
 

	
106


	
SECTION 10.9

	
Amendments

	
 

	
107


	
 

	
 

	
 

	
 


	
ARTICLE XI MISCELLANEOUS PROVISIONS

	
 

	
108


	
SECTION 11.1

	
Amendment

	
 

	
108


	
SECTION 11.2

	
Recordation of Agreement; Counterparts

	
 

	
109


	
SECTION 11.3

	
Governing Law

	
 

	
109


	
SECTION 11.4

	
Intention of Parties

	
 

	
110


	
SECTION 11.5

	
Notices

	
 

	
110


	
SECTION 11.6

	
Severability of Provisions

	
 

	
111


	
SECTION 11.7

	
Assignment

	
 

	
111


	
SECTION 11.8

	
Limitation on Rights of Certificateholders

	
 

	
112


	
SECTION 11.9

	
Inspection and Audit Rights

	
 

	
112


	
SECTION 11.10

	
Certificates Nonassessable and Fully Paid

	
 

	
113


	
SECTION 11.11

	
Limitations on Actions; No Proceedings

	
 

	
113


	
SECTION 11.12

	
Acknowledgment of Seller

	
 

	
113


	
 

	
 

	
 

	
 


	
 

	
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 / Regulation S 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 Subsequent Certification of Custodian

	
 

	
G-1


	
Exhibit H:

	
Transfer Affidavit

	
 

	
H-1


	
Exhibit I-1:

	
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


	
Exhibit N-1:

	
Form of Annual Certification (Subservicer)

	
 

	
N-1-1


	
Exhibit N-2:

	
Form of Annual Certification (Trustee)

	
 

	
N-2-1


	
Exhibit O:

	
Form of Servicing Criteria to be Addressed in
  Assessment of Compliance

	
 

	
O-1


	
Exhibit P:

	
List of Item 1119 Parties

	
 

	
P-1


	
Exhibit Q:

	
Form of Sarbanes-Oxley Certification

	
 

	
Q-1





iii






          THIS
POOLING AND SERVICING AGREEMENT, dated as of June 1, 2007, among FIRST HORIZON
ASSET SECURITIES INC., a Delaware corporation, as depositor (the “Depositor”),
FIRST HORIZON HOME LOANS, a division of First Tennessee Bank National
Association, 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 three 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 I-A-R
Certificates will represent the residual interests in the Lower REMIC, Middle
REMIC and Upper REMIC, as described in Section 2.7.  The “latest possible maturity date” for federal income tax
purposes of each REMIC regular interest 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]


1








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Class 

  Designation

	
 

	
Initial Class 

  Certificate Balance

	
 

	
Initial

  Pass Through 

  Rate

	
 

	
Minimum 

  Denomination

	
 

	
Integral Multiples 

  in Excess 

  Minimum

	
 

	
Final 

  Scheduled

  Distribution 

  Date(1)

	
 


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
Class I-A-1

	
 

	
$

	
191,389,000.00

	
 

	
6.1000

	
% (2)

	
 

	
$

	
25,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class I-A-2

	
 

	
$

	
14,807,000.00

	
 

	
6.1000

	
% (2)

	
 

	
$

	
25,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class I-A-3

	
 

	
 

	
(3

	
)

	
0.4192

	
% (4)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
May
  2012

	
 


	
Class I-A-R

	
 

	
$

	
100.00

	
 

	
6.5192

	
% (5)

	
 

	
$

	
100

	
 

	
$

	
N/A

	
 

	
 

	
August
  2037

	
 


	
Class II-A-1

	
 

	
$

	
19,594,000.00

	
 

	
6.0000

	
% (6)

	
 

	
$

	
25,000

	
 

	
$

	
1,000

	
 

	
 

	
July
  2037

	
 


	
Class II-A-2

	
 

	
 

	
(7

	
)

	
0.9630

	
%(8)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
May
  2017

	
 


	
Class B-1

	
 

	
$

	
8,954,000.00

	
 

	
6.5578

	
%(9)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class B-2

	
 

	
$

	
2,420,000.00

	
 

	
6.5578

	
%(9)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class B-3

	
 

	
$

	
1,815,000.00

	
 

	
6.5578

	
%(9)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class B-4

	
 

	
$

	
1,210,000.00

	
 

	
6.5578

	
%(9)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class B-5

	
 

	
$

	
968,000.00

	
 

	
6.5578

	
%(9)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 


	
Class B-6

	
 

	
$

	
847,575.56

	
 

	
6.5578

	
%(9)

	
 

	
$

	
100,000

	
 

	
$

	
1,000

	
 

	
 

	
August
  2037

	
 





(1) The actual final payment
on the Certificates could occur earlier or later than the Final Scheduled
Distribution Date.


(2) The Pass-Through Rates
for the Class I-A-1 and Class I-A-2 Certificates for each subsequent
Distribution Date will equal the Weighted Average Adjusted Net Mortgage Rate
for Pool I, 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 and any Principal Prepayments
received on or after such date and distributed to Certificateholders on the
prior Distribution Date, less 0.4192446543% through the Interest Accrual Period
ending April 30, 2012, and thereafter, the weighted average of the Net Mortgage
Rates of the Mortgage Loans in Pool I.


(3) The Class I-A-3
Certificates are Notional Amount Certificates that will accrue interest during
each Interest Accrual Period on a Notional Amount equal to the aggregate Class
Certificate Balances of the Class I-A-1 and Class I-A-2 Certificates.


(4) The Pass-Through Rate for
the Class I-A-3 Certificates will equal 0.4192446543% through the Interest
Accrual Period ending April 30, 2012, and thereafter, 0.00000%. 


(5) The Pass-Through Rate for
the Class I-A-R Certificates for each subsequent Distribution Date will equal
the Weighted Average Adjusted Net Mortgage Rate for Pool I, 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 and any Principal Prepayments received on or after such date and
distributed to Certificateholders on the prior Distribution Date.


(6) The Pass-Through Rate for
the Class II-A-1 Certificates for each subsequent Distribution Date will equal
the Weighted Average Adjusted Net Mortgage Rate for Pool II, 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 and any Principal Prepayments received on or after such
date and distributed to Certificateholders on the prior Distribution Date, less
0.9630368085% through the Interest Accrual Period ending April 30, 2017, and
thereafter, the weighted average of the Net Mortgage Rates of the Mortgage
Loans in Pool II.


(7) The Class II-A-2
Certificates are Notional Amount Certificates that will accrue interest during
each Interest Accrual Period on a Notional Amount equal to the Class
Certificate Balance of the Class II-A-1 Certificates.


(8) The Pass-Through Rate for
the Class II-A-2 Certificates will equal 0.9630368085% through the Interest
Accrual Period ending April 30, 2017, and thereafter, 0.00000%. 


(9) 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 and any Principal
Prepayments received on or after such date and distributed to
Certificateholders on the prior Distribution Date.


2







	
 

	
 

	
 


	
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, and with respect to Pool II, the Group II Senior Certificates.


	
 

	
 

	
 


	
COFI Certificates

	
 

	
None.


	
 

	
 

	
 


	
Component Certificates

	
 

	
None.


	
 

	
 

	
 


	
Components

	
 

	
None.


	
 

	
 

	
 


	
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, Class I-A-2, Class I-A-3 and Class
  I-A-R Certificates.


	
 

	
 

	
 


	
Group II Senior Certificates

	
 

	
The Class II-A-1 and Class II-A-2 Certificates.


	
 

	
 

	
 


	
Insured Retail Certificates

	
 

	
None.


	
 

	
 

	
 


	
Inverse Floating Rate Certificates

	
 

	
None.


	
 

	
 

	
 


	
LIBOR Certificates

	
 

	
None.


	
 

	
 

	
 


	
Non-Delay Certificates

	
 

	
None.


	
 

	
 

	
 


	
Notional Amount Components

	
 

	
None.


	
 

	
 

	
 


	
Notional Amount Certificates

	
 

	
The Class I-A-3 and Class II-A-2 Certificates.


	
 

	
 

	
 


	
Offered Certificates

	
 

	
All Classes of the Certificates other than the
  Private Certificates.


	
 

	
 

	
 


	
Physical Certificates

	
 

	
The Residual Certificates and the Private
  Certificates.


	
 

	
 

	
 


	
Planned Principal Classes

	
 

	
None.


	
 

	
 

	
 


	
Principal Only Certificates

	
 

	
None.


	
 

	
 

	
 


	
Private Certificates

	
 

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


	
 

	
 

	
 


	
Rating Agencies

	
 

	
Fitch 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,
  Fitch shall be the sole Rating Agency. The Class B-6 Certificates will not be
  rated.


	
 

	
 

	
 


	
Regular Certificates

	
 

	
All Classes of Certificates, other than the Residual
  Certificates.


	
 

	
 

	
 


	
Residual Certificates

	
 

	
The Class I-A-R Certificates.





3







	
 

	
 

	
 


	
Scheduled Principal Classes

	
 

	
None.


	
 

	
 

	
 


	
Senior Certificates

	
 

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


	
 

	
 

	
 


	
Senior Mezzanine Certificates

	
 

	
The Class I-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 I-A-1 Certificates.


	
 

	
 

	
 


	
Support Classes

	
 

	
None.


	
 

	
 

	
 


	
Targeted Principal Classes

	
 

	
None.


	
 

	
 

	
 


	
Underwriter

	
 

	
Bear, Stearns & Co. 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






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 (or Notional
Amount in the case of the Notional Amount Certificates) of such Class of
Certificates immediately prior to such Distribution Date, less such Class’
share of any Net Interest Shortfall.


          Additional
Designated Information: As defined in Section 10.2.


          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.


          Aggregate
Senior Percentage: For any Distribution Date, the percentage (carried to eight
decimal places) equal to (x) the sum of the Class Certificate Balances of the
Senior Certificates (other than the Notional Amount Certificates) of all
Certificate Groups immediately prior to such Distribution Date, divided by (y)
the aggregate Pool Principal Balance for all of the Mortgage Pools on such
Distribution Date. 


          Aggregate
Subordinated Percentage: For any Distribution Date, the percentage (carried to
eight decimal places) equal to (x) the sum of the Class Certificate Balances of
the Subordinated Certificates immediately prior to such Distribution Date,
divided by (y) the aggregate Pool Principal Balance for all of the Mortgage Pools
on such Distribution Date.


          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 the Subordinated Optimal Principal Amount for each Mortgage Pool; 


5






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.


          Alternative
Title Product: Any one of the following: (i) Lien Protection Insurance issued
by Integrated Loan Services or ATM Corporation of America, (ii) a Mortgage Lien
Report issued by EPN Solutions/ACRAnet, (iii) a Property Plus Report issued by
Rapid Refinance Service through SharperLending.com, or (iv) such other
alternative title insurance product that the Seller utilizes in connection with
its then current underwriting criteria.


          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 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, the Trustee Fee, any expenses and indemnities due to
  the Master Servicer and all scheduled installments of principal due in
  respect of the Mortgage Loans in such Mortgage 





6







	
 

	
 

	
 


	
 

	
 

	
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, Liquidation Proceeds and
  Unanticipated Recoveries 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


	
 

	
 

	
 


	
 

	
•

	
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 


7






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 Loans in trust for the
registered holders of First Horizon Asset Securities Inc. Mortgage Pass-Through
Certificates, Series 2007-AA2.”


          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 (other than a Notional Amount
Certificate) and as of any Distribution Date, the principal balance of such
Certificate 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, 


8






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.


          Certification
Party: As defined in Section 10.5.


          Certifying
Person: As defined in Section 10.5.


          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, plus the amount of any
Unanticipated Recoveries added to the Class Certificate Balance of such Class
of Certificate pursuant to Section 4.2(g).


          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 the Mortgage Pools with respect to such Distribution Date, equals or
exceeds such percentage calculated as of the Closing Date.


          Closing
Date: June 29, 2007.


          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 on or after the first day of the month
following the month of receipt, no additional payment is required for such
Principal Prepayment.


9






          Component:
Not applicable.


          Component
Certificates: Not applicable.


          Component
Principal Balance: 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, 4W, New
York, New York 10286 (Attn: Corporate Trust Administration—First Horizon Asset
Securities Inc. Series 2007-AA2), facsimile no. (212) 815-3986, and which is
the address to which notices to and correspondence with the Trustee should be
directed.


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


          Corresponding
Classes of Middle REMIC Interests: As to any Lower REMIC Interest identified in
Section 2.7, the Middle REMIC Interest or Middle REMIC Interests that are
identified in Section 2.7 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 June 29, 2007 by and among the
Trustee, the Master Servicer and the Custodian.


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


          Cut-off
Date: June 1, 2007.


10






          Cut-off
Date Pool Principal Balance: With respect to Pool I, $221,003,366; and with
respect to Pool II, $21,001,309.


          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 the 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.


          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.


11







          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 2007-AA2.” 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 July 2007.


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


          EDGAR:
The SEC’s Electronic Data Gathering, Analysis and Retrieval system.


          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) are rated at least “A-2” by S&P (in
the case of the Certificate Account or the Distribution Account), “P 1” by
Moody’s and “F1+” by Fitch (or a comparable rating if another Rating Agency is
specified by the Depositor by written notice to each of the Master Servicer and
the Trustee) with respect to such account or accounts at the time any amounts
are held on deposit therein, or (ii) 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 (iii)
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. In the event the depository institution
no longer meets the applicable S&P rating requirement specified above, the
funds on deposit therein in connection with this transaction shall be
transferred to an Eligible Account within 30 days.


          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.


12






          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: 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, Insurance Proceeds and/or
Unanticipated Recoveries in respect 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.


          Exchange
Act: The Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.


          Exchange
Act Reports: Any reports on Form 10-D, Form 8-K and Form 10-K required to be
filed by the Depositor with respect to the Trust Fund under the Exchange Act.


          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.


          Final
Scheduled Distribution Date: For each Certificate, as specified in the
Preliminary Statement.


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


          First
Horizon: First Horizon Home Loans, a division of First Tennessee Bank National
Association, which is a wholly-owned subsidiary of First Horizon National
Corporation, a Tennessee corporation.


          Fitch:
Fitch Ratings and its successors and/or assigns. If Fitch is designated as a
Rating Agency in the Preliminary Statement, for purposes of Section 11.5(b) the
address for notices to


13






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.


          Form
10-D Disclosure Item: With respect to any Person, any material litigation or
governmental proceedings pending against such Person, or against any of the
Trust Fund, the Depositor, the Trustee, the co-trustee, the Master Servicer or
any Subservicer that is material to the Certificateholders if such Person, as
applicable, has actual knowledge thereof.


          Form
10-K Disclosure Item: With respect to any Person, (a) any Form 10-D Disclosure
Item, and (b) any affiliations or relationships between such Person and any
Item 1119 Party other than the Depositor, the Master Servicer or any affiliate
of either.


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


          Fraud
Loss Coverage Amount: As of the Closing Date, $4,840,094. As of any
Distribution Date from the first anniversary of the Cut-off Date and prior to
the fifth anniversary of the Cut-off Date, the Fraud Loss Coverage Amount will
equal $2,420,047 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 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
Subordinate Amount: For a Mortgage Pool and any Distribution Date; the excess
of (a) the Pool Principal Balance of such Mortgage Pool for such Distribution
Date, over (b) the aggregate Class Certificate Balance of the Senior
Certificates (other than the Notional Amount Certificates) of the related
Certificate Group immediately prior to that Distribution Date.


          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: $150,000.


14






          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 (a) in respect
of Insured Expenses, (b) that is applied to the restoration of the related
Mortgaged Property, or (c) that is released to the Mortgagor in accordance with
the Master Servicer’s normal servicing procedures.


          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.


          Item
1119 Party: The Depositor, the Seller, the Master Servicer, the Trustee, any
Subservicer, any originator identified in the Prospectus Supplement and any
other material transaction party, as identified in Exhibit P hereto, as updated
pursuant to Section 10.4.


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


          Limited
Exchange Act Reporting Obligations: The obligations of the Master Servicer
under Section 3.16(b), Section 8.7 and Section 8.9 with respect to notice and
information to be provided to the Depositor and Article X (except Section
10.7(a)(i) and (ii)).


          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


15






connection
with the liquidation of such Mortgage Loan, including the final disposition of
an REO Property.


          Liquidation
Proceeds: All cash amounts, other than Insurance Proceeds and Unanticipated
Recoveries, 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 Trust Fund but
excluding, the Middle REMIC Interests, the Lower REMIC Interests, the RL
Interest, the RM Interest and the RU Interest.


          Lower
REMIC Interests: The REMIC regular interests, within the meaning of the REMIC
Provisions, issued by the Lower REMIC as set forth in Section 2.7.


          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 Loans, a division of First Tennessee Bank National
Association, 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 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: A per annum rate equal to 0.369%. 


16






          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®
System: The system of recording transfers of mortgages electronically
maintained by MERS.


          Middle
REMIC: The segregated pool of assets consisting of the Lower REMIC Interests.


          Middle
REMIC Interests: The REMIC regular interests, within the meaning of the REMIC
Provisions, issued by the Middle REMIC as set forth in Section 2.7.


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


          MLPA:
The Mortgage Loan Purchase Agreement dated as of June 29, 2007, by and between
First Horizon Home Loans, as seller, and First Horizon Asset Securities Inc.,
as purchaser, as related to the transfer, sale and conveyance of the Mortgage
Loans.


          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.


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


          Moody’s:
Moody’s Investors Service, Inc., and its successors and/or assigns. 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;


17




	
 

	
 


	
 

	
          (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;


	
 

	
 


	
 

	
          (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; 


	
 

	
 


	
 

	
          (14)
  the Master Servicing Fee for the Mortgage Loan; and


	
 

	
 


	
 

	
          (15)
  a code indicating whether the Mortgage Loan is a MERS 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: Either Pool I or Pool II.


18






          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 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 in 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: As specified in the Preliminary Statement.


          Notional
Amount Component: Not applicable.


          Notional
Amount Certificates: As specified in the Preliminary Statement.


          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


19






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.


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


          Original
Subordinated Principal Balance: The aggregate Class Certificate Balance of the
Subordinated Certificates as of the Closing Date.


          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.


20






          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.


          Performance
Certification: As defined in Section 10.5.


          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;


	
 

	
 

	
 


	
 

	
 

	
          (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)





21







	
 

	
 


	
 

	
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 as will not result
  in the downgrading or 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 


22






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
Certificates: As specified in the Preliminary Statement.


          Plan:
An employee benefit plan or other retirement arrangement which is subject to
Section 406 of ERISA and/or Section 4975 of the Code or any entity whose
underlying assets include such plan’s or arrangement’s assets by reason of
their investment in the entity.


          Planned
Balance: Not applicable.


          Planned
Principal Classes: Not applicable.


          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
Principal Balance: For a Mortgage Pool, with respect to any Distribution Date,
the aggregate of the Stated Principal Balances of the Mortgage Loans in such
Mortgage Pool which were Outstanding Mortgage Loans on the Due Date in the
month preceding the month of such Distribution Date, and for the first
Distribution Date, as of the Closing Date, less any Principal Prepayments
received on or after such Due Date and distributed to Certificateholders on the
prior 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.


23






          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
Balance Schedules: Not applicable.


          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
Certificates: As specified in the Preliminary Statement.


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


          Prospectus:
The Prospectus dated June 14, 2007 generally relating to mortgage pass-through
certificates to be sold by the Depositor.


          Prospectus
Supplement: The Prospectus Supplement, dated June 27, 2007, relating to the
Offered Certificates.


          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 


24






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) any Liquidation Proceeds, Insurance Proceeds and/or
Unanticipated Recoveries received during the month in which such liquidation
occurred (or during the calendar month preceding the related Distribution Date,
as applicable), 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, other than a Liquidated 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.


          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.


          Regulation
AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to
such clarification and interpretation as have been provided by the SEC in the
adopting release (Asset-


25






Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or its
staff from time to time.


          Regulation
S: Regulation S promulgated under the Securities Act or any successor provision
thereto, in each case as the same may be amended from time to time; and all
references to any rule, section or subsection of, or definition or term
contained in, Regulation S means such rule, section, subsection, definition or
term, as the case may be, or any successor thereto, in each case as the same
may be amended from time to time.


          Relief
Act: The Servicemembers Civil Relief Act, as amended, 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
Pool: Either of the Lower REMIC, Middle REMIC or Upper REMIC.


          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.


          Reportable
Event: Any event required to be reported on Form 8-K, and in any event, the
following:


	
 

	
 


	
 

	
          (a)
  entry into a definitive agreement related to the Trust Fund, the Certificates
  or the Mortgage Loans, or an amendment to a Transaction Document, even if the
  Depositor is not a party to such agreement (e.g., a servicing agreement with
  a servicer contemplated by Item 1108(a)(3) of Regulation AB);


	
 

	
 


	
 

	
          (b)
  termination of this Agreement or any other document entered into in
  connection with the Trust Fund, the Certificates or the Mortgage Loans (other
  than by expiration of the applicable agreement on its stated termination date
  or as a result of all parties completing their obligations under such
  agreement), even if the Depositor is not a 





26






	
 

	
 


	
 

	
party to
  such agreement (e.g., a servicing agreement with a servicer contemplated by
  Item 1108(a)(3) of Regulation AB);


	
 

	
 


	
 

	
          (c)
  with respect to the Master Servicer only, if the Master Servicer becomes
  aware of any bankruptcy or receivership with respect to First Horizon, the
  Depositor, the Master Servicer, any Subservicer, the Trustee, any co-trustee,
  any enhancement or support provider contemplated by Items 1114(b) or 1115 of
  Regulation AB, or any other material party contemplated by Item 1101(d)(1) of
  Regulation AB;


	
 

	
 


	
 

	
          (d)
  with respect to the Trustee, the Master Servicer and the Depositor only, the
  occurrence of an early amortization, performance trigger or other event,
  including an Event of Default under this Agreement;


	
 

	
 


	
 

	
          (e)
  the resignation, removal, replacement, substitution of the Trustee, the
  Master Servicer, any Subservicer, the Trustee or any co-trustee;


	
 

	
 


	
 

	
          (f)
  with respect to the Master Servicer only, if the Master Servicer becomes
  aware that (i) any material enhancement or support specified in Item
  1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB that
  was previously applicable regarding one or more classes of the Certificates
  has terminated other than by expiration of the contract on its stated
  termination date or as a result of all parties completing their obligations
  under such agreement; (ii) any material enhancement specified in Item
  1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation AB has
  been added with respect to one or more classes of the Certificates; or (iii)
  any existing material enhancement or support specified in Item 1114(a)(1)
  through (3) of Regulation AB or Item 1115 of Regulation AB with respect to
  one or more classes of the Certificates has been materially amended or
  modified; and 


	
 

	
 


	
 

	
          (g)
  with respect to the Trustee, the Master Servicer and the Depositor only, a
  required distribution to Holders of the Certificates is not made as of the
  required Distribution Date under this Agreement.





          Reporting
Subcontractor: With respect to the Master Servicer or the Trustee, any
Subcontractor determined by such Person pursuant to Section 10.8(b) to be
materially “participating in the servicing function” within the meaning of Item
1122 of Regulation AB. References to a Reporting Subcontractor shall refer only
to the Subcontractor of such Person and shall not refer to Subcontractors
generally.


          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.


27






          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.


          RL
Interest: The REMIC residual interest, within the meaning of the REMIC
Provisions, issued by the Lower REMIC, which shall be represented by the Class
I-A-R Certificate.


          RM
Interest: The REMIC residual interest, within the meaning of the REMIC
Provisions, issued by the Middle REMIC, which shall be represented by the
Class I-A-R Certificate.


          RU
Interest: The REMIC residual interest, within the meaning of the REMIC
Provisions, issued by the Upper REMIC, which shall be represented by the Class
I-A-R Certificate.


          Sarbanes-Oxley
Certification: As defined in Section 10.5.


          Scheduled
Balances: Not applicable.


          Scheduled
Certificates: Not applicable.


          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.


          SEC:
The U.S. Securities and Exchange Commission.


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


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


          Seller:
First Horizon Home Loans, a division of First Tennessee Bank National
Association, and its successors and assigns, in its capacity as seller of the
Mortgage Loans pursuant to the MLPA.


          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
Mezzanine Certificates: As specified in the Preliminary Statement.


28






          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 the sum of (a) all partial
Principal Prepayments in respect of each Mortgage Loan in such Mortgage Pool
received during the applicable Prepayment Period and (b) all Unanticipated
Recoveries received in respect of each Mortgage Loan in the related Mortgage
Pool received during the calendar month preceding such Distribution Date;


                    (4)
the lesser of:


	
 

	
 


	
 

	
          (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.


29






          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
(other than Notional Amount 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:


	
 

	
 

	
 


	
Period (Dates Inclusive)

	
 

	
Senior Prepayment Percentage


	


	
 

	



	
July 2007 – June 2014

	
 

	
100%


	
July 2014 – June 2015

	
 

	
The related
  Senior Percentage plus 70% of the related Subordinated Percentage.


	
July 2015 – June 2016

	
 

	
The related
  Senior Percentage plus 60% of the related Subordinated Percentage.


	
July 2016 – June 2017

	
 

	
The related
  Senior Percentage plus 40% of the related Subordinated Percentage.


	
July 2017 – June 2018

	
 

	
The related
  Senior Percentage plus 20% of the related Subordinated Percentage.


	
July 2018 and thereafter

	
 

	
The related
  Senior Percentage.





provided however,
(i) if on any Distribution Date, the Aggregate Senior Percentage exceeds such
percentage calculated as of the Closing Date, then the Senior Prepayment
Percentage for all Certificate Groups for such Distribution Date will equal
100%, (ii) if on any Distribution Date prior to the July 2010 Distribution
Date, the Aggregate Subordinated Percentage is greater than or equal to twice
such percentage calculated as of the Closing Date, then the Senior Prepayment
Percentage for each Certificate Group for such Distribution Date will equal the
Senior Percentage for such Certificate Group plus 50% of the Subordinated
Percentage for such Certificate Group and (iii) if on or after the July 2010
Distribution Date, the Aggregate Subordinated Percentage is greater than or
equal to twice such percentage calculated as of the Closing Date, then the
Senior Prepayment Percentage for each 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) or (iii) of the paragraph above, unless both of the following
step-down conditions are satisfied with respect to each Mortgage Pool as of the
last day of the month preceding the Distribution Date: 


	
 

	
 

	
 


	
 

	
(1)

	
the
  aggregate Stated Principal Balance of Mortgage Loans in all the Mortgage
  Pools 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
  Class Certificate Balances of the Subordinated Certificates as of that date;
  and 


	
 

	
 

	
 


	
 

	
(2)

	
cumulative
  Realized Losses on the Mortgage Loans in all the Mortgage Pools do not
  exceed:





30






	
 

	
 

	
 


	
 

	
(a) 20% of
  the Original Subordinated Principal Balance if such Distribution Date occurs
  between and including July 2007 and June 2010; and 


	
 

	
 

	
 


	
 

	
(b) 30% of
  the Original Subordinated Principal Balance if such Distribution Date occurs
  on or after July 2010. 





          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 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, as the same may be
amended from time to time in accordance with its terms.


          Servicing
Criteria: The “servicing criteria” set forth in Item 1122(d) of Regulation AB.


          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 Loans (as successor in interest to First Horizon Home Loan
Corporation), as transferor and subservicer, and First Tennessee Mortgage
Services, Inc., as transferee and servicer, as the same may be amended from
time to time in accordance with its terms.


          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, (ii) any shortfall in Insurance
Proceeds for partial damage due to the application of the co-insurance clauses
contained in a hazard insurance policy, or (iii) 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;





31







                    (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


	
 

	
 


	
 

	
          (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,
$4,160,000. As of any Distribution Date, the Special Hazard Loss Coverage
Amount shall 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, a division of The McGraw-Hill Companies, Inc., and its
successors and/or assigns. 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.


32






          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.


          Subcontractor:
Any vendor, subcontractor or other Person that is not responsible for the overall
servicing (as “servicing” is commonly understood by participants in the
mortgage-backed securities market) of Mortgage Loans but performs one or more
discrete functions identified in Item 1122(d) of Regulation AB with respect to
the Mortgage Loans under the direction or authority of the Master Servicer, a
Subservicer or the Trustee, as the case may be.


          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 (other
than the Notional Amount 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 of the Pool Principal Balances of all of the Mortgage
Pools 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;


33






                    (3)
the related Subordinated Prepayment Percentage of the sum of (a) all partial
Principal Prepayments received in respect of each Mortgage Loan in the related
Mortgage Pool during the related Prepayment Period, (b) all Unanticipated
Recoveries received in respect of each Mortgage Loan in the related Mortgage
Pool during the calendar month prior to such Distribution Date, and (c) 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 each Mortgage Loan
in the related 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 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 and each Certificate Group,
100% minus the related 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 


34






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.


          Super
Senior Support Certificates: Not applicable.


          Support
Classes: Not applicable.


          Targeted
Balances: Not applicable.


          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 I-A-R Certificates with a Denomination of
$0.01.


          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 equal to
0.006%.


35






          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: An individual administrative exemption granted by the U.S.
Department of Labor to the Underwriter providing exceptions from some of the
prohibited transaction rules of ERISA with respect to the initial purchase, the
holding and the subsequent resale by employee benefit plans in certificates in
pass-through trusts having assets and meeting conditions described therein, as
amended by Prohibited Transaction Exemption 2000-58 (65 Fed. Reg. 67765,
November 13, 2000), as amended, and Prohibited Transaction Exemption 2002-41
(67 Fed. Reg. 54487, August 22, 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 Middle 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) 97.0% of all
Voting Rights will be allocated among all Holders of the Certificates (other
than the Notional Amount Certificates and Class I-A-R Certificates) in
proportion to their then outstanding Class Certificate Balance; (b) 2.0% of all
Voting Rights will be allocated to the Holders of the Notional Amount
Certificates; and (c) 1.0% of all Voting Rights will be allocated to the
Holders of the Class I-A-R 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 





36






	
 

	
 


	
 

	
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 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 recorded 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 Seller as being
  a true and complete copy of the Mortgage;


	
 

	
 


	
 

	
          (iii)
  in the case of a Mortgage Loan that is not a MERS Mortgage Loan, a
  duly executed assignment of the Mortgage, or a copy of such assignment
  certified by the Seller as being a true and complete copy of the assignment,
  in blank (which may be included in a blanket assignment or assignments),
  together with, except as provided below, all interim recorded assignments, or
  copies of such interim assignments certified by the Seller as being true and
  complete copies of the interim 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;





37






	
 

	
 


	
 

	
          (v)
  either the original or duplicate original title policy, or a copy of such
  title policy certified by the Seller as being a true and complete copy of the
  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, or in lieu thereof, an Alternative Title Product or a
  copy of such Alternative Title Product certified by the Seller as being a
  true and complete copy of the Alternative Title Product; 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 that is not a MERS 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 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 


38






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; provided further, however, that the Depositor shall
not be required to deliver an original or duplicate lender’s title policy
(together with all riders thereto) if the Depositor delivers an Alternative
Title Product in lieu thereof. 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 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 2007-AA2,
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 


39






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 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 Texas, unless otherwise
permitted by the Rating Agencies.


40






          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
Subsequent 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 Subsequent 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 shall occur within 720
days from the Closing Date. The Trustee shall deliver or shall cause the
Custodian to 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 


41






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 (delivery of which to the Custodian will be by electronic
data transmission or email), 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. If pursuant to the foregoing provisions the Seller repurchases
a Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall either
(i) cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage from MERS to the Seller and shall
cause such Mortgage to be removed from registration on the MERS® System in
accordance with MERS’ rules and regulations or (ii) cause MERS to designate on
the MERS® System the Seller as the beneficial holder of such Mortgage Loan.


          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.


          The
mortgage loans permitted by the terms of this Agreement to be included in the
Trust Fund are limited to (i) the Mortgage Loans (which the Depositor acquired
pursuant to the MLPA, which contains, among other representations and
warranties, a representation and warranty of the Seller that no Mortgage Loan
is a “high cost loan” as defined by the specific applicable local, state or
federal predatory and abusive lending laws, and (ii) Substitute Mortgage Loans
(which, by definition as set forth in this Agreement and referred to in the
MLPA, are required to conform to, among other representations and warranties, a
representation and warranty of the Seller set forth in the MLPA that no
Substitute Mortgage Loan is a “high cost loan” as defined by the specific
applicable local, state or federal predatory and abusive lending laws). It is
therefore understood and agreed by the parties hereto that it is not intended
that any Mortgage Loan be included in the Trust Fund that is a “high cost loan”
as defined by the specific applicable local, state or federal predatory and
abusive lending laws.


42






          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, 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 (delivery of which to the Custodian
  will be by electronic data transmission or email) 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 


43






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, upon the delivery to the Trustee of a Request for
Release in the form of Exhibit L, 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 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 


44






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 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 





45






	
 

	
 


	
 

	
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 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 “latest possible maturity date” for
federal income tax purposes of all REMIC regular interests created hereby. 


          The
assets of the Lower REMIC shall be as set forth in the definition thereof. Each
interest identified in the first table below by a designation beginning with
“L” shall be a “regular interest” in the Lower REMIC and a Lower REMIC
Interest, and the RL Interest 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 Middle REMIC. 


          The
assets of the Middle REMIC shall be as set forth in the definition thereof.
Each interest identified in the second table below by a designation beginning
with “M” shall be a “regular interest” in the Middle REMIC and a Middle REMIC
Interest, and the RM Interest shall be the sole class of residual interest in
the Middle REMIC. The Middle REMIC Interests shall be uncertificated and shall
be held by the Trustee as assets of the Upper REMIC. 


          The
assets of the Upper REMIC shall be as set forth in the definition thereof. The
Regular Certificates shall represent “regular interests” in the Upper REMIC.
The RU Interest shall be the sole class of residual interest in the Upper REMIC.
The Class I-A-R Certificate shall represent ownership of the RL Interest,
RM Interest and RU Interest. 


          The
“Startup Day” for purposes of the REMIC Provisions for each REMIC hereunder
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. 


46






	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Lower 

  REMIC 

  Interest or 

  Residual

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Corresponding Class of Middle
 REMIC Interests

	
 


	
 

	
Lower REMIC 

  Interest Balance

	
 

	
Lower REMIC 

  Interest Rate

	
 

	


	
 


	
 

	
 

	
 

	
Interest

	
 

	
Principal

	
 


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 


	
L-I-A-1

	
 

	
$

	
133,265.40

	
 

	
 

	
(2)

	
 

	
 

	
(1)

	
 

	
 

	
(1)

	
 


	
L-I-A-2

	
 

	
$

	
14,807.27

	
 

	
 

	
(2)

	
 

	
 

	
(1)

	
 

	
 

	
(1)

	
 


	
L-I-ZZZ

	
 

	
$

	
220,855,293.56

	
 

	
 

	
(2)

	
 

	
 

	
(1)

	
 

	
 

	
(1)

	
 


	
RL

	
 

	
$

	
0.00

	
 

	
 

	
N/A

	
 

	
 

	
N/A

	
 

	
 

	
N/A

	
 


	
L-II-A-1

	
 

	
$

	
12,665.78

	
 

	
 

	
(3)

	
 

	
 

	
(1)

	
 

	
 

	
(1)

	
 


	
L-II-A-2

	
 

	
$

	
1,407.31

	
 

	
 

	
(3)

	
 

	
 

	
(1)

	
 

	
 

	
(1)

	
 


	
L-II-ZZZ

	
 

	
$

	
20,987,236.24

	
 

	
 

	
(3)

	
 

	
 

	
(1)

	
 

	
 

	
(1)

	
 


	
Total

	
 

	
$

	
242,004,675.56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 





(1) The Lower REMIC Interest L-I-A-1, Lower REMIC
Interest L-I-A-2 and Lower REMIC Interest L-I-ZZZ shall be Corresponding
Classes to these classes of Middle REMIC Interests: M-I-A-1, M-I-A-2, M-I-A-RU,
M-B-1, M-B-2, M-B-3, M-B-4, M-B-5 and M-B-6 (provided that with respect to
M-B-1, M-B-2, M-B-3, M-B-4, M-B-5 and M-B-6, such Lower REMIC Interests shall
only correspond to the portion supported by Pool I). The Lower REMIC
Interest L-II-A-1, Lower REMIC L-II-A-2 and Lower REMIC Interest L-II-ZZZ shall
be Corresponding Classes to these classes of Middle REMIC Interests: M-II-A-1,
M-B-1, M-B-2, M-B-3, M-B-4, M-B-5 and M-B-6 (provided that with respect to
M-B-1, M-B-2, M-B-3, M-B-4, M-B-5 and M-B-6, such Lower REMIC Interests shall
only correspond to the portion supported by Pool II). 


(2) The Lower REMIC Interest Rate for the Lower REMIC
Interest L-I-A-1, L-I-A-2 and L-I-ZZZ will equal the Weighted Average Adjusted
Net Mortgage Rate for Pool I.


(3) The Lower REMIC Interest Rate for the Lower REMIC
Interest L-II-A-1, L-II-A-2 and L-II-ZZZ will equal the Weighted Average
Adjusted Net Mortgage Rate for Pool II. 


          “L1
Interests” refers to the L-I-A-1 Lower REMIC Interest and the L-II-A-1 Lower
REMIC Interests. “L2 Interests” refers to the L-I-A-2 Lower REMIC Interest and
L-II-A-2 Lower REMIC Interest. “LZZZ Interests” refers to L-I-ZZZ Lower REMIC
Interest and L-II-ZZZ Lower REMIC Interest. Each L1 Interest shall have a
principal balance initially equal to 0.9% of the Group Subordinate Amount of
its corresponding Mortgage Pool. Each L2 Interest shall have a principal
balance initially equal to 0.1% of the Group Subordinate Amount of its corresponding
Mortgage Pool. The initial principal balance of each LZZZ Interest shall
equal the excess of the Pool Principal Balance of its corresponding Mortgage
Pool over the sum of the initial principal balances of the L1 Interests and L2
Interests corresponding to such Mortgage Pool.


          Unless a
Cross-over Situation (as defined below) exists, principal and Realized Losses
arising with respect to each Mortgage Pool shall be allocated first to cause
the L1 and L2 Interests corresponding to such Mortgage Pool to equal 0.9% and
0.1% of the Group Subordinate Amount of such Mortgage Pool as of such
Distribution Date (after distributions of principal and allocation of Realized
Losses are made) and all excess principal and Realized Losses shall be
allocated to the LZZZ Interest corresponding to such Mortgage Pool. A L1, L2 or
LZZZ Interest that is allocated principal on any Distribution Date shall
receive such principal, and have its principal balance reduced by the amount of
such principal, on such Distribution Date. Similarly, a L1, L2 or LZZZ Interest
that is allocated a Realized Loss on any Distribution Date shall have its
principal balance reduced by the amount of such Realized Loss on such
Distribution Date. 


47







          A
“Cross-over Situation” exists if on any Distribution Date (after taking into
account distributions of principal and allocations of Realized Losses on such
Distribution Date) the L1 and L2 Interests corresponding to any Mortgage Pool
are in the aggregate less than 1% of the Group Subordinate Amount of the
corresponding Mortgage Pool. If a Cross-over Situation exists on any
Distribution Date, and the weighted average interest rate of the outstanding L1
and L2 Interests is less than the Pass-Through Rate for any Class of
Subordinate Certificates for the following Distribution Date, a Principal
Reallocation Payment (as defined below) shall be made proportionately to the
outstanding L1 Interests prior to any other distributions of principal from each
such Mortgage Pool so that the Calculation Rate equals the Pass-Through Rate
for each Class of Subordinate Certificates. If a Cross-over Situation exists on
any Distribution Date, and the weighted average rate of the outstanding L1 and
L2 Interests is greater than the Pass-Through Rate for any Class of Subordinate
Certificates for the following Distribution Date, a Principal Reallocation
Payment shall be made proportionately to the outstanding L2 Interests prior to
any other distributions of principal from each such Mortgage Pool so that the
Calculation Rate equals the Pass-Through Rate for each Class of Subordinate
Certificates. A “Principal Reallocation Payment” is a distribution of the
minimum amount of principal that causes the Calculation Rate (as defined below)
with respect to the outstanding L1 and L2 Interests to equal the Pass-Through
Rate for each Class of Subordinate Certificates. The “Calculation Rate” shall
equal the product of (i) 10 and (ii) the weighted average interest rate of the
outstanding L1 and L2 Interests, treating each L1 Interest as capped at zero or
reduced by a fixed percentage of 100% of the interest accruing on such class.
Principal Reallocation Payments shall be made from principal received on the
Mortgage Loans from a Mortgage Pool and shall also consist of a proportionate
allocation of Realized Losses from the Mortgage Loans of a Mortgage Pool. For
purposes of making Principal Reallocation Payments, to the extent that the
principal received during the applicable collection period from the related
Mortgage Pool or Mortgage Pools and related Realized Losses are insufficient to
make the necessary reduction of principal, then interest shall accrue on the
LZZZ Interest (and be added to its principal balance) of the related Mortgage Pool
or Mortgage Pools to allow the necessary Principal Reallocation Payment to be
made. The Calculation Rate is designed to always equal the Pass-Through Rate of
each Class of Subordinated Certificates.


          If
a Cross-over Situation exists, the aggregate principal balances of the
outstanding L1 and L2 Interests of all of the Mortgage Pools shall not be
reduced below one percent of the aggregate Pool Principal Balance of all of the
Mortgage Pools for the following Distribution Date in excess of the Senior
Certificates as of the related Distribution Date (after taking into account
distributions of principal and allocations of Realized Losses on such
Distribution Date). To the extent this limitation prevents the distribution of
principal to the L1 and L2 Interests of a Mortgage Pool and the related LZZZ
Interest has already been reduced to zero, such excess principal from such
Mortgage Pool shall be paid proportionately to the LZZZ Interests of the
Mortgage Pool or Mortgage Pools whose aggregate L1 and L2 Interests are less
than one percent of the Group Subordinate Amount. Any such shortfall as a
result of the Mortgage Pool receiving the extra payment having a Weighted
Average Adjusted Net Mortgage Rate lower than the Weighted Average Adjusted Net
Mortgage Rate of the Mortgage Pool or Mortgage Pools from which the payment was
reallocated shall be treated as a Realized Loss and if excess arises as result
of the Mortgage Pool receiving the extra payment having a Weighted Average
Adjusted Net Mortgage Rate higher than the Mortgage Pool or Mortgage Pools from
which the payment was reallocated it shall reimburse the Middle REMIC for prior
Realized Losses. If on any 


48






Distribution
Date, the L1 Interest or L2 Interest remains outstanding after the related Pool
Principal Balance is at zero as of the beginning of the Accrual Period
corresponding to such Distribution Date, their Lower REMIC Interest Rate shall
be the Weighted Average Adjusted Net Mortgage Rate of the Mortgage Pool with
the lowest Weighted Average Adjusted Net Mortgage Rate that remains outstanding
and the excess of interest at the Pass-Through Rate for the Subordinated
Certificates over interest at such Weighted Average Adjusted Net Mortgage Rate
shall be treated as paid from Lower REMIC to the Middle REMIC as reimbursement
for prior Realized Losses.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Middle

  REMIC 

  Interest or 

  Residual

	
 

	
Middle REMIC 

  Interest Balance

	
 

	
Middle REMIC Interest 

  Rate

	
 

	
Corresponding Class or Interest

	
 


	
 

	
 

	
 

	


	
 


	
 

	
 

	
 

	
Interest

	
 

	
Principal

	
 


	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
M-I-A-1

	
 

	
$

	
191,389,000.00

	
 

	
 

	
(1)

	
 

	
 

	
I-A-1, I-A-3

	
 

	
 

	
I-A-1

	
 


	
M-I-A-2

	
 

	
$

	
14,807,000.00

	
 

	
 

	
(1)

	
 

	
 

	
I-A-2, I-A-3

	
 

	
 

	
I-A-2

	
 


	
M-I-A-RU

	
 

	
$

	
100.00

	
 

	
 

	
(1)

	
 

	
 

	
RU Interest

	
 

	
 

	
RU Interest

	
 


	
M-II-A-1

	
 

	
$

	
19,594,000.00

	
 

	
 

	
(2)

	
 

	
 

	
II-A-1, II-A-2

	
 

	
 

	
II-A-1

	
 


	
M-B-1

	
 

	
$

	
8,954,000.00

	
 

	
 

	
(3)

	
 

	
 

	
B-1

	
 

	
 

	
B-1

	
 


	
M-B-2

	
 

	
$

	
2,420,000.00

	
 

	
 

	
(3)

	
 

	
 

	
B-2

	
 

	
 

	
B-2

	
 


	
M-B-3

	
 

	
$

	
1,815,000.00

	
 

	
 

	
(3)

	
 

	
 

	
B-3

	
 

	
 

	
B-3

	
 


	
M-B-4

	
 

	
$

	
1,210,000.00

	
 

	
 

	
(3)

	
 

	
 

	
B-4

	
 

	
 

	
B-4

	
 


	
M-B-5

	
 

	
$

	
968,000.00

	
 

	
 

	
(3)

	
 

	
 

	
B-5

	
 

	
 

	
B-5

	
 


	
M-B-6

	
 

	
$

	
847,575.56

	
 

	
 

	
(3)

	
 

	
 

	
B-6

	
 

	
 

	
B-6

	
 


	
RM

	
 

	
$

	
0.00

	
 

	
 

	
N/A

	
 

	
 

	
N/A

	
 

	
 

	
N/A

	
 


	
Total

	
 

	
$

	
242,004,675.56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 





(1) The Middle
REMIC Interest Rate for the Middle REMIC Interest M-I-A-1, M-I-A-2 and M-I-A-RU
will be equal to the interest rate on Lower REMIC Interest L-I-ZZZ.


(2) The Middle
REMIC Interest Rate for the Middle REMIC Interest M-II-A-1 will be equal to the
interest rate on Lower REMIC Interest L-II-ZZZ. 


(4) The Middle
REMIC Interest Rate for the Middle REMIC Interest M-B-1, Middle REMIC Interest
M-B-2, Middle REMIC Interest M-B-3, Middle REMIC Interest M-B-4, Middle REMIC
Interest M-B-5, Middle REMIC Interest M-B-6 shall equal the Calculation Rate as
defined in this Section 2.7. The Pass-Through Rate on each Class of
Subordinated Certificates is variable and will be equal to the weighted average
of the Middle REMIC Interest Rates on Middle REMIC Interest M-B-1, Middle REMIC
Interest M-B-2, Middle REMIC Interest M-B-3, Middle REMIC Interest M-B-4,
Middle REMIC Interest M-B-5, Middle REMIC Interest M-B-6, weighted on the basis
of the principal balance of each such Middle REMIC Interest.


          On
each Distribution Date Available Funds shall be distributed with respect to the
Middle REMIC Interests in a manner such that:


	
 

	
 


	
 

	
          interest
  accrued, if any, on each Middle REMIC Interest is distributed with respect to
  each such Middle 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; and





49






	
 

	
 


	
 

	
          principal
  is distributed (and Realized Losses shall be allocated) with respect to each
  such Middle REMIC Interest in the same manner that principal is distributed
  (and Realized Losses is allocated) with respect to the Corresponding Classes
  or Classes of Certificate pursuant to Section 4.2 and Section 4.4.





          The
foregoing REMIC structure is intended to cause all of the cash from the
Mortgage Loans to flow through to the Upper REMIC as cash flow on a REMIC
regular interest, without creating any shortfall-actual or potential (other
than for credit losses) to any REMIC regular interest. To the extent that the
structure is believed to diverge from such intention the Trustee shall resolve
ambiguities to accomplish such result and shall to the extent necessary rectify
any drafting errors or seek clarification to the structure without
Certificateholder approval (but with guidance of counsel) to accomplish such
intention.


          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) 


50






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, 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. The
Master Servicer further is authorized and empowered by the Trustee, on behalf
of the Certificateholders and the Trustee, in its own name or in the name of
the Subservicer, when the Master Servicer or the Subservicer as the case may
be, believes it appropriate in its best judgment to register any Mortgage Loan
on the MERS® System, or cause the removal from the registration of any Mortgage
Loan on the MERS® System, to execute and deliver, on behalf of the Trustee and
the Certificateholders or any of them, any and all instruments of assignment
and other comparable instruments with respect to such assignment or
re-recording of a Mortgage in the name of MERS, solely as nominee for the
Trustee and its successors and assigns.


          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 





51






	
 

	
 


	
 

	
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.


	
 

	
 


	
 

	
          (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 


52






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 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 two 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 (2) 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;





53






	
 

	
 


	
 

	
          (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;


	
 

	
 


	
 

	
          (v)
  any amounts required to be deposited by the Master Servicer in respect of the
  related Mortgage Pool pursuant to Section 3.9(b) and 3.9(d);


	
 

	
 


	
 

	
          (vi)
  any Substitution Adjustment Amounts or the Purchase Price for any Deleted
  Mortgage Loan in 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.





54






	
 

	
 


	
 

	
          (c)
  The Trustee shall establish and maintain, on behalf of the
  Certificateholders, the Distribution Account. The Distribution Account shall
  consist of two 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


	
 

	
 


	
 

	
          (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 institution at which the Certificate Account is maintained shall invest
  funds as directed by the Master Servicer in Permitted Investments which shall
  mature not later than 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, shall not be sold or
  disposed of prior to its maturity. If the Master Servicer does not provide
  such prior written investment direction, the funds in the Certificate Account
  will be held uninvested. 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. The amount of any losses in the Certificate
  Account in respect of any such investments shall promptly be deposited by the
  Master Servicer in the Certificate Account. The funds in the Distribution
  Account shall be held uninvested. 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 or
  the Distribution Account and made in accordance with this Section 3.5.





55






	
 

	
 

	
 


	
 

	
 

	
          (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 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


56







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, or shall (in the case of Section
  3.8(a)(ix)), 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;





57






	
 

	
 


	
 

	
          (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 (and
  with respect to clause (i) below, shall), 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 withdraw and return to the Master Servicer any amount deposited in the
  Distribution Account and not required to be deposited therein; and


	
 

	
 


	
 

	
          (iii)
  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 not to exceed the
  highest value placed by the insurer on the improvements securing such
  Mortgage Loan. The required coverage under any such hazard insurance policy
  will be equal to the lesser of (i) the aggregate principal amount of all
  liens against the related Mortgaged Property, including the proposed
  loan/line amount as long as it equals at least 80% of the value of 





58






	
 

	
 


	
 

	
the
  improvements/replacement cost of the structure, and (ii) the replacement cost
  of the insurable improvements securing such Mortgage Loan. 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 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 





59






	
 

	
 


	
 

	
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 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 





60






	
 

	
 


	
 

	
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 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


61






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. 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 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 created 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 created 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.


62






          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 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


63






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.


          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


64






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 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


65






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.


	
 

	
 


	
 

	
          (a)
  The Master Servicer shall deliver to the Depositor and the Trustee on or
  before March 15th of each year, commencing in 2008, 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 (or applicable portion
  thereof) 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 in all material respects throughout
  such year (or applicable portion thereof), or, if there has been a failure to
  fulfill any such obligation in any material respect, specifying each such
  failure known to such officer and the status thereof.


	
 

	
 


	
 

	
          (b)
  The Master Servicer shall cause each Subservicer that is a Reporting
  Subcontractor to deliver to the Depositor and the Trustee on or before March
  15th of each year, commencing in 2008, an Officer’s Certificate stating, as
  to the signer thereof, that (i) a review of the activities of such
  Subservicer during the preceding calendar year (or applicable portion
  thereof) and of the performance of the Subservicer under the applicable
  Subservicing Agreement or primary servicing agreement, has been made under
  such officer’s supervision and (ii) to the best of such officer’s knowledge,
  based on such review, such Subservicer has fulfilled all its obligations
  under the applicable Subservicing Agreement or primary servicing agreement,
  in all material respects throughout such year (or applicable portion
  thereof), or, if there has been a failure to fulfill any such obligation in
  any material respect, specifying each such failure known to such officer and
  the nature and status thereof.





          SECTION
3.17 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
3.18 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


66







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 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:





67







	
 

	
 


	
 

	
          (i)
  to the Classes of Senior Certificates of the related Certificate Group, the
  Accrued Certificate Interest on each such Class for such Distribution Date,
  any shortfall in available amounts being allocated among such Classes in
  proportion to the amount of Accrued Certificate Interest otherwise
  distributable thereon (or added to the balance thereof);


	
 

	
 


	
 

	
          (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, any shortfall in available amounts being allocated
  among such Classes in proportion to the amount of Accrued Certificate
  Interest remaining undistributed for that Class for that Distribution Date;


	
 

	
 


	
 

	
          (iii)
  to the Classes of Senior Certificates of the related Certificate Group
  entitled to distributions of principal, 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 I and Group
  II Senior Certificates, in the order of priority set forth below in Sections
  4.2(b) and (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 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 





68







	
 

	
 

	
 


	
 

	
 

	
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
  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.


	
 

	
 

	
 


	
 

	
          (b)
  Amounts allocated to the Group I Senior Certificates pursuant to Section
  4.2(a)(iii) above will be distributed to the Class I-A-R, Class I-A-1 and
  Class I-A-2 Certificates, sequentially in the following order of priority:


	
 

	
 

	
 


	
 

	
 

	
          (i)
  to the Class I-A-R Certificates, until the Class Certificate Balance thereof
  has been reduced to zero; and


	
 

	
 

	
 


	
 

	
 

	
          (ii)
  concurrently, to the Class I-A-1 and Class I-A-2 Certificates, pro rata, until the respective Class
  Certificate Balances thereof have each been reduced to zero.


	
 

	
 

	
 


	
 

	
          (c)
  Amounts allocated to the Group II Senior Certificates pursuant to Section
  4.2(a)(iii) above will be distributed to the Class II-A-1 Certificates until
  the respective Class Certificate Balances thereof have each been reduced to
  zero.


	
 

	
 

	
 


	
 

	
          (d)
  On each Distribution Date, the Trustee shall distribute to the Holders of the
  Class I-A-R 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), (c) and (e) of this Section 4.2. Any
  distributions pursuant to this subsection (d) shall not reduce the Class
  Certificate Balance of the Class I-A-R Certificates.


	
 

	
 

	
 


	
 

	
          (e)
  On and after the Cross-Over Date, the amount distributable to the Senior
  Certificates of the related Certificate Group 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, as applicable,
  immediately prior to such Distribution Date, regardless of the priorities and
  amounts set forth in Section 4.2.


	
 

	
 

	
 


	
 

	
          (f)
  If on any Distribution Date (i) the Class Certificate Balance of any Class of
  Subordinated Certificates (other than the Class of Subordinated Certificates
  with the





69







	
 

	
 


	
 

	
highest
  priority of distribution) for which the related Class Prepayment Distribution
  Trigger was satisfied on such Distribution Date is reduced to zero and (ii)
  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 on a pro rata basis, subject to the priority
  of payments described in Section 4.2(a). 


	
 

	
 


	
 

	
          (g)
  In the event that in any calendar month the Master Servicer recovers an
  amount, net of reimbursable expenses (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 the Unanticipated Recovery from the Distribution Account and
  sequentially increase, in order of payment priority, the Class Certificate
  Balance of each Class of Certificates to which such Realized Losses were
  previously allocated by the amount of such Unanticipated Recovery, but not to
  exceed the amount of Realized Losses previously allocated to such Class
  pursuant to Section 4.4, and shall distribute the amount of such
  Unanticipated Recovery in the order of payment priority described in Section
  4.2(a) of this Agreement. Holders of any Class of Certificates for which the
  Class Certificate Balance has been increased by the amount of any
  Unanticipated Recovery will not be entitled to any payment in respect of
  Accrued Certificate Interest on the amount of any such increase for any Interest
  Accrual Period preceding the Distribution Date on which such increase occurs.
  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). 


	
 

	
 


	
 

	
          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-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





70







	
 

	
 


	
 

	
with the
  priorities set forth in Sections 4.2(b) and (c) until the total Class
  Certificate Balance of such Senior Certificates (after giving effect to
  distributions to be made on that Distribution Date) equals the Stated
  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 Pools 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
  Accrued Certificate Interest with respect to any Undercollateralized Group on
  any Distribution Date (including any Accrued Certificate Interest 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 an
  Undercollateralized Group is no longer undercollateralized.


	
 

	
 


	
 

	
          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, with respect to such Certificate Group, 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 Aggregate Subordinated
  Percentage for such Distribution Date is at least two times the Aggregate
  Subordinated Percentage as of the Closing Date, (b) the aggregate Stated
  Principal Balance of all the Mortgage Loans in the Mortgage Pools 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 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%, and (c) the cumulative Realized Losses in the Mortgage Pools do not
  exceed (i) 20% of the Original Subordinated Principal Balance if such
  Distribution Date occurs between and including July 2007 and June 2010, and
  30% of the Original Subordinated Principal Balance if such Distribution Date
  occurs on or after July 2010. 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) through (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 





71







	
 

	
 


	
 

	
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 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) with respect to a Mortgage Pool shall be
  allocated in the following order of priority:





72







	
 

	
 

	
 


	
 

	
 

	
          (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 allocable to the Class I-A-1 Certificates will instead be
  borne first by the Class I-A-2 Certificates until its Class Certificate
  Balance is reduced to zero (in addition to other Realized Losses allocable to
  the Class I-A-2 Certificates), and not by the Class I-A-1 Certificates, until
  the Class Certificate Balance of the Class I-A-2 Certificates has been
  reduced to 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 Certificate Balances, each 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 Class Certificate Balances. Any allocation of
  Realized Losses pursuant to this paragraph (d) shall be accomplished by
  reducing the Class Certificate 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 





73







	
 

	
 

	
 


	
 

	
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, that complies
  with Item 1121 of Regulation AB, setting forth, among other things, with
  respect to the related distribution and/or may post such statement on its
  website located at www.bnyinvestorreporting.com:


	
 

	
 

	
 


	
 

	
 

	
          (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; 





74







	
 

	
 

	
 


	
 

	
 

	
          (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;


	
 

	
 

	
 


	
 

	
 

	
          (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 not delivered within thirty days
  after the Closing Date.





75







	
 

	
 


	
 

	
          (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.


	
 

	
 


	
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





76







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 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, any Holder of a Private Certificate (other than
  a Private Certificate that is a Book-Entry Certificate) desiring to effect
  such transfer and 






77









	
 

	
 


	
 

	
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. Furthermore, in the event a Private Certificate is
  offered and sold outside of the United States to a Person who is not a U.S.
  person within the meaning of Regulation S, such Private Certificates will be
  offered and sold in reliance on Regulation S. Each Holder of a Private
  Certificate sold in reliance on Regulation S shall be deemed to have
  represented to the Trustee: (i) such Person (A) if the offer or sale was
  made to it prior to the expiration of the 40-day distribution compliance
  period within the meaning of Regulation S, is not a U.S. person within the
  meaning of Regulation S and (B) was, at the time the buy order was
  originated, outside the United States and (ii) such Person understands that
  such Private Certificates have not been registered under the Securities Act,
  and that (x) until the expiration of the 40-day distribution compliance
  period (within the meaning of Regulation S), no offer, sale, pledge or other
  transfer of such Certificates or any interest therein shall be made in the
  United States or to or for the account or benefit of a U.S. person (each as
  defined in Regulation S), (y) if in the future it decides to offer, resell,
  pledge or otherwise transfer such Certificates, such Certificates may be
  offered, resold, pledged or otherwise transferred only (A) to a person which
  the seller reasonably believes is a “qualified institutional buyer” as
  defined in Rule 144A under the Securities Act, that is purchasing such
  Certificates for its own account or for the account of a qualified
  institutional buyer to which notice is given that the transfer is being made
  in reliance on Rule 144A or (B) in an offshore transaction (as defined in
  Regulation S) in compliance with the provisions of Regulation S, in each case
  in compliance with the requirements of this Agreement; and it will notify
  such transferee of the transfer restrictions specified in this Section.


	
 

	
 


	
 

	
          Each
  Holder of a Private Certificate that is a Book-Entry Certificate, by its
  acquisition thereof (or a beneficial interest therein), shall be deemed to
  have represented and warranted for the benefit of the Depositor, the Servicer
  and the Trustee that (a) it understands that the Private Certificates are not
  being registered under the Securities Act, or any state securities laws and
  are being transferred to it in a transaction that is exempt from the
  registration requirements of the Securities Act and any such laws, (b) it has
  such knowledge and experience in financial and business matters that it is
  capable of evaluating the merits and risks of investments in the Private
  Certificates, (c) it has had the opportunity to ask questions of and receive
  answers from the Depositor concerning the purchase of the Private
  Certificates and all matters relating thereto or any additional information
  deemed necessary to its decision to purchase the Private Certificates, (d)
  neither it, nor any anyone acting on its behalf, has offered, transferred,
  pledged, sold or otherwise disposed of the Private Certificates or any
  interest therein, or solicited any offer to buy or accept a transfer, pledge
  or other disposition of the Private Certificates or any interest therein
  from, or otherwise approached or negotiated with respect to the Private
  Certificates or any interest therein with, any person in any manner, or made
  any general solicitation by means of general advertising or in any other manner,
  or taken any other action, that would constitute a distribution of the
  Private Certificates under the Securities Act or that would render the
  disposition of the Private Certificates a violation of Section 






78









	
 

	
 


	
 

	
5 of the Securities Act or require registration
  pursuant thereto, nor will it act, nor has it authorized or will authorize
  any person to act, in such manner with respect to the Private Certificates,
  (e) it is a “qualified institutional buyer” as that term is defined in Rule
  144A under the Securities Act (“Rule 144A”), (f) it is aware that the sale of
  the Private Certificates to it is being made in reliance on Rule 144A, (g) it
  is acquiring the Private Certificates for its own account or for resale
  pursuant to Rule 144A and it understands that the Private Certificates may be
  resold, pledged or transferred only (A) to a person whom it reasonably
  believes to be a qualified institutional buyer that purchases for its own
  account or for the account of a qualified institutional buyer to whom notice
  is given that the resale, pledge or transfer is being made in reliance on
  Rule 144A, or (B) pursuant to another exemption from registration under the
  Securities Act; and (h) it understands that no representation is made as to
  the availability of the exemption provided by Rule 144A for resales of the
  Private Certificates. 


	
 

	
 


	
 

	
          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 Holder of a Private Certificate desiring to effect
  such transfer shall, and by its acceptance of a Private Certificate 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 in the form of a Definitive
  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 






79









	
 

	
 


	
 

	
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
  Title I 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.


	
 

	
 


	
 

	
          Each
  Holder of a Private Certificate that is a Book-Entry Certificate, by its
  acquisition thereof (or a beneficial interest therein) shall be deemed to
  have represented and warranted for the benefit of the Depositor, the
  Servicer, the Trustee and the other Certificateholders, that (a) it is not an
  employee benefit plan or arrangement that is subject to Section 406 of ERISA,
  or a plan or arrangement that is subject to Section 4975 of the Internal
  Revenue Code of 1986, as amended, nor is it acting on behalf of any such plan
  or arrangement or using the assets of any such plan or arrangement to effect
  such acquisition, or (b) if it is an insurance company, in the case of
  Private Certificates that have been the subject of an ERISA-Qualifying
  Underwriting, it is purchasing the Private Certificates with funds contained
  in an “insurance company general account” (as defined in Section V(e) of
  Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and its purchase
  and holding of the Private Certificates are covered under Sections I and III
  of PTCE 95-60. 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. The Trustee shall be entitled, but not obligated, to recover
  from any Holder of any ERISA-Restricted Certificate that was in fact a Plan
  or a Person acting on behalf of any such Plan any payments made on such
  ERISA-Restricted Certificate at and after either such time. Any such payments
  so recovered by the Trustee shall be paid and delivered by the Trustee to the
  last preceding Holder of such Certificate that is not such a Plan or Person
  acting on behalf of a Plan.


	
 

	
 


	
 

	
          Notwithstanding
  the foregoing, no opinion or certificate shall be required for the initial
  issuance of any ERISA-Restricted Certificate that is registered in the name
  of the Depository or its nominee.


	
 

	
 


	
 

	
          (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 Interest to have agreed to be bound by the following provisions,
  and the rights of each 






80







	
 

	
 

	
 


	
 

	
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 and with a certificate of the proposed
  transferor in the form attached hereto as 
Exhibit I.


	
 

	
 


	
 

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






81









	
   

  	
   

  
	
   

  	
            (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 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

  



82







	
   

  	
   

  
	
   

  	
  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. 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.


83






          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.


          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


84






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
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.


85






          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 other 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 (except with respect to failure related
  to a Limited Exchange Act Reporting Obligation), 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
  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

  



86







	
 

	
 


	
 

	
          (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. In addition, if during the period that the
Depositor is required to file Exchange Act Reports with respect to the Trust
Fund, the Master Servicer shall fail to observe or perform any of the
obligations set forth in Section 3.16(a) or Section 10.1(a)(i) and (ii), and
such failure continues for the lesser of ten (10) calendar days or such period
in which the applicable Exchange Act Report can be filed timely (without taking
into account any extensions), so long as such failure shall not have been
remedied, the Trustee shall, but only at the direction of the Depositor,
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. The Depositor shall not be
entitled to terminate the rights and obligations of the Master Servicer if a
failure of the Master Servicer to identify a Subcontractor “participating in
the servicing function” within the meaning of Item 1122 of Regulation AB was
attributable solely to the role or functions of such Subcontractor with respect
to mortgage loans other than the Mortgage Loans. 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


87






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 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.


          If
the Master Servicer is terminated, the Trustee shall provide the Depositor in
writing and in form and substance reasonably satisfactory to the Depositor, all
information reasonably requested by the Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a successor
master servicer in the event the Trustee should succeed to the duties of the
Master Servicer as set forth herein. 


          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 


88






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. The Trustee shall
provide written notice to the Depositor of such successor pursuant to this
Section. The successor to the Master Servicer shall provide to the Depositor in
writing, fifteen (15) days prior to the effective date of such appointment, and
in form and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor in order to comply with its reporting
obligation under Item 6.02 of Form 8-K with respect to a replacement master
servicer. The Trustee shall not resign as servicer until a successor servicer
has been appointed and has accepted such appointment. 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
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 3.17.


          In
connection with the termination or resignation of the Master Servicer
hereunder, either (i) the successor Master Servicer, including the Trustee if
the Trustee is acting as successor Master Servicer, shall represent and warrant
that it is a member of MERS in good standing and shall agree to comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS, or (ii) the
predecessor Master Servicer shall cooperate with the successor Master Servicer
either (x) in causing MERS to execute and deliver an assignment of Mortgage in
recordable form to transfer the Mortgage from MERS to the Trustee and to
execute and deliver such other notices, documents and other instruments as may
be necessary or desirable to effect a transfer of such Mortgage Loan or
servicing of such mortgage Loan on the MERS® System to the successor Master
Servicer or (y) in causing MERS to designate on the MERS® System the successor
Master Servicer as the servicer of such Mortgage Loan. The predecessor Master
Servicer shall file or cause to be filed any such assignment in the appropriate
recording office. The successor Master Servicer shall cause such assignment to
be delivered to the Trustee promptly upon receipt


89






of the original with evidence of recording thereon or a
copy certified by the public recording office in which such assignment was
recorded.


          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.


          The
Trustee is hereby directed to execute and deliver to The Depository Trust
Company the Issuer Letter of Representations dated as of the Closing Date on
behalf of the trust created hereunder. The Depositor and the Master Servicer
acknowledge and agree that the Trustee is executing and delivering the Issuer
Letter of Representations on behalf of the trust created hereunder and shall do
so solely in its capacity as Trustee and not in its individual capacity.


          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:


90







	
 

	
 


	
 

	
          (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 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





91







	
 

	
 


	
 

	
 


	
 

	
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.


	
 

	
 


	
 

	
          (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 





92







	
 

	
 


	
 

	
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 or of MERS or the MERS® System 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 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.


	
 

	
 





93







	
 

	
 


	
 

	
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
  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.





94







	
 

	
 


	
 

	
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.


	
 

	
 


	
          As
  a condition to the effectiveness of any such resignation, at least 15
  calendar days prior to the effective date of such resignation, the Trustee
  shall provide (x) written notice to the Depositor of any successor pursuant
  to this Section and (y) in writing and in form and substance reasonably
  satisfactory to the Depositor, all information reasonably requested by the
  Depositor in order to comply with its reporting obligation under Item 6.02 of
  Form 8-K with respect to the resignation of the Trustee.


	
 

	
 


	
          If
  at any time (i) 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, (ii) 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, (iii)(A) a tax is
  imposed with respect to the Trust Fund by any state in which the Trustee or
  the Trust Fund is located, (B) the imposition of such tax would be avoided by
  the appointment of a different trustee and (C) the Trustee fails to indemnify
  the Trust Fund against such tax, or (iv) during the period that the Depositor
  is required to file Exchange Act Reports with respect to the Trust Fund, the
  Trustee fails to comply with its obligations under the last sentence of Section
  7.1, Section 8.9 or Article X and such failure is not remedied within the
  lesser of ten (10) calendar days or such period in which the applicable
  Exchange Act Report can be filed timely (without taking into account any
  extensions), then, in the case of clauses (i) through (iii), 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.





95







	
 

	
 


	
 

	
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.


	
 

	
 


	
          The
  Trustee shall provide (x) written notice to the Depositor of any successor
  due to merger or consolidation of the trustee pursuant to this Section within
  five (5) days after the effectiveness of such merger or consolidation and (y)
  in writing and in form and substance reasonably satisfactory to the
  Depositor, all information reasonably requested by the Depositor in order to
  comply with its reporting obligation under Item 6.02 of Form 8-K with respect
  to a replacement Trustee.


	
 

	
 


	
 

	
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 





96






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 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 


97






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.


          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 


98






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 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). 


99






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 aggregate of the Pool Principal
Balances for all of the Mortgage Pools, at the time of any such repurchase,
being less than ten percent (10%) of the aggregate Cut-off Date Pool Principal
Balance of all the Mortgage Pools. The Master Servicer will deposit the funds
for such purchase into the Certificate Account pursuant to Section
3.5(b)(viii).


          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 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 


100






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 I-A-R 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.


          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:





101









	
   

  	
   

  
	
   

  	
            (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 

EXCHANGE ACT REPORTING


          SECTION
10.1 Filing Obligations. 


                    The
Master Servicer, the Trustee and the Seller shall reasonably cooperate with the
Depositor in connection with the satisfaction of the Depositor’s reporting
requirements under the Exchange Act with respect to the Trust Fund. In addition
to the information specified below, if so requested by the Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act, the
Master Servicer, the Trustee and the Seller shall (and the Master Servicer
shall cause each Subservicer to) provide the Depositor with (a) such
information which is available to such Person without unreasonable effort or
expense and within such timeframe as may be reasonably requested by the
Depositor to comply with the Depositor’s reporting obligations under the
Exchange Act and (b) to the extent such Person is a party (and the Depositor is
not a party) to any agreement or amendment requested of it by the Depositor and
required to be filed, copies of such agreement or amendment in EDGAR-compatible
form. 


          SECTION
10.2 Form 10-D Filings. 


	
   

  	
   

  
	
   

  	
            (a)
  Although the Depositor is responsible under Regulation AB for filing the Form
  10-D, the Trustee hereby agrees it shall prepare for filing and file within
  fifteen days after each Distribution Date (subject to permitted extensions
  under the Exchange Act) with the SEC with respect to the Trust Fund, a Form
  10-D with copies of the Monthly Report and, to the extent delivered to the
  Trustee, no later than ten days following the Distribution Date, such other
  information identified by the Depositor or the 

  



102







	
   

  	
   

  
	
   

  	
  Master
  Servicer, in writing, to be filed with the SEC (such other information, the
  “Additional Designated Information”). If the Depositor or Master Servicer
  directs that any Additional Designated Information is to be filed with any
  Form 10-D, the Depositor or Master Servicer, as the case may be, shall
  specify the Item on Form 10-D to which such information is responsive and,
  with respect to any Exhibit to be filed on Form 10-D, the Exhibit number. Any
  information to be filed on Form 10-D shall be delivered to the Trustee in EDGAR-compatible
  form or as otherwise agreed upon by the Trustee and the Depositor or the
  Master Servicer, as the case may be, at the Depositor’s expense, and any
  necessary conversion to EDGAR-compatible format will be at the Depositor’s
  expense. At the reasonable request of, and in accordance with the reasonable
  directions of, the Depositor or the Master Servicer, subject to the two
  preceding sentences, the Trustee shall prepare for filing and file an
  amendment to any Form 10-D previously filed with the SEC with respect to the
  Trust Fund. The Master Servicer shall sign the Form 10-D filed on behalf of
  the Trust Fund. 

  
	
   

  	
   

  
	
   

  	
            (b) No later
  than each Distribution Date, each of the Master Servicer and the Trustee
  shall notify (and the Master Servicer shall cause any Subservicer to notify)
  the Depositor and the Master Servicer of any Form 10-D Disclosure Item
  relating to it, together with a description of any such Form 10-D Disclosure
  Item in form and substance reasonably acceptable to the Depositor. In
  addition to such information as the Master Servicer and the Trustee are
  obligated to provide pursuant to other provisions of this Agreement, if so
  requested by the Depositor, each of the Master Servicer and the Trustee shall
  provide such information which is available to the Master Servicer and the
  Trustee, as applicable, without unreasonable effort or expense regarding the
  performance or servicing of the Mortgage Loans (in the case of the Trustee,
  based on the information provided by the Master Servicer) as is reasonably
  required of the Depositor to facilitate preparation of distribution reports
  in accordance with Item 1121 of Regulation AB. Such information shall be
  provided concurrently with the delivering of the reports specified in Section
  4.6 in the case of the Master Servicer and the Monthly Statement in the case
  of the Trustee, commencing with the first such report due not less than five
  (5) Business Days following such request. 

  
	
   

  	
   

  
	
   

  	
            (c) The
  Trustee shall not have any responsibility to file any items (other than those
  generated by it) that have not been received in a format suitable (or readily
  convertible into a format suitable) for electronic filing via the EDGAR
  system and shall not have any responsibility to convert any such items to
  such format (other than those items generated by it or that are readily
  convertible to such format). The Trustee shall have no liability to the
  Certificateholders, the Trust Fund, the Master Servicer or the Depositor with
  respect to any failure to properly prepare or file any of Form 10-D to the
  extent that such failure is not the result of any negligence, bad faith or
  willful misconduct on its part. For avoidance of doubt, the Trustee shall
  have no liability whatsoever under the Securities Act or the Exchange Act. 

  
	
   

  	
   

  
	
   

  	
  SECTION 10.3
  Form 8-K Filings.

  



          The
Master Servicer shall prepare and file on behalf of the Trust Fund any Form 8-K
required by the Exchange Act. Each Form 8-K must be signed by the Master
Servicer. Each of


103






the Trustee
and the Master Servicer shall (and the Master Servicer shall cause any
Subservicer to), promptly notify the Depositor and the Master Servicer (if the
notifying party is not the Master Servicer), but in no event later than one (1)
Business Day after its occurrence, of any Reportable Event related to it, of
which it has actual knowledge. The Master Servicer shall notify the Depositor
if any material pool characteristic of the actual asset pool at the time of
issuance of the Certificates differs by five percent or more (other than as a
result of the pool assets converting into cash in accordance with their terms)
from the description of the asset pool in the Prospectus Supplement. 


          SECTION
10.4 Form 10-K Filings. 


          Prior
to March 30th of each year, commencing in 2008 (or such earlier date as may be
required by the Exchange Act), the Depositor shall prepare and file on behalf
of the Trust Fund a Form 10-K, in form and substance as required by the
Exchange Act. A senior officer in charge of the servicing function of the
Master Servicer shall sign each Form 10-K filed on behalf of the Trust Fund.
Such Form 10-K shall include as exhibits each (i) annual compliance statement
described under Section 3.16(a), (ii) annual report on assessments of
compliance with servicing criteria described under Section 10.7 and (iii)
accountant’s report described under Section 10.7. Each Form 10-K shall also
include any Sarbanes-Oxley Certification required to be included therewith, as
described in Section 10.5. 


          If
the Item 1119 Parties listed on Exhibit P have changed since the Closing Date,
no later than March 1st of each year, the Depositor shall provide each of the
Master Servicer (and the Master Servicer shall provide any Subservicer) and the
Trustee with an updated Exhibit P setting forth the Item 1119 Parties. No later
than March 15th of each year, commencing in 2008, the Master Servicer and the
Trustee shall notify (and the Master Servicer shall cause any Subservicer to
notify) the Depositor of any Form 10-K Disclosure Item related to it, together
with a description of any such Form 10-K Disclosure Item in form and substance
reasonably acceptable to the Depositor. Additionally, each of the Master
Servicer and the Trustee shall provide to the Depositor, and shall cause each
Reporting Subcontractor retained by the Master Servicer or the Trustee, as
applicable, and in the case of the Master Servicer shall cause each Subservicer
that is a Reporting Subcontractor, to provide to the Depositor, the following
information no later than March 15th of each year in which a Form 10-K is
required to be filed on behalf of the Trust Fund: (i) if such Person’s report
on assessment of compliance with servicing criteria described under Section
10.7 or related registered public accounting firm attestation report described
under Section 10.7 identifies any material instance of noncompliance,
notification of such instance of noncompliance and (ii) if any such Person’s
report on assessment of compliance with servicing criteria or related
registered public accounting firm attestation report is not provided to be
filed as an exhibit to such Form 10-K, information detailing the explanation
why such report is not included. 


          SECTION
10.5 Sarbanes-Oxley Certification. 


          Each
Form 10-K shall include a certification (the “Sarbanes-Oxley Certification”)
required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of
the SEC promulgated thereunder (including any interpretations thereof by the
SEC’s staff)). No later than March 15th 


104






of each year
in which a Form 10-K is required to be filed on behalf of the Trust Fund,
beginning in 2008, the Master Servicer (unless such Person is the Certifying
Person) and the Trustee shall, and the Master Servicer shall cause each
Subservicer to, provide to the Person who signs the Sarbanes-Oxley
Certification (the “Certifying Person”) a certification (each, a “Performance
Certification”), substantially in the form attached hereto as Exhibit N-1 (in
the case of a Subservicer) and Exhibit N-2 (in the case of the Trustee), unless
such other form is mutually agreed upon, on which the Certifying Person, the
entity for which the Certifying Person acts as an officer, and such entity’s
officers, directors and Affiliates (collectively with the Certifying Person,
“Certification Parties”) can reasonably rely. The senior officer in charge of
the servicing function of the Master Servicer shall serve as the Certifying
Person on behalf of the Trust Fund. Neither the Master Servicer nor the
Depositor will request delivery of a certification under this clause unless the
Depositor is required under the Exchange Act to file an annual report on Form
10-K with respect to the Trust Fund. In the event that prior to the filing date
of the Form 10-K in March of each year, a Responsible Officer of the Trustee or
the Depositor has actual knowledge of information material to the
Sarbanes-Oxley Certification, the Trustee or the Depositor, as the case may be,
shall promptly notify the Master Servicer and the Depositor. The respective
parties hereto agree to cooperate with all reasonable requests made by any
Certifying Person or Certification Party in connection with such Person’s
attempt to conduct any due diligence that such Person reasonably believes to be
appropriate in order to allow it to deliver any Sarbanes-Oxley Certification or
portion thereof with respect to the Trust Fund. 


          SECTION
10.6 Form 15 Filing. 


          Prior
to January 31st of the first year in which the Depositor is able to
do so under applicable law, the Depositor shall file a Form 15 relating to the
automatic suspension of reporting in respect of the Trust Fund under the
Exchange Act. 


          SECTION
10.7 Report on Assessment of Compliance and Attestation. 


	
   

  	
   

  
	
   

  	
            (a)
  On or before March 15th of each calendar year in which a Form 10-K is
  required to be filed on behalf of the Trust Fund, commencing in 2008: 

  






	
   

  	
   

  
	
   

  	
            (i)
  Each of the Master Servicer and the Trustee shall deliver to the Depositor
  and the Master Servicer a report (in form and substance reasonably
  satisfactory to the Depositor) regarding the Master Servicer’s or the
  Trustee’s, as applicable, assessment of compliance with the Servicing
  Criteria during the immediately preceding calendar year, as required under
  Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB.
  Such report shall be signed by an authorized officer of such Person and shall
  address each of the Servicing Criteria specified on a certification
  substantially in the form of Exhibit O hereto, unless such other form is
  mutually agreed upon and delivered to the Depositor concurrently with the
  execution of this Agreement. To the extent any of the Servicing Criteria are
  not applicable to such Person, with respect to asset-backed securities
  transactions taken as a whole involving such Person and that are backed by
  the same asset type backing the Certificates, such report shall include such
  a statement to that effect. The Depositor and the Master Servicer, and each
  of their 

  



105







	
   

  	
   

  
	
   

  	
  respective
  officers and directors shall be entitled to rely upon each such servicing
  criteria assessment. 

  
	
   

  	
   

  
	
   

  	
            (ii)
  Each of the Master Servicer and the Trustee shall deliver to the Depositor
  and the Master Servicer a report of a registered public accounting firm
  reasonably acceptable to the Depositor that attests to, and reports on, the
  assessment of compliance made by Master Servicer or the Trustee, as
  applicable, and delivered pursuant to the preceding paragraphs. Such
  attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
  Regulation S-X under the Securities Act and the Exchange Act, including,
  without limitation that in the event that an overall opinion cannot be expressed,
  such registered public accounting firm shall state in such report why it was
  unable to express such an opinion. Such report must be available for general
  use and not contain restricted use language. To the extent any of the
  Servicing Criteria are not applicable to such Person, with respect to
  asset-backed securities transactions taken as a whole involving such Person
  and that are backed by the same asset type backing the Certificates, such
  report shall include such a statement that that effect. 

  
	
   

  	
   

  
	
   

  	
            (iii)
  The Master Servicer shall cause each Subservicer that is a Reporting
  Subcontractor engaged by it to deliver to the Depositor an assessment of
  compliance and accountants’ attestation as and when provided in paragraphs
  (a) and (b) of this Section 10.7. 

  
	
   

  	
   

  
	
   

  	
            (iv)
  The Trustee shall cause each Reporting Subcontractor engaged by it to deliver
  to the Depositor and the Master Servicer an assessment of compliance and
  accountants’ attestation as and when provided in paragraphs (a) and (b) of this
  Section. 

  






	
   

  	
   

  
	
   

  	
            (b)
  Each assessment of compliance provided by a Subservicer pursuant to Section
  10.7(a)(iii) shall address each of the Servicing Criteria specified on a
  certification substantially in the form of Exhibit O hereto delivered to the
  Depositor concurrently with the execution of this Agreement or, in the case
  of a Subservicer subsequently appointed as such, on or prior to the date of
  such appointment. An assessment of compliance provided by a Subcontractor
  pursuant to Section 10.7(a)(iii) or (iv) need not address any elements of the
  Servicing Criteria other than those specified by the Master Servicer or the
  Trustee, as applicable, pursuant to Section 10.7(a)(i). 

  



          SECTION
10.8 Use of Subservicers and Subcontractors. 


	
   

  	
   

  
	
   

  	
            (a)
  The Master Servicer shall cause any Subservicer that is a Reporting
  Subcontractor used by the Master Servicer (or by any Subservicer) for the
  benefit of the Depositor to comply with the provisions of Section 3.16 and
  this Article X to the same extent as if such Subservicer were the Master
  Servicer (except with respect to the Master Servicer’s duties with respect to
  preparing and filing any Exchange Act Reports or as the Certifying Person).
  The Master Servicer shall be responsible for obtaining from each Subservicer
  that is a Reporting Subcontractor and delivering to the Depositor any
  servicer compliance statement required to be delivered by such Subservicer
  under Section 3.16, 

  



106







	
   

  	
   

  
	
   

  	
  any
  assessment of compliance and attestation required to be delivered by such
  Subservicer under Section 10.7 and any certification required to be delivered
  to the Certifying Person under Section 10.5 as and when required to be
  delivered. As a condition to the succession to any Subservicer as subservicer
  under this Agreement by any Person (i) into which such Subservicer may be
  merged or consolidated, or (ii) which may be appointed as a successor to any
  Subservicer, the Master Servicer shall provide to the Depositor, at least
  fifteen (15) calendar days prior to the effective date of such succession or
  appointment, (x) written notice to the Depositor of such succession or
  appointment and (y) in writing and in form and substance reasonably
  satisfactory to the Depositor, all information reasonably requested by the
  Depositor in order to comply with its reporting obligation under Item 6.2 of
  Form 8-K. 

  
	
   

  	
   

  
	
   

  	
            (b)
  It shall not be necessary for the Master Servicer or any Subservicer to seek
  the consent of the Depositor or any other party hereto to the utilization of any
  Subcontractor. The Master Servicer shall promptly upon request provide to the
  Depositor (or any designee of the Depositor, such as the Master Servicer or
  administrator) a written description (in form and substance satisfactory to
  the Depositor) of the role and function of each Subcontractor utilized by
  such Person (or in the case of the Master Servicer or any Subservicer),
  specifying (i) the identity of each such Subcontractor, (ii) which (if any)
  of such Subcontractors are “participating in the servicing function” within
  the meaning of Item 1122 of Regulation AB, and (iii) which elements of the
  Servicing Criteria will be addressed in assessments of compliance provided by
  each Subcontractor, who is a Reporting Subcontrator, identified pursuant to
  clause (ii) of this paragraph. 

  
	
   

  	
   

  
	
   

  	
            As
  a condition to the utilization of any Subcontractor determined to be a
  Reporting Subcontractor, the Master Servicer shall cause any such
  Subcontractor used by such Person (or in the case of the Master Servicer or any
  Subservicer) for the benefit of the Depositor to comply with the provisions
  of Sections 10.7 and 10.9 of this Agreement to the same extent as if such
  Subcontractor were the Master Servicer (except with respect to the Master
  Servicer’s duties with respect to preparing and filing any Exchange Act
  Reports or as the Certifying Person). The Master Servicer shall be
  responsible for obtaining from each Subcontractor and delivering to the
  Depositor and the Master Servicer, any assessment of compliance and attestation
  required to be delivered by such Subcontractor under Section 10.7, in each
  case as and when required to be delivered. 

  



          SECTION
10.9 Amendments. 


          In
the event the parties to this Agreement desire to further clarify or amend any
provision of this Article X, this Agreement shall be amended to reflect the new
agreement between the parties covering matters in this Article X pursuant to
Section 11.1, which amendment shall not require any Opinion of Counsel or
Rating Agency confirmations or the consent of any Certificateholder. If, during
the period that the Depositor is required to file Exchange Act Reports with
respect to the Trust Fund, the Master Servicer is no longer an Affiliate of the
Depositor, the Depositor shall assume the obligations and responsibilities of
the Master Servicer in this Article X with respect to the preparation and
filing of the Exchange Act Reports and/or acting as the Certifying Person, if
the Depositor has received indemnity from such successor 


107






Master Servicer
satisfactory to the Depositor, and such Master Servicer has agreed to provide a
Sarbanes-Oxley Certification to the Depositor substantially in the form of
Exhibit Q. 


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 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, 


108






without the
consent of the Holders of all such Certificates then outstanding. In addition,
the permitted activities of the Trust under this Agreement cannot be
significantly modified without the approval of Holders of Certificates
evidencing a Majority in Interest. 


          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 any 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. 


          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 


109






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. 


          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 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 financing and 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; 

  
	
   

  	
   

  	
   

  
	
   

  	
  (5)

  	
  The final
  payment to Certificateholders; and 

  



110







	
   

  	
   

  	
   

  
	
   

  	
  (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: 


	
   

  	
   

  	
   

  
	
   

  	
  (1)

  	
  Each report
  to Certificateholders described in Section 4.6; 

  
	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
  Each annual
  statement as to compliance described in Section 3.16; and 

  
	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
  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: Alfred Chang; (b) in the case of the
  Master Servicer, First Horizon Home Loans, 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, 4W,
  New York, New York 10286, Attention: Corporate Trust Administration—First
  Horizon 2007-AA2, 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. 


111







          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 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 


112






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.


          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.


* * * * * *


113






          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:

  
	
   

  	
   

  	
  


  
	
   

  	
            Alfred
  Chang

  
	
   

  	
            Vice
  President

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK,

  
	
   

  	
  not in its individual capacity, but solely as
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
  


  
	
   

  	
            Kelly
  Crosson

  
	
   

  	
            Assistant
  Treasurer

  
	
   

  	
   

  
	
   

  	
  FIRST HORIZON HOME LOANS, a division of First
  Tennessee Bank National Association, in its capacity as Master Servicer

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
  


  
	
   

  	
            Terry
  L. McCoy

  
	
   

  	
            Executive
  Vice President

  



The foregoing agreement is hereby

acknowledged and accepted as of the 

date first above written:


FIRST HORIZON HOME LOANS,

a division of First Tennessee Bank National Association,

in its capacity as Seller


	
   

  	
   

  	
   

  
	
  By:  

  	
   

  	
   

  
	
   

  	
  


  	
   

  
	
   

  	
            Terry L. McCoy

  	
   

  
	
   

  	
            Executive Vice President

  	
   

  



FHAMS
2007-AA2

Pooling and Servicing Agreement – Signature Page






SCHEDULE I


First Horizon
Asset Securities Inc.

Mortgage Pass-Through Certificates Series 2007-AA2


Mortgage Loan
Schedule


[Available Upon
Request from Trustee]


I-1






SCHEDULE II


First Horizon
Asset Securities Inc.

Mortgage Pass-Through Certificates Series 2007-AA2


Representations
and Warranties of the Master Servicer


          First
Horizon Home Loans (“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







	
   

  	
   

  
	
   

  	
  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. 

  
	
   

  	
   

  
	
   

  	
            (5)
  First Horizon is a member of MERS in good standing, and will comply in all
  material respects with the rules and procedures of MERS in connection with
  the servicing of the MERS Mortgage Loans for as along as such Mortgage Loans
  are registered with MERS.

  



II-2






SCHEDULE III


First Horizon
Asset Securities Inc.

Mortgage Pass-Through Certificates Series 2007-AA2


Form of Monthly
Master Servicer Report


[Begins on Next
Page]


III-1






EXHIBIT A


[FORM OF SENIOR
CERTIFICATE]


UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT
CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).


A-1







	
   

  	
   

  	
   

  
	
  Certificate No.

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  Cut-off Date

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  First Distribution Date

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  Initial Certificate Balance

  of this Certificate (“Denominations”)

  	
  :

  	
  $

  
	
   

  	
   

  	
   

  
	
  Initial Certificate 

  	
   

  	
   

  
	
  Balances of all 

  	
   

  	
   

  
	
  Certificate of this 

  	
   

  	
   

  
	
  Class

  	
  :

  	
  $

  
	
   

  	
   

  	
   

  
	
  CUSIP

  	
  :

  	
   

  



First Horizon
Alternative Mortgage Securities Trust 2007-AA2

Mortgage Pass-Through Certificates, Series 2007-AA2

Class [________]


	
   

  	
   

  	
   

  
	
   

  	
  evidencing a percentage interest in the
  distributions allocable to the Certificates of the above-referenced Class
  with respect to a Trust Fund consisting primarily of one or more pools of
  conventional mortgage loans (the “Mortgage Loans”) secured by first liens on
  one- to four-family residential properties.

  	
   

  



First Horizon
Asset Securities Inc., as Depositor


          [Principal
in respect of this Certificate is distributable monthly as set forth
herein.  Accordingly, the Certificate
Balance at any time may be less than the Certificate Balance as set forth
herein.]  This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Master Servicer or the Trustee referred to below or any of their
respective affiliates.  Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.


          This
certifies that __________________ is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination
of this Certificate by the aggregate Initial Certificate Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Mortgage
Loans deposited by First Horizon Asset Securities Inc. (the “Depositor”).  The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the “Agreement”) among the Depositor, First Horizon Home Loans, as master
servicer (the “Master Servicer”), and The Bank of New York, as trustee (the “Trustee”).  To the extent not
defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.  This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.


          Reference
is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.


A-2






          This
Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.


A-3







          IN
WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.


Dated:  June __, 2007


	
 

	
 

	
 


	
 

	
THE BANK OF
  NEW YORK,

  not in its individual capacity, but solely as Trustee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Authorized
  Signatory of 

  THE BANK OF NEW YORK

  not in its individual capacity,

  but solely as Trustee








	
 

	
 

	
 

	
 


	
Countersigned:

	
 

	
 


	
 

	
 

	
 

	
 


	
By

	
 

	
 

	
 


	
 

	


	
 

	
 


	
 

	
Authorized
  Signatory of

  THE BANK OF NEW YORK,

  not in its individual capacity, 

  but solely as Trustee

	
 

	
 





A-4






EXHIBIT B


[FORM OF SUBORDINATED / [REGULATION S
CERTIFICATE]]


UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.


SOLELY FOR
U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A
“REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE “CODE”).


THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.


THIS
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES (“BLUE SKY LAWS”), AND SUCH CERTIFICATE MAY NOT BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE BLUE SKY
LAWS.  NO REPRESENTATION IS MADE AS TO
THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THIS CERTIFICATE.


[THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  NEITHER THIS CERTIFICATE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES (AS DEFINED IN
RULES 901 THROUGH 905 OF THE SECURITIES ACT (“REGULATION S”)) OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.]


B-1






[THE HOLDER OF
THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF IS DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT (A) UNTIL THE EXPIRATION OF THE APPLICABLE “DISTRIBUTION
COMPLIANCE PERIOD” WITHIN THE MEANING OF REGULATION S, ANY OFFER, SALE, PLEDGE
OR OTHER TRANSFER OF THIS CERTIFICATE SHALL NOT BE MADE IN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON (EACH AS DEFINED IN
REGULATION S) AND (B) IF THIS CERTIFICATE IS HELD WITHIN THE UNITED STATES OR
SUCH HOLDER IS A U.S. PERSON OR THIS CERTIFICATES IS HELD FOR THE ACCOUNT OR
BENEFIT OF, A U.S. PERSON (EACH AS DEFINED IN REGULATION S) SUCH CERTIFICATE
WAS ACQUIRED ONLY (1) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (2) BY SUCH HOLDER AS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A OR TO AN INSTITUTIONAL ACCREDITED INVESTOR AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]


NEITHER THIS
CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE
REPRESENTS TO THE TRUSTEE THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN
OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED (“ERISA”), OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF THE
CODE, OR, IF SUCH PURCHASER IS AN INSURANCE COMPANY AND THE CERTIFICATE HAS
BEEN SUBJECT TO AN ERISA-QUALIFYING UNDERWRITING, A REPRESENTATION IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN, OR DELIVERS
TO THE TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE
AGREEMENT REFERRED TO HEREIN.  SUCH REPRESENTATION
SHALL BE DEEMED TO HAVE BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE’S ACCEPTANCE
OF A CERTIFICATE OF THIS CLASS AND BY A BENEFICIAL OWNER’S ACCEPTANCE OF ITS
INTEREST IN A CERTIFICATE OF THIS CLASS.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN
SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO
THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.


B-2







	
 

	
 


	
Certificate
  No.

	
:


	
 

	
 


	
Cut-off Date

	
:


	
 

	
 


	
First Distribution
  Date

	
:


	
 

	
 


	
Initial
  Certificate Balance

  of this Certificate

  (“Denominations”)

	
:    $


	
 

	
 


	
Initial
  Certificate 

	
 


	
Balances of
  all

  Certificate of this

  Class

	
:    $


	
 

	
 


	
CUSIP

	
:





First Horizon Alternative Mortgage Securities
Trust 2007-AA2

Mortgage Pass-Through Certificates, Series 2007-AA2 

Class [       ]


[Regulation S]


	
 


	
evidencing a
  percentage interest in the distributions allocable to the Certificates of the
  above-referenced Class with respect to a Trust Fund consisting primarily of
  one or more pools of conventional mortgage loans (the “Mortgage Loans”)
  secured by first liens on one- to four-family residential properties.





First Horizon Asset Securities Inc., as
Depositor


          Principal
in respect of this Certificate is distributable monthly as set forth
herein.  Accordingly, the Certificate
Balance at any time may be less than the Certificate Balance as set forth
herein.  This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Master Servicer, or the Trustee referred to below or any of
their respective affiliates.  Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.


          This
certifies that ___________ is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the denomination of this
Certificate by the aggregate Initial Certificate Balances of the denominations
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Mortgage Loans deposited by First Horizon Asset Securities Inc. (the
“Depositor”).  The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the “Agreement”) among the Depositor, First Horizon Home
Loans, as master servicer (the “Master Servicer”), and The Bank of New York, as
trustee (the “Trustee”).  To the extent
not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement.  This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.


B-3






          No
transfer of a Certificate of this Class 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 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 the event that such a transfer is to be
made within two years from the date of the initial issuance of Certificates
pursuant hereto, there shall also be delivered (except in the case of a
transfer pursuant to Rule 144A of the Securities Act) to the Trustee an Opinion
of Counsel that such transfer may be made pursuant to an exemption from the
Securities Act and such state securities laws, which Opinion of Counsel shall
not be obtained at the expense of the Trustee, the Seller, the Master Servicer
or the Depositor.  The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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 a Certificate of this Class shall be made unless the Trustee shall
have received either (i) a representation [letter] from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or Section 4975 of the Code, nor a
person acting on behalf of any such plan, which representation letter shall not
be an expense of the Trustee, the Depositor or the Master Servicer, (ii) if the
purchaser is an insurance company and the certificate has been subject to an
ERISA-Qualifying Underwriting, 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 Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or
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, an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of such 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 undertaken in the Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Depositor or the Master
Servicer.  [Such representation shall be
deemed to have been made to the Trustee by the Transferee’s acceptance of a
Certificate of this Class and by a beneficial owner’s acceptance of its
interest in a Certificate of this Class. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate of this Class to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.]Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.


          Reference
is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.


B-4






          This
Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.


B-5






          IN
WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.


Dated:  June __, 2007


	
 

	
 

	
 


	
 

	
THE BANK OF
  NEW YORK,

  not in its individual capacity, but solely as Trustee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Authorized
  Signatory of 

  THE BANK OF NEW YORK

  not in its individual capacity,

  but solely as Trustee








	
 

	
 

	
 

	
 


	
Countersigned:

	
 

	
 


	
 

	
 

	
 

	
 


	
By

	
 

	
 

	
 


	
 

	


	
 

	
 


	
 

	
Authorized
  Signatory of

  THE BANK OF NEW YORK,
 not in its individual capacity, 

  but solely as Trustee

	
 

	
 





B-6






EXHIBIT C


[FORM OF RESIDUAL CERTIFICATE]


SOLELY FOR
U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS ONE OR MORE
“RESIDUAL INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).


NEITHER THIS
CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE PROPOSED
TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.


[THIS
CERTIFICATE REPRESENTS THE “TAX MATTERS PERSON RESIDUAL INTEREST” ISSUED UNDER
THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY NOT BE
TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE
TRANSFEREE OF THE DUTIES OF THE SERVICER UNDER SUCH AGREEMENT.]


NEITHER THIS
CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE
REPRESENTS TO THE TRUSTEE THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED (“ERISA”), OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF THE
CODE, OR, IF SUCH PURCHASER IS AN INSURANCE COMPANY, A REPRESENTATION IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN, OR DELIVERS
TO THE TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE
AGREEMENT REFERRED TO HEREIN.  [SUCH
REPRESENTATION SHALL BE DEEMED TO HAVE BEEN MADE TO THE TRUSTEE BY THE
TRANSFEREE’S ACCEPTANCE OF A CERTIFICATE OF THIS CLASS AND BY A BENEFICIAL
OWNER’S ACCEPTANCE OF ITS INTEREST IN A CERTIFICATE OF THIS CLASS.]  NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF
AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.


C-1







	
 

	
 


	
Certificate
  No.

	
:


	
 

	
 


	
Cut-off Date

	
:


	
 

	
 


	
First
  Distribution Date

	
:


	
 

	
 


	
Initial Certificate Balance

  of this Certificate

  (“Denominations”)

	
:    $


	
 

	
 


	
Initial
  Certificate

  Balances of all

  Certificate of this 

  Class

	
:    $


	
 

	
 


	
CUSIP

	
:





First Horizon Alternative Mortgage Securities
Trust 2007-AA2

Mortgage Pass-Through Certificates, Series 2007-AA2


	
 


	
evidencing a
  percentage interest in the distributions allocable to the Certificates of the
  above-referenced Class with respect to a Trust Fund consisting primarily of
  one or more pools of conventional mortgage loans (the “Mortgage Loans”)
  secured by first liens on one- to four-family residential properties.





First Horizon Asset Securities Inc., as
Depositor


          Principal
in respect of this Certificate is distributable monthly as set forth
herein.  Accordingly, the Certificate
Balance at any time may be less than the Certificate Balance as set forth
herein.  This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Master Servicer or the Trustee referred to below or any of their
respective affiliates.  Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.


          This
certifies that _________________ is the registered owner of the Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Initial Certificate Balances of the denominations of all Certificates
of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting of the Mortgage Loans
deposited by First Horizon Asset Securities Inc. (the “Depositor”).  The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the “Agreement”) among the Depositor, First Horizon Home Loans, as master
servicer (the “Master Servicer”), and The Bank of New York, as trustee (the
“Trustee”).  To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.  This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.


          Any
distribution of the proceeds of any remaining assets of the Trust Fund will be
made only upon presentment and surrender of this Class I-A-R Certificate at the
Corporate Trust 


C-2






Office or the
office or agency maintained by the Trustee in New York, New York.  This Class I-A-R Certificate represents an ownership
in the RL Interest, RU Interest and RM Interest, as defined in the Agreement.


          No
transfer of a Class I-A-R Certificate shall be made unless the Trustee shall
have received either (i) a representation [letter] from the transferee of such Certificate,
acceptable to and in form and substance satisfactory to the Trustee, to the
effect that such transferee is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person
acting on behalf of any such plan, which representation letter shall not be an
expense of the Trustee, the Depositor or the Master Servicer, (ii) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificate 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 Certificate are covered under Sections I and III
of PTCE 95-60 or (iii) in the case of any such Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or
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, an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of such Class I-A-R 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 and the Master
Servicer to any obligation in addition to those undertaken in the Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Depositor
or the Master Servicer.  [Such
representation shall be deemed to have been made to the Trustee by the
Transferee’s acceptance of this Class I-A-R Certificate and by a beneficial
owner’s acceptance of its interest in such Certificate.]  Notwithstanding anything else to the
contrary herein, any purported transfer of a Class I-A-R Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.


          Each
Holder of this Class I-A-R Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest
in this Class I-A-R Certificate must be a Permitted Transferee, (ii) no
Ownership Interest in this Class I-A-R Certificate may be transferred without
delivery to the Trustee of (a) a transfer affidavit of the proposed transferee
and (b) a transfer certificate of the transferor, each of such documents to be
in the form described in the Agreement, (iii) each person holding or acquiring
any Ownership Interest in this Class I-A-R Certificate must agree to require a
transfer affidavit and to deliver a transfer certificate to the Trustee as
required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Class I-A-R Certificate must agree not to transfer
an Ownership Interest in this Class I-A-R Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v)
any attempted or purported transfer of any Ownership Interest in this Class
I-A-R Certificate in violation of such restrictions will be absolutely null and
void and will vest no rights in the purported transferee.


          Reference
is hereby made to the further provisions of this Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.


C-3






          This
Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.


C-4






          IN
WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.


Dated:  June __, 2007


	
 

	
 

	
 


	
 

	
THE BANK OF
  NEW YORK,

  not in its individual capacity, but solely as Trustee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Authorized
  Signatory of 

  THE BANK OF NEW YORK

  not in its individual capacity,

  but solely as Trustee








	
 

	
 

	
 

	
 


	
Countersigned:

	
 

	
 


	
 

	
 

	
 

	
 


	
By

	
 

	
 

	
 


	
 

	


	
 

	
 


	
 

	
Authorized
  Signatory of

  THE BANK OF NEW YORK,
 not in its individual capacity, 

  but solely as Trustee

	
 

	
 





C-5






EXHIBIT D


[Form of Reverse of Certificates]


First Horizon Alternative Mortgage Securities
Trust 2007-AA2

Mortgage Pass-Through Certificates


          This
Certificate is one of a duly authorized issue of Certificates designated as
First Horizon Alternative Mortgage Securities Trust 2007-AA2 Mortgage
Pass-Through Certificates, of the Series specified on the face hereof (herein
collectively called the “Certificates”), and representing a beneficial
ownership interest in the Trust Fund created by the Agreement.


          The
Certificateholder, by its acceptance of this Certificate, agrees that it will
look solely to the funds on deposit in the Distribution Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.


          This
Certificate does not purport to summarize the Agreement and reference is made
to the Agreement for the interests, rights and limitations of rights, benefits,
obligations and duties evidenced thereby, and the rights, duties and immunities
of the Trustee.


          Pursuant
to the terms of the Agreement, a distribution will be made on the 25th day of
each month or, if such 25th day is not a Business Day, the Business Day
immediately following (the “Distribution Date”), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name
this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the
month of such Distribution Date.


          Distributions
on this Certificate shall be made by wire transfer of immediately available
funds to the account of the Holder hereof at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the
related Record Date and such Certificateholder shall satisfy the conditions to
receive such form of payment set forth in the Agreement, or, if not, by check
mailed by first class mail to the address of such Certificateholder appearing
in the Certificate Register. The final distribution on each Certificate will be
made in like manner, but only upon presentment and surrender of such
Certificate at the Corporate Trust Office or such other location specified in
the notice to Certificateholders of such final distribution.


          The
Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the rights and obligations of the Trustee and
the rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or


D-1






in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates.


          As
provided in the Agreement and subject to certain limitations therein set forth,
the transfer of this Certificate is registrable in the Certificate Register of
the Trustee upon surrender of this Certificate for registration of transfer at
the Corporate Trust Office or the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder’s attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the
Trust Fund will be issued to the designated transferee or transferees.


          The
Certificates are issuable only as registered Certificates without coupons in denominations
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest, as requested by the Holder surrendering the
same.


          No
service charge will be made for any such registration of transfer or exchange,
but the Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.


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


          On
any Distribution Date on which the aggregate of the Pool Principal Balances of
all of the Mortgage Pools is less than 10% of the aggregate of the Cut-off Date
Pool Principal Balances of all of the Mortgage Pools, the Master Servicer will
have the option to repurchase, in whole, from the Trust Fund all remaining
Mortgage Loans and all property acquired in respect of the Mortgage Loans in
the Mortgage Pools at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of the
maturity or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund or the disposition of all property in
respect thereof and the distribution to Certificateholders of all amounts
required to be distributed pursuant to the Agreement. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.


          Any
term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.


D-2







	
 

	
 


	
 

	
ASSIGNMENT


	
 

	
 


	
 

	
FOR VALUE
  RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto 








	
 


	



	
(Please insert social security or


	
other identifying number of assignee)








	



	
 


	



	
(Please print or typewrite name and address


	
including postal zip code of assignee)


	
 


	






the Percentage
Interest evidenced by the within Certificate and hereby authorizes the transfer
of registration of such Percentage Interest to assignee on the Certificate
Register of the Trust Fund.


          I
(We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:


	
 


	



	
 


	



	
 


	



	
 








	
Dated: 

	
 


	
 

	



	
 

	
 


	
 

	
 

	



	
 

	
 

	
Signature by
  or on behalf of assignor





DISTRIBUTION INSTRUCTIONS


          The
assignee should include the following for purposes of distribution:


          Distributions
shall be made, by wire transfer or otherwise, in immediately available funds to
______________________________________, for the account of
_____________________, account number ___________, or, if mailed by check, to
___________________________. Applicable statements should be mailed to
__________________________. 


          This
information is provided by ________________________________________, the
assignee named above, or _________________, as its agent.


D-3






EXHIBIT E


FORM OF INITIAL CERTIFICATION OF CUSTODIAN


[date]


First Horizon
Asset Securities Inc.

First Horizon Home Loans  

4000 Horizon Way

Irving, Texas 75063


The Bank of
New York

101 Barclay Street, 4W

New York, New York 10286


	
 

	
 

	
 


	
 

	
Re:

	
Custodial
  Agreement dated as of June 29, 2007 by and among The Bank of New York, as
  Trustee, First Horizon Home Loans, as Servicer and First Tennessee Bank
  National Association, as Custodian





Gentlemen:


          In
accordance with Section 2 of the above-captioned Custodial Agreement (the “Custodial
Agreement”), the undersigned, as Custodian, hereby certifies that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan listed in the attached schedule), it has received:


          (i)
the original Mortgage Note, endorsed as provided in the following form: “Pay to
the order of ____________, without recourse”; and


          (ii)
a duly executed assignment, or a copy of such assignment certified by the
Seller as being a true and complete copy of the assignment, of the Mortgage
(which may be included in a blanket assignment or assignments); provided,
however, that it has received no assignment with respect to any Mortgage for
which the related Mortgaged Property is located in the Commonwealth of Puerto
Rico.


          Based
on its review and examination and only as to the foregoing documents, such
documents appear regular on their face and related to such Mortgage Loan.


          The Custodian has made no independent
examination of any documents contained in each Mortgage File beyond the review
specifically required in the Custodial Agreement. The Custodian makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.


E-1






          Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Custodial Agreement.


	
 

	
 

	
 


	
 

	
FIRST TENNESSEE BANK NATIONAL


	
 

	
ASSOCIATION,


	
 

	
as Custodian


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name: 

	
 


	
 

	
 

	



	
 

	
Title:

	
 


	
 

	
 

	






E-2






EXHIBIT F


FORM OF DELAY DELIVERY CERTIFICATION


[date]


First Horizon
Asset Securities Inc.   

First Horizon Home Loans  

4000 Horizon Way

Irving, Texas 75063


The Bank of
New York

101 Barclay Street, 4W

New York, New York 10286


	
 

	
 

	
 


	
 

	
Re:

	
Custodial
  Agreement dated as of June 29, 2007 by and among The Bank of New York, as
  Trustee, First Horizon Home Loans, as Servicer, and First Tennessee Bank
  National Association, as Custodian





Ladies and
Gentlemen:


In accordance
with Section 3 of the above-captioned Custodial Agreement (the “Custodial
Agreement”), the undersigned, as Custodian, hereby certifies that, as to each
Delay Delivery Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Delay Delivery Mortgage Loan listed in the attached schedule), it has
received:


          (i)
the original Mortgage Note, endorsed as provided in the following form: “Pay to
the order of _____________, without recourse”; 


          (ii)
in the case of each 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 Mortgage Loan that is a MERS Mortgage Loan,
the original Mortgage, or a copy of such Mortgage certified by the Seller as
being a true and complete copy of the Mortgage, noting thereon the presence of
the MIN of the Mortgage Loan and language indicating that the Mortgage Loan is
a MOM Loan if the Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon]; and


          (iii)
in the case of each Mortgage Loan, a duly executed assignment, or a copy of
such assignment certified by the Seller as a true and complete copy of the
assignment, of the Mortgage (which may be included in a blanket assignment or
assignments); provided, however, that it has received no assignment with
respect to any Mortgage for which the related Mortgage Property is located in
the Commonwealth of Puerto Rico.


          Based
on its review and examination and only as to the foregoing documents, such
documents appear regular on their face and related to such Delay Delivery
Mortgage Loan.


          The
Custodian has made no independent examination of any documents contained in
each Mortgage File beyond the review specifically required in the Custodial
Agreement. The


F-1






Custodian
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Delay Delivery Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Delay Delivery Mortgage Loan.


          Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the above-captioned Custodial Agreement.


	
 

	
 

	
 


	
 

	
FIRST TENNESSEE BANK NATIONAL


	
 

	
ASSOCIATION,


	
 

	
as Custodian


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name:

	
 


	
 

	
 

	



	
 

	
Title:

	
 


	
 

	
 

	






F-2







EXHIBIT G


FORM OF SUBSEQUENT CERTIFICATION OF CUSTODIAN


[date]


First Horizon
Asset Securities Inc.

First Horizon Home Loans

4000 Horizon Way

Irving, Texas 75063


The Bank of
New York

101 Barclay Street, 4W

New York, New York 10286


	
 

	
 

	
 


	
 

	
Re:

	
Custodial
  Agreement dated as of June 29, 2007 by and among The Bank of New York, as
  Trustee, First Horizon Home Loans, as Servicer, and First Tennessee Bank
  National Association, as Custodian





Ladies and
Gentlemen:


          In
accordance with Section 3 of the above-captioned Custodial Agreement (the
“Custodial Agreement”), the undersigned, as Custodian hereby certifies that as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached exception report) it has
received, unless otherwise provided in Section 2 of the Custodial Agreement:


	
 

	
 

	
 


	
 

	
(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 endorsements
  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 in Section 2(c) of the Custodial Agreement 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 recorded 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, 





G-1







	
 

	
 

	
 


	
 

	
 

	
with
  evidence of recording indicated thereon, or a copy of the Mortgage certified
  by the Seller as being a true and complete copy of the Mortgage;


	
 

	
 

	
 


	
 

	
(iii)

	
in the case
  of each Mortgage Loan that is not a MERS Mortgage Loan, a duly executed
  assignment of the Mortgage, or a copy of such assignment certified by the
  Seller as being a true and complete copy of the assignment, in blank (which
  may be included in a blanket assignment or assignments), together with,
  except as provided below, all interim recorded assignments, or copies of such
  interim assignments certified by the Seller as being true and complete copies
  of the interim 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, or a copy of such title policy
  certified by the Seller as being a true and complete copy of the 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, or in lieu thereof, an Alternative Title Product or a
  copy of such Alternative Title Product certified by the Seller as being a
  true and complete copy of the Alternative Title Product; 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
  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


	
 

	
 

	
 


	
 

	
(e)

	
Executed
  UCC-3 financing statements or their 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).





G-2






          Based
on its review and examination and only as to the foregoing documents, (a) such
documents appear regular on their face and related to such Mortgage Loan, and
(b) the information set forth in items (i), (ii), (iii), (iv), (vi) and (xi) of
the definition of the “Mortgage Loan Schedule” in Article I of the Pooling and
Servicing Agreement accurately reflects information set forth in the Mortgage
File.


          The
Custodian has made no independent examination of any documents contained in
each Mortgage File beyond the review specifically required in the Custodial
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, sufficiency, enforceability or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan. Notwithstanding anything herein to
the contrary, the Custodian has made no determination and makes no
representations 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 sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which the assignment relates.


          Capitalized
words and phrases used herein shall have the respective meanings assigned to
them in the Custodial Agreement.


	
 

	
 

	
 


	
 

	
FIRST TENNESSEE BANK NATIONAL

  ASSOCIATION,


	
 

	
as Custodian


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name:

	
 


	
 

	
 

	



	
 

	
Title:

	
 


	
 

	
 

	






G-3






EXHIBIT H


TRANSFER AFFIDAVIT


First Horizon Alternative Mortgage Securities
Trust 2007-AA2

Mortgage Pass-Through Certificates

Series 2007-AA2


	
 

	
 


	
STATE OF

	
)


	
 

	
) ss.:


	
COUNTY OF

	
)





          The
undersigned, being first duly sworn, deposes and says as follows:


          1.
The undersigned is an officer of __________, the proposed Transferee of an
Ownership Interest in a [Class I-A-R] Certificate (the “Certificate”) issued
pursuant to the Pooling and Servicing Agreement, (the “Agreement”), relating to
the above-referenced Series, by and among First Horizon Asset Securities Inc.,
as depositor (the “Depositor”), First Horizon Home Loans, as master servicer,
and The Bank of New York, as trustee. Capitalized terms used, but not defined
herein or in Exhibit 1 hereto, shall have the meanings ascribed to such terms
in the Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.


          2.
The Transferee is, as of the date hereof, and will be, as of the date of the
Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee
has no knowledge that any such affidavit is false. The Transferee does not hold
REMIC residual interests as nominee to facilitate the clearance and settlement
of such interests through electronic book-entry changes in accounts of
participating organizations.


          3.
The Transferee has been advised of, and understands that (i) a tax may be
imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman)
for a Person that is not a Permitted Transferee, on the agent; and (iii) the
Person otherwise liable for the tax shall be relieved of liability for the tax
if the subsequent transferee furnished to such Person an affidavit that such
subsequent transferee is a Permitted Transferee and, at the time of Transfer,
such Person does not have actual knowledge that the affidavit is false.


          4.
The Transferee has been advised of, and understands that a tax may be imposed
on a “pass-through entity” holding the Certificate if at any time during the
taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
“pass-through entity” includes a regulated investment company, a real estate
investment trust or common trust fund, a


H-1






partnership,
trust or estate, and certain cooperatives and, except as may be provided in
Treasury Regulations, persons holding interests in pass-through entities as a
nominee for another Person.)


          5.
The Transferee has reviewed the provisions of Section 5.2(c) of the Agreement
(attached hereto as Exhibit 2 and incorporated herein by reference) and
understands the legal consequences of the acquisition of an Ownership Interest
in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.2(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.


          6.
The Transferee agrees to require a Transfer Affidavit from any Person to whom the
Transferee attempts to Transfer its Ownership Interest in the Certificate, and
in connection with any Transfer by a Person for whom the Transferee is acting
as nominee, trustee or agent, and the Transferee will not Transfer its
Ownership Interest or cause any Ownership Interest to be Transferred to any
Person that the Transferee knows is not a Permitted Transferee. In connection
with any such Transfer by the Transferee, the Transferee agrees to deliver to
the Trustee a certificate substantially in the form set forth as Exhibit I to
the Agreement (a “Transferor Certificate”) to the effect that such Transferee
has no actual knowledge that the Person to which the Transfer is to be made is
not a Permitted Transferee.


          7.
The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.


          8.
The Transferee’s taxpayer identification number is ______.


          9.
The Transferee is either a U.S. Person as defined in Code Section 7701(a)(30)
or the Transferee has furnished the Transferor a properly completed Internal
Revenue Service Form W-8ECI.


          10.
The Transferee is aware that the Certificate may represent one or more
interests in a “noneconomic residual interest” within the meaning of Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.


          11.
The 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.


          12.
The Transferee has historically paid its debts as they came due and the
Transferee will continue to pay its debts as they come due in the future; the
Transferee understands that, as the holder of the Certificate, the Transferee
may incur tax liabilities in excess of any cash flows generated by the
Certificate and the Transferee intends to pay taxes associated with holding the
Certificate as they become due.


H-2






          13.
The Transferee is a domestic corporation taxable as a regular corporation for
U.S. federal income tax purposes (a “taxable domestic C corporation”) and is
not a real estate investment trust, regulated investment company or REMIC. The
Transferee will not cause income from the Certificate to be attributable, for
U.S. federal income tax purposes, to a non-U.S. permanent establishment or
fixed base (within the meaning of an applicable income tax treaty) of the
Transferee or another U.S. taxpayer. At the time of the Transfer, and at the
close of each of the Transferee’s two fiscal years preceding the year of the
Transfer, the Transferee’s gross assets for financial reporting purposes
exceeded $10 million (together, the “Asset Requirements”), and the Transferee
hereby covenants that any subsequent Transfer of its Ownership Interest in the
Certificate will be to another taxable, domestic C corporation satisfying the
Asset Requirements


          IN
WITNESS WHEREOF, the Transferee has caused this instrument to be executed on
its behalf, pursuant to authority of its Board of Directors, by its duly
authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ___ day of _________, 20__.


	
 

	
 

	
 


	
 

	



	
 

	
Print Name
  of Transferee


	
 

	
 








	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	








	
 

	
 

	
 


	
 

	
Name:

	
 


	
 

	
 

	








	
 

	
 

	
 


	
 

	
Title:

	
 


	
 

	
 

	






          Personally
appeared before me the above-named ________________, known or proved to me to
be the same person who executed the foregoing instrument and to be the
_________________ of the Transferee, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.


          Subscribed
and sworn before me this _____ day of ___________, 20____.


	
 

	
 


	
 

	



	
 

	
NOTARY
  PUBLIC


	
 

	
 


	
 

	
My
  Commission expires the ___ day of 

  ________________, 20___.





H-3






EXHIBIT 1 to EXHIBIT H


Certain Definitions


          “Ownership
Interest”: As to any 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.


          “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
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 Certificate to such Person may cause any
REMIC created pursuant to the Agreement to fail to qualify as a REMIC at any
time that the Certificates (as defined in the Agreement) are outstanding;
provided, however, that if a person is classified as a partnership or a
disregarded entity 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, bank,
joint-stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.


          “Transfer”:
Any direct or indirect transfer or sale of any Ownership Interest in a
Certificate, including the acquisition of a Certificate by the Depositor.


H-4






          “Transferee”:
Any Person who is acquiring by Transfer any Ownership Interest in a
Certificate.


H-5






EXHIBIT 2 to EXHIBIT H


Section 5.2(c) of the Agreement


          (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
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 and with a certificate of the proposed
  transferor in the form attached hereto as Exhibit I.


	
 

	
 


	
 

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





H-6







	
 

	
 


	
 

	
          (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 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.


H-7






EXHIBIT I


FORM OF TRANSFEROR CERTIFICATE


_______________, 20___


First Horizon
Asset Securities Inc.

First Horizon Home Loans  

4000 Horizon Way

Irving, Texas 75063


The Bank of
New York

101 Barclay Street, 4W

New York, New York 10286


	
 

	
 

	
 


	
 

	
Re:

	
First
  Horizon Alternative Mortgage Securities Trust 2007-AA2 Mortgage Pass-Through
  Certificates, Series 2007-AA2, Class ___





Ladies and
Gentlemen:


          In
connection with our disposition of the above Certificates we certify that (a)
to the extent we are disposing of a Private Certificate, we understand that
such Private Certificate has not been registered under the Securities Act of
1933, as amended (the “Act”), and is being disposed of by us in a transaction
that is exempt from the registration requirements of the Act, (b) we have not
offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, and
(c) to the extent we are disposing of a Residual Certificate, we have no
knowledge the transferee is not a Permitted Transferee.


          Capitalized
terms used herein shall have the meaning ascribed to such terms in the Pooling
and Servicing Agreement, dated as of June 1, 2007, by and among First Horizon
Asset Securities Inc., as depositor, First Horizon Home Loans, as master
servicer, and The Bank of New York, as trustee, pursuant to which the Residual
Certificates were issued. 


	
 

	
 

	
 


	
 

	
Very truly
  yours,


	
 

	
 


	
 

	



	
 

	
Print Name
  of Transferor


	
 

	
 


	
 

	
By:


	
 

	
 

	



	
 

	
 

	
          Authorized
  Officer





I-1






EXHIBIT J


FORM OF INVESTMENT LETTER (NON-RULE 144A)


_____________, 20___


First Horizon
Asset Securities Inc.

4000 Horizon Way

Irving, Texas 75063


The Bank of
New York

101 Barclay Street, 4W

New York, New York 10286

Attention: Mortgage-Backed Securities Group


	
 

	
 

	
 


	
 

	
Re:

	
First
  Horizon Alternative Mortgage Securities Trust 2007-AA2 Mortgage Pass-Through
  Certificates, Series 2007-AA2, Class ___





Ladies and
Gentlemen:


          In
connection with our acquisition of the above Certificates we certify that (a)
we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the “Act”), or any state securities laws
and are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
“accredited investor,” as defined in Regulation D under the Act, and have such knowledge
and experience in financial and business matters that we are capable of
evaluating the merits and risks of investments in the Certificates, (c) we have
had the opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (d) either (i) we are not an employee benefit plan or arrangement
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement nor are we using the assets of any such plan or
arrangement to effect such acquisition or (ii) if, in the case of
ERISA-Restricted Certificates that have been the subject of an ERISA-Qualifying
Underwriting, we are an insurance company, a representation that we are 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, (e) we are acquiring the Certificates for investment for our own
account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense
provide an opinion of counsel satisfactory 


J-1






to the
addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.


	
 

	
 

	
 


	
 

	
Very truly
  yours,


	
 

	
 


	
 

	



	
 

	
Print Name
  of Transferee


	
 

	
 


	
 

	
By:


	
 

	
 

	



	
 

	
Authorized
  Officer





J-2






EXHIBIT K


FORM OF RULE 144A LETTER


___________, 20__


First Horizon
Asset Securities Inc.

4000 Horizon Way

Irving, Texas 75063


The Bank of
New York

101 Barclay Street, 4W

New York, New York 10286

Attention: Mortgage-Backed Securities Group


	
 

	
 

	
 


	
 

	
Re:

	
First
  Horizon Alternative Mortgage Securities Trust 2007-AA2 Mortgage Pass-Through
  Certificates, Series 2007-AA2, Class ___





Ladies and
Gentlemen:


          In
connection with our acquisition of the above Certificates we certify that (a)
we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the “Act”), or any state securities laws
and are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan or
arrangement that is subject to the Employee Retirement Income Security Act of
1974, as amended, or a plan or arrangement that is subject to Section 4975 of
the Internal Revenue Code of 1986, as amended, nor are we acting on behalf of
any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such acquisition, (e) if an insurance company, in the
case of ERISA-restricted Certificates that have been the subject of an
ERISA-Qualifying Underwriting, we are purchasing the Certificates with funds
contained in an “insurance company general account” (as defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and our
purchase and holding of the Certificates are covered under Sections I and III
of PTCE 95-60, (f) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would render the
disposition of the 


K-1






Certificates a
violation of Section 5 of the Act or require registration pursuant thereto, nor
will act, nor has authorized or will authorize any person to act, in such
manner with respect to the Certificates, (g) we are a “qualified institutional
buyer” as that term is defined in Rule 144A under the Act (“Rule 144A”) and
have completed either of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2, (h) we are aware that the sale to us is being
made in reliance on Rule 144A, and (i) we are acquiring the Certificates for
our own account or for resale pursuant to Rule 144A and further, understand
that such Certificates may be resold, pledged or transferred only (A) to a
person reasonably believed to be a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer to
whom notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (B) pursuant to another exemption from registration
under the Act.


	
 

	
 

	
 


	
 

	
Very truly
  yours,


	
 

	
 


	
 

	



	
 

	
Print Name
  of Transferee


	
 

	
 


	
 

	
By:


	
 

	
 

	



	
 

	
Authorized
  Officer





K-2






ANNEX 1 TO EXHIBIT
K


QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A


[For Transferees
Other Than Registered Investment Companies]


          The
undersigned (the “Buyer”) hereby certifies as follows to the parties listed in
the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:


          1.
As indicated below, the undersigned is the President, Chief Financial Officer,
Senior Vice President or other executive officer of the Buyer.


          2.
In connection with purchases by the Buyer, the Buyer is a “qualified
institutional buyer” as that term is defined in Rule 144A under the Securities
Act of 1933, as amended (“Rule 144A”) because (i) the Buyer owned and/or
invested on a discretionary basis $ ______ 1 in securities (except for the excluded securities referred to below) as of the
end of the Buyer’s most recent fiscal year (such amount being calculated in
accordance with Rule 144A and (ii) the Buyer satisfies the criteria in the category
marked below. 


	
 

	
 


	
 

	
          ___ Corporation, etc. The Buyer is a
  corporation (other than a bank, savings and loan association or similar
  institution), Massachusetts or similar business trust, partnership, or
  charitable organization described in Section 501(c)(3) of the Internal
  Revenue Code of 1986, as amended.


	
 

	
 


	
 

	
          ___ Bank. The Buyer (a) is a national bank or
  banking institution organized under the laws of any State, territory or the
  District of Columbia, the business of which is substantially confined to banking
  and is supervised by the State or territorial banking commission or similar
  official or is a foreign bank or equivalent institution, and (b) has an
  audited net worth of at least $25,000,000 as demonstrated in its latest
  annual financial statements, a copy of which is attached hereto.


	
 

	
 


	
 

	
          ___ Savings and Loan. The Buyer (a) is a
  savings and loan association, building and loan association, cooperative
  bank, homestead association or similar institution, which is supervised and
  examined by a State or Federal authority having supervision over any such
  institutions or is a foreign savings and loan association or equivalent
  institution and (b) has an audited net worth of at least $25,000,000 as
  demonstrated in its latest annual financial statements, a copy of which is
  attached hereto.


	
 

	
 


	
 

	
          ___ Broker-dealer. The Buyer is a dealer
  registered pursuant to Section 15 of the Securities Exchange Act of 1934.


	
 

	
 


	
 

	
          ___ Insurance Company. The Buyer is an
  insurance company whose primary and predominant business activity is the
  writing of insurance or the reinsuring of risks underwritten by insurance
  companies and which is subject to supervision by the 






	
 

	
 

	
 


	
 

	
SECTION 1.1 __________________





1 Buyer must own and/or invest on
a discretionary basis at least $100,000,000 in securities unless Buyer is a
dealer, and, in that case, Buyer must own and/or invest on a discretionary
basis at least $10,000,000 in securities.


K-3







	
 

	
 


	
 

	
insurance commissioner or a similar official or
  agency of a State, territory or the District of Columbia.


	
 

	
 


	
 

	
          ___ State or Local Plan. The Buyer is a plan
  established and maintained by a State, its political subdivisions, or any
  agency or instrumentality of the State or its political subdivisions, for the
  benefit of its employees.


	
 

	
 


	
 

	
          ___ ERISA Plan. The Buyer is an employee
  benefit plan within the meaning of Title I of the Employee Retirement Income
  Security Act of 1974.


	
 

	
 


	
 

	
          ___ Investment Advisor. The Buyer is an
  investment advisor registered under the Investment Advisors Act of 1940.


	
 

	
 


	
 

	
          ___ Small Business Investment Company. Buyer
  is a small business investment company licensed by the U.S. Small Business
  Administration under Section 301(c) or (d) of the Small Business Investment
  Act of 1958.


	
 

	
 


	
 

	
          ___ Business Development Company. Buyer is a
  business development company as defined in Section 202(a)(22) of the
  Investment Advisors Act of 1940.





          3.
The term “securities” as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.


          4.
For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Buyer, the Buyer used the cost of such
securities to the Buyer and did not include any of the securities referred to
in the preceding paragraph, except (i) where the Buyer reports its securities
holdings in its financial statements on the basis of their market value, and
(ii) no current information with respect to the cost of those securities has
been published. If clause (ii) in the preceding sentence applies, the
securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer’s direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.


          5.
The Buyer acknowledges that it is familiar with Rule 144A and understands that
the seller to it and other parties related to the Certificates are relying and
will continue to rely on the statements made herein because one or more sales
to the Buyer may be in reliance on Rule 144A.


          6.
Until the date of purchase of the Rule 144A Securities, the Buyer will notify
each of the parties to which this certification is made of any changes in the
information and conclusions herein. Until such notice is given, the Buyer’s
purchase of the Certificates will 


K-4






constitute a reaffirmation of this certification as of
the date of such purchase. In addition, if the Buyer is a bank or savings and
loan is provided above, the Buyer agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.


	
 

	
 

	
 


	
 

	



	
 

	
Print Name of Transferee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name:

	
 


	
 

	
 

	



	
 

	
Title:

	
 


	
 

	
 

	



	
 

	
 

	
 


	
 

	
Date:

	
 


	
 

	
 

	






K-5






ANNEX 2 TO EXHIBIT
K


QUALIFIED
INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A


[For Transferees
That are Registered Investment Companies]


          The
undersigned (the “Buyer”) hereby certifies as follows to the parties listed in
the Rule 144A Transferee Certificate to which this certification relates with
respect to the Certificates described therein:


          1.
As indicated below, the undersigned is the President, Chief Financial Officer
or Senior Vice President of the Buyer or, if the Buyer is a “qualified
institutional buyer” as that term is defined in Rule 144A under the Securities
Act of 1933, as amended (“Rule 144A”) because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.


          2.
In connection with purchases by Buyer, the Buyer is a “qualified institutional
buyer” as defined in SEC Rule 144A because (i) the Buyer is an investment
company registered under the Investment Company Act of 1940, as amended and
(ii) as marked below, the Buyer alone, or the Buyer’s Family of Investment
Companies, owned at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer’s most recent fiscal
year. For purposes of determining the amount of securities owned by the Buyer
or the Buyer’s Family of Investment Companies, the cost of such securities was
used, except (i) where the Buyer or the Buyer’s Family of Investment Companies
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the cost of
those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.


	
 

	
 


	
 

	
          ___ The Buyer owned $          in securities (other than the
  excluded securities referred to below) as of the end of the Buyer’s most
  recent fiscal year (such amount being calculated in accordance with Rule
  144A).


	
 

	
 


	
 

	
          ___ The Buyer is part of a Family of Investment
  Companies which owned in the aggregate $          in securities (other than the
  excluded securities referred to below) as of the end of the Buyer’s most
  recent fiscal year (such amount being calculated in accordance with Rule
  144A).





          3.
The term “Family of Investment Companies” as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).


          4.
The term “securities” as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer’s Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.




K-6






          5.
The Buyer is familiar with Rule 144A and understands that the parties listed in
the Rule 144A Transferee Certificate to which this certification relates are
relying and will continue to rely on the statements made herein because one or
more sales to the Buyer will be in reliance on Rule 144A. In addition, the
Buyer will only purchase for the Buyer’s own account.


          6.
Until the date of purchase of the Certificates, the undersigned will notify the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer’s purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.


	
 

	
 

	
 


	
 

	



	
 

	
Print Name of Transferee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name:

	
 


	
 

	
 

	



	
 

	
Title:

	
 


	
 

	
 

	



	
 

	
 


	
 

	
IF AN ADVISER:


	
 

	
 

	
 


	
 

	



	
 

	
Print Name of Buyer


	
 

	
 

	
 


	
 

	
Date:

	
 


	
 

	
 

	






K-7






EXHIBIT L


REQUEST FOR
RELEASE


[Substitution of
Deleted Mortgage Loans

or

Mortgage Loans Paid in Full]


                    ____________________________________
Mortgage Loan Files


_____________________ hereby certifies that he/she is
an officer of _____________________, holding the office set forth beneath
his/her signature, and hereby further certifies as follows:


(Check One)


	
 

	
 


	
o

	
With respect to the mortgage loans described in the
  attached schedule, each such mortgage loan constitutes a “Substitute Mortgage
  Loan” (as the term is defined in the Pooling and Servicing Agreement).


	
 

	
 


	
o

	
With respect to the “Mortgage Loans” (as the term is
  defined in the custodial agreement) described in the attached schedule:


	
 

	
 


	
 

	
All payments of principal, premium (if any), and
  interest have been made with respect to the following:


	
 

	
 


	
 

	
Loan Number: _________________________________


	
 

	
 


	
 

	
Borrower’s Name: ______________________________


	
 

	
 


	
 

	
County: ______________________________________


	
 

	
 


	
 

	
We hereby certify that all amounts to be received in
  connection with such payments have been received.





______________________________


Dated: ______________________


/ / Vice President


/ / Assistant Vice President


L-1






EXHIBIT M


REQUEST FOR
RELEASE AND RECEIPT

[For Servicing and Foreclosure]


                    _____________________________________
Mortgage Loan Files


LOAN
INFORMATION


	
 

	
 

	
 


	
 

	
Name of Mortgagor:

	
__________________________________


	
 

	
 

	
 


	
 

	
Loan No.:

	
__________________________________





          The
undersigned hereby acknowledges that it has received from FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, as Custodian for ____________________ Mortgage Loan
Files, the documents referred to below (the “Documents”). All capitalized terms
not otherwise defined in this Request for Release and Receipt shall have the
meanings ascribed to them in the Custodial Agreement dated as of
__________________ among ___________________ and FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Custodian (the “Custodial Agreement”).


[complete
as necessary]


          The
undersigned hereby acknowledges an agrees as follows:


          (1)
The undersigned shall hold and retain possession of the Documents in trust for
the benefit of __________________, solely for the purposes provided in the
Custodial Agreement.


          (2)
The undersigned shall not cause or permit the Documents to become subject to,
or encumbered by, any claim, liens, security interest, charges, writs of
attachment or other impositions nor shall the undersigned assert or seek to
assert any claims or rights of setoff to or against the Documents or any
proceeds thereof.


          (3)
The undersigned shall return each and every Document previously requested from
the Mortgage File to the Custodian when the need therefor no longer exists, unless
the Mortgage Loan relating to the Documents has been liquidated.


	
 

	
 

	
 

	
 


	
Date:

	
 

	
 


	
 

	


	
 


	
 

	
 

	
 


	
 

	
 

	
NAME


	
 


	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
Name:

	
 


	
 

	
 

	
 

	



	
 

	
 

	
Title:

	
 


	
 

	
 

	
 

	






M-1






EXHIBIT N-1


FORM OF ANNUAL
CERTIFICATION


(Subservicer)


                    Re:
First Horizon Alternative Mortgage Securities Trust 2007-[   ] (the “Trust”),
Mortgage Pass-Through Certificates, Series 2007-[   ], issued pursuant to the
Pooling and Servicing Agreement, dated as of _____ 1, 2007 (the “Pooling and
Servicing Agreement”), among First Horizon Asset Securities Inc., as depositor
(the “Depositor”), First Horizon Home Loans, as master servicer (the “Master
Servicer”) and The Bank of New York, as trustee (the “Trustee”)


                    I,
[identify the certifying individual], a [title of certifying individual] of
[name of company] (the “Company”), hereby certify to the Depositor, the
Trustee, the Master Servicer, and their officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification,
that:


	
 

	
 


	
 

	
          1.
  I have reviewed the servicer compliance statement of the Company provided in
  accordance with Item 1123 of Regulation AB (the “Compliance Statement”),
  the report on assessment of the Company’s compliance with the servicing
  criteria set forth in Item 1122(d) of Regulation AB (the “Servicing
  Criteria”), provided in accordance with Rules 13a-18 and 15d-18 under
  Securities Exchange Act of 1934, as amended (the “Exchange Act”) and
  Item 1122 of Regulation AB (the “Servicing Assessment”), the
  registered public accounting firm’s attestation report provided in accordance
  with Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
  Regulation AB (the “Attestation Report”), and all servicing reports,
  officer’s certificates and other information relating to the servicing of the
  Mortgage Loans by the Company during 200[ ] that were delivered by the
  Company to the [Depositor] [Master Servicer] [Trustee] pursuant to the
  Pooling and Servicing Agreement (collectively, the “Company Servicing
  Information”);


	
 

	
 


	
 

	
          2.
  Based upon my knowledge, the Company Servicing Information, taken as a whole,
  does not contain any untrue statement of a material fact or omit to state a
  material fact necessary to make the statements made, in light of the
  circumstances under which such statements were made, not misleading with
  respect to the period of time covered by the Company Servicing Information;


	
 

	
 


	
 

	
          3.
  Based on my knowledge, all of the Company Servicing Information required to
  be provided by the Company under the Pooling and Servicing Agreement has been
  provided to the [Depositor] [Master Servicer] [Trustee];


	
 

	
 


	
 

	
          4.
  I am responsible for reviewing the activities performed by the Company as a
  servicer under the Pooling and Servicing Agreement, and based on my knowledge
  and the compliance review conducted in preparing the Compliance Statement and
  except as disclosed in the Compliance Statement, the 








N-1-1







	
 

	
 


	
 

	
Servicing Assessment or the Attestation Report, the
  Company has fulfilled its obligations under the Pooling and Servicing
  Agreement in all material respects; and


	
 

	
 


	
 

	
          5.
  The Compliance Statement required to be delivered by the Company pursuant to
  the Pooling and Servicing Agreement, and the Servicing Assessment and
  Attestation Report required to be provided by the Company and by any
  Subservicer or Subcontractor pursuant to the Pooling and Servicing Agreement,
  have been provided to the [Depositor] [Master Servicer]. Any material
  instances of noncompliance described in such reports have been disclosed to
  the [Depositor] [Master Servicer]. Any material instance of noncompliance
  with the Servicing Criteria has been disclosed in such reports.








	
 

	
 

	
 


	
 

	
Date:

	
 


	
 

	
 

	



	
 


	
 

	
 

	



	
 

	
 

	
[Signature]


	
 

	
 

	
[Title]





N-1-2






EXHIBIT N-2


FORM OF ANNUAL
CERTIFICATION

(Trustee)


                    Re:
First Horizon Alternative Mortgage Securities Trust 2007-[   ] (the “Trust”),
Mortgage Pass-Through Certificates, Series 2007-[   ], issued pursuant to the
Pooling and Servicing Agreement, dated as of _____ 1, 2007 (the “Pooling and
Servicing Agreement”), among First Horizon Asset Securities Inc., as depositor
(the “Depositor”), First Horizon Home Loans, as master servicer (the “Master
Servicer”) and The Bank of New York, as trustee (the “Trustee”)


                    I,
[identify the certifying individual], a [title of certifying individual] of the
Trustee, hereby certify to the Depositor, the Master Servicer, and their
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:


	
 

	
 


	
 

	
          1. I have reviewed the report on assessment of the
  Trustee’s compliance with the servicing criteria set forth in Item 1122(d) of
  Regulation AB (the “Servicing Criteria”), provided in accordance with
  Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended
  (the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing
  Assessment”), and the registered public accounting firm’s attestation
  report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange
  Act and Section 1122(b) of Regulation AB (the “Attestation Report”)
  (collectively, the “Trustee Information”);


	
 

	
 


	
 

	
          2. Based upon my knowledge, the Trustee Information,
  taken as a whole, does not contain any untrue statement of a material fact or
  omit to state a material fact necessary to make the statements made, in light
  of the circumstances under which such statements were made, not misleading
  with respect to the period of time covered by the Trustee Information;


	
 

	
 


	
 

	
          3. Based on my knowledge, all of the Trustee
  Information required to be provided by the Trustee under the Pooling and
  Servicing Agreement has been provided to the [Depositor] [Master Servicer];


	
 

	
 


	
 

	
          4. I am responsible for reviewing the activities
  performed by the Trustee as trustee under the Pooling and Servicing
  Agreement, and based on my knowledge and the compliance review conducted in
  preparing the Compliance Statement and except as disclosed in the Servicing
  Assessment or the Attestation Report, the Trustee has fulfilled its
  obligations under the Pooling and Servicing Agreement in all material
  respects; and


	
 

	
 


	
 

	
          5. The Servicing Assessment and Attestation Report
  required to be provided by the Trustee pursuant to the Pooling and Servicing
  Agreement have been provided to the [Depositor] [Master Servicer]. Any
  material instances of noncompliance described in such reports have been
  disclosed to the [Depositor] [Master Servicer]. Any material instance of
  noncompliance with the Servicing Criteria has been disclosed in such reports.








	
 

	
 

	
 


	
 

	
Date:

	
 


	
 

	
 

	



	
 


	
 

	
 

	



	
 

	
 

	
[Signature]


	
 

	
 

	
[Title] 





N-2-1






EXHIBIT O


[FORM OF]
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF 

COMPLIANCE STATEMENT


          The
assessment of compliance to be delivered by [the Master Servicer] [Trustee]
[Name of Subservicer] shall address, at a minimum, the criteria identified as
below as “Applicable Servicing Criteria”:


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
SERVICING CRITERIA


	
 


	
Reference

	
 

	
 

	
 

	
Criteria

	
 

	
 

	
 

	
Responsible 

  Party *

	
 


	


	
 

	
 

	
 

	


	
 

	
 

	
 

	


	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
General Servicing Considerations

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
1122(d)(1)(i)

	
 

	
Policies and procedures are instituted to monitor
  any performance or other triggers and events of default in accordance with
  the transaction agreements.

	
 

	
Master 

  Servicer 

  Trustee


	
 

	
 

	
 

	
 

	
 


	
1122(d)(1)(ii)

	
 

	
If any material servicing activities are outsourced
  to third parties, policies and procedures are instituted to monitor the third
  party’s performance and compliance with such servicing activities.

	
 

	
Master 

  Servicer 

  Trustee


	
 

	
 

	
 

	
 

	
 


	
1122(d)(1)(iii)

	
 

	
Any requirements in the transaction agreements to
  maintain a back-up servicer for the mortgage loans are maintained.

	
 

	
N/A


	
 

	
 

	
 

	
 

	
 


	
1122(d)(1)(iv)

	
 

	
A fidelity bond and errors and omissions policy is
  in effect on the party participating in the servicing function throughout the
  reporting period in the amount of coverage required by and otherwise in
  accordance with the terms of the transaction agreements.

	
 

	
Master 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Cash Collection and Administration

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(i)

	
 

	
Payments on mortgage loans are deposited into the
  appropriate custodial bank accounts and related bank clearing accounts no
  more than two business days following receipt, or such other number of days
  specified in the transaction agreements.

	
 

	
Master/Sub 

  Servicer 

  (Certificate 

  Account)


	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(ii)

	
 

	
Disbursements made via wire transfer on behalf of an
  obligor or to an investor are made only by authorized personnel.

	
 

	
Master 

  Servicer 

  Trustee





* Unless Otherwise Agreed Upon by the Parties.


O-1







	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(iii)

	
 

	
Advances of funds or guarantees regarding
  collections, cash flows or distributions, and any interest or other fees
  charged for such advances, are made, reviewed and approved as specified in
  the transaction agreements.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(iv)

	
 

	
The related accounts for the transaction, such as
  cash reserve accounts or accounts established as a form of
  overcollateralization, are separately maintained (e.g., with respect to
  commingling of cash) as set forth in the transaction agreements.

	
 

	
Master/Sub 

  Servicer 

  Trustee


	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(v)

	
 

	
Each custodial account is maintained at a federally
  insured depository institution as set forth in the transaction agreements.
  For purposes of this criterion, “federally insured depository institution”
  with respect to a foreign financial institution means a foreign financial
  institution that meets the requirements of Rule 13k-1(b)(1) of the Securities
  Exchange Act.

	
 

	
Trustee 

  (Distribution 

  Account)*; 

  Master/Sub 

  Servicer 

  (Certificate 

  Account)


	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(vi)

	
 

	
Unissued checks are safeguarded so as to prevent
  unauthorized access.

	
 

	
N/A


	
 

	
 

	
 

	
 

	
 


	
1122(d)(2)(vii)

	
 

	
Reconciliations are prepared on a monthly basis for
  all asset-backed securities related bank accounts, including custodial
  accounts and related bank clearing accounts. These reconciliations are (A)
  mathematically accurate; (B) prepared within 30 calendar days after the bank
  statement cutoff date, or such other number of days specified in the
  transaction agreements; (C) reviewed and approved by someone other than the
  person who prepared the reconciliation; and (D) contain explanations for
  reconciling items. These reconciling items are resolved within 90 calendar
  days of their original identification, or such other number of days specified
  in the transaction agreements.

	
 

	
Master/Sub

  Servicer 

  Trustee


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Investor Remittances and Reporting

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
1122(d)(3)(i)

	
 

	
Reports to investors, including those to be filed
  with the Commission, are maintained in accordance with the transaction
  agreements and applicable Commission requirements. Specifically, such reports
  (A) are prepared in accordance with timeframes and other terms set forth in
  the transaction agreements; (B) provide information calculated in accordance
  with the terms specified in the transaction agreements; (C) are filed with
  the Commission as required by its rules and regulations; and (D) agree with
  investors’ or the trustee’s records as to the total unpaid principal balance
  and number of mortgage loans serviced by the Servicer.

	
 

	
Trustee





* Pending Further Clarification From the Sec.


O-2







	
 

	
 

	
 

	
 

	
 


	
1122(d)(3)(ii)

	
 

	
Amounts due to investors are allocated and remitted
  in other terms set forth in the transaction agreements.

	
 

	
Master 

  Servicer 

  Trustee


	
 

	
 

	
 

	
 

	
 


	
1122(d)(3)(iii)

	
 

	
Disbursements made to an investor are posted within
  two business days to the Servicer’s investor records, or such other number of
  days specified in the transaction agreements.

	
 

	
Trustee


	
 

	
 

	
 

	
 

	
 


	
1122(d)(3)(iv)

	
 

	
Amounts remitted to investors per the investor
  reports agree with cancelled checks, or other form of payment, or custodial
  bank statements.

	
 

	
Trustee


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Pool
  Asset Administration

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(i)

	
 

	
Collateral or security on mortgage loans is
  maintained as required by the transaction agreements or related mortgage loan
  documents.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(ii)

	
 

	
Mortgage loan and related documents are safeguarded
  as required by the transaction agreements.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(iii)

	
 

	
Any additions, removals or substitutions to the
  asset pool are made, reviewed and approved in accordance with any conditions
  or requirements in the transaction agreements.

	
 

	
Master/Sub 
Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(iv)

	
 

	
Payments on mortgage loans, including any payoffs,
  made in accordance with the related mortgage loan documents are posted to the
  Servicer’s obligor records maintained no more than two business days after
  receipt, or such other number of days specified in the transaction
  agreements, and allocated to principal, interest or other items (e.g.,
  escrow) in accordance with the related mortgage loan documents.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(v)

	
 

	
The Servicer’s records regarding the mortgage loans
  agree with the Servicer’s records with respect to an obligor’s unpaid principal
  balance.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(vi)

	
 

	
Changes with respect to the terms or status of an
  obligor’s mortgage loans (e.g., loan modifications or re-agings) are made,
  reviewed and approved by authorized personnel in accordance with the transaction
  agreements and related pool asset documents.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(vii)

	
 

	
Loss mitigation or recovery actions (e.g.,
  forbearance plans, modifications and deeds in lieu of foreclosure,
  foreclosures and repossessions, as applicable) are initiated, conducted and
  concluded in accordance with the timeframes or other requirements established
  by the transaction agreements

	
 

	
Master/Sub 
Servicer





O-3







	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(viii)

	
 

	
Records documenting collection efforts are
  maintained during the period a mortgage loan is delinquent in accordance with
  the transaction agreements. Such records are maintained on at least a monthly
  basis, or such other period specified in the transaction agreements, and
  describe the entity’s activities in monitoring delinquent mortgage loans
  including, for example, phone calls, letters and payment rescheduling plans
  in cases where delinquency is deemed temporary (e.g., illness or
  unemployment).

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(ix)

	
 

	
Adjustments to interest rates or rates of return for
  mortgage loans with variable rates are computed based on the related mortgage
  loan documents.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(x)

	
 

	
Regarding any funds held in trust for an obligor
  (such as escrow accounts): (A) such funds are analyzed, in accordance with
  the obligor’s mortgage loan documents, on at least an annual basis, or such
  other period specified in the transaction agreements; (B) interest on such
  funds is paid, or credited, to obligors in accordance with applicable mortgage
  loan documents and state laws; and (C) such funds are returned to the obligor
  within 30 calendar days of full repayment of the related mortgage loans, or
  such other number of days specified in the transaction agreements.

	
 

	
Master/Sub 
Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(xi)

	
 

	
Payments made on behalf of an obligor (such as tax
  or insurance payments) are made on or before the related penalty or
  expiration dates, as indicated on the appropriate bills or notices for such
  payments, provided that such support has been received by the servicer at
  least 30 calendar days prior to these dates, or such other number of days
  specified in the transaction agreements.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(xii)

	
 

	
Any late payment penalties in connection with any
  payment to be made on behalf of an obligor are paid from the servicer’s funds
  and not charged to the obligor, unless the late payment was due to the
  obligor’s error or omission.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(xiii)

	
 

	
Disbursements made on behalf of an obligor are
  posted within two business days to the obligor’s records maintained by the
  servicer, or such other number of days specified in the transaction
  agreements.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(xiv)

	
 

	
Delinquencies, charge-offs and uncollectible
  accounts are recognized and recorded in accordance with the transaction
  agreements.

	
 

	
Master/Sub 

  Servicer


	
 

	
 

	
 

	
 

	
 


	
1122(d)(4)(xv)

	
 

	
Any external enhancement or other support,
  identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is
  maintained as set forth in the transaction agreements.

	
 

	
Trustee* 

  Master/Sub 

  Servicer





*Solely with respect to disbursements to the enhancement
provider required by the transaction documents.


O-4







	
 

	
 

	
 


	
 

	
[NAME OF MASTER SERVICER] [NAME
  OF 
TRUSTEE] [NAME OF CO-TRUSTEE] [SUBSERVICER]


	
 


	
 

	
Date:

	
 


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
Name:

	
 


	
 

	
 

	



	
 

	
Title:

	
 


	
 

	
 

	






O-5






EXHIBIT P


[FORM OF] LIST OF
ITEM 1119 PARTIES

FIRST HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2007-AA2


Mortgage
Pass-Through Certificates,

Series 2007-AA2


	
 

	
 

	
 

	
 


	
Party

	
 

	
Contact
  Information

	
 


	


	
 

	


	
 





P-1






EXHIBIT Q


FORM OF
SARBANES-OXLEY CERTIFICATION

(Replacement of the Master Servicer) 


          I,
[identify the certifying individual], a [title of certifying individual] of
First Horizon Home Loans (the “Company”), hereby certify that:


	
 

	
 


	
 

	
          1.
  I have reviewed the report on Form 10-K and all reports on Form 10-D required
  to be filed in respect of the period covered by this report on Form 10-K of
  First Horizon Alternative Mortgage Securities Trust 2007-AA2 (the “Exchange
  Act Reports”);


	
 

	
 


	
 

	
          2. Based
  upon my knowledge, the Exchange Act Reports, taken as a whole, do not contain
  any untrue statement of a material fact or omit to state a material fact
  necessary to make the statements made, in light of the circumstances under
  which such statements were made, not misleading with respect to the period
  covered by this report;


	
 

	
 


	
 

	
          3. Based
  on my knowledge, all of the distribution, servicing and other information
  required to be provided under Form 10-D for the period covered by this report
  is included in the Exchange Act Reports;


	
 

	
 


	
 

	
          4. I
  am responsible for reviewing the activities performed by the Company as
  master servicer under the Pooling and Servicing Agreement and, based on my
  knowledge and the compliance review(s) conducted in preparing the servicer
  compliance statement(s) required in this report under Item 1123 of Regulation
  AB (the “Compliance Statements”), and except as disclosed in the
  Exchange Act Reports, the Company has fulfilled its obligations as master
  servicer under the Pooling and Servicing Agreement; and 


	
 

	
 


	
 

	
          5. All
  of the reports on assessment of compliance with servicing criteria for
  asset-backed securities and their related attestation reports on assessment
  of compliance with servicing criteria for asset-backed securities required to
  be included in this report in accordance with Item 1122 of Regulation AB and
  Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this
  report, except as otherwise disclosed in this report. Any material instances
  of noncompliance described in such reports have been disclosed in this report
  on Form 10-K. [In giving the certifications above, I have reasonably relied
  on information provided to me by the following unaffiliated parties [name of
  servicer, sub-servicer, co-servicer, depositor or trustee].








	
 

	
 

	
 


	
 

	
Date:

	
 


	
 

	
 

	



	
 


	
 

	
 

	



	
 

	
 

	
[Signature]


	
 

	
 

	
[Title] 





Q-1