FIRST HORIZON ASSET SECURITIES INC.

                                    Depositor

                       FIRST HORIZON HOME LOAN CORPORATION

                                 Master Servicer

                                       and

                              THE BANK OF NEW YORK,

                                     Trustee

              -----------------------------------------------------

                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2005

              -----------------------------------------------------

               FIRST HORIZON MORTGAGE PASS-THROUGH TRUST 2005-AR1

               MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-AR1



<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>             <C>                                                                                             <C>
ARTICLE I DEFINITIONS.............................................................................................5

ARTICLE II CONVEYANCE OF MORTGAGE LOANS;  REPRESENTATIONS AND WARRANTIES.........................................34
   SECTION 2.1 Conveyance of Mortgage Loans......................................................................34
   SECTION 2.2 Acceptance by Trustee of the Mortgage Loans.......................................................38
   SECTION 2.3 Representations and Warranties of the Master Servicer;  Covenants of the Seller...................40
   SECTION 2.4 Representations and Warranties of the Depositor as to the Mortgage Loans..........................42
   SECTION 2.5 Delivery of Opinion of Counsel in Connection with Substitutions...................................42
   SECTION 2.6 Execution and Delivery of Certificates............................................................43
   SECTION 2.7 REMIC Matters.....................................................................................43
   SECTION 2.8 Covenants of the Master Servicer..................................................................46

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.......................................................47
   SECTION 3.1 Master Servicer to Service Mortgage Loans.........................................................47
   SECTION 3.2 Subservicing; Enforcement of the Obligations of Servicers.........................................48
   SECTION 3.3 Rights of the Depositor and the Trustee in Respect of the Master Servicer.........................49
   SECTION 3.4 Trustee to Act as Master Servicer.................................................................49
   SECTION 3.5 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account...................49
   SECTION 3.6 Collection of Taxes, Assessments and Similar Items; Escrow Accounts...............................53
   SECTION 3.7 Access to Certain Documentation and Information Regarding the Mortgage Loans......................53
   SECTION 3.8 Permitted Withdrawals from the Certificate Account and
         Distribution Account....................................................................................54
   SECTION 3.9 Maintenance of Hazard Insurance; Maintenance of Primary
         Insurance Policies......................................................................................55
   SECTION 3.10 Enforcement of Due-on-Sale Clauses; Assumption Agreements........................................57
   SECTION 3.11 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans..................58
   SECTION 3.12 Trustee to Cooperate; Release of Mortgage Files..................................................61
   SECTION 3.13 Documents Records and Funds in Possession of Master Servicer to be Held for the Trustee..........62
   SECTION 3.14 Master Servicing Compensation....................................................................62
   SECTION 3.15 Access to Certain Documentation..................................................................63
   SECTION 3.16 Annual Statement as to Compliance................................................................63
   SECTION 3.17 Annual Independent Public Accountants' Servicing Statement; Financial Statements.................63
   SECTION 3.18 Errors and Omissions Insurance; Fidelity Bonds...................................................64
   SECTION 3.19 Notification of Adjustments......................................................................64

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER.....................................................64
   SECTION 4.1 Advances..........................................................................................64
   SECTION 4.2 Priorities of Distribution........................................................................65


                                       i
<PAGE>

   SECTION 4.3 Method of Distribution............................................................................69
   SECTION 4.4 Allocation of Losses..............................................................................70
   SECTION 4.5 [RESERVED]........................................................................................72
   SECTION 4.6 Monthly Statements to Certificateholders..........................................................72

ARTICLE V THE CERTIFICATES.......................................................................................74
   SECTION 5.1 The Certificates..................................................................................74
   SECTION 5.2 Certificate Register; Registration of Transfer and Exchange of Certificates.......................75
   SECTION 5.3 Mutilated, Destroyed, Lost or Stolen Certificates.................................................80
   SECTION 5.4 Persons Deemed Owners.............................................................................80
   SECTION 5.5 Access to List of Certificateholders' Names and Addresses.........................................80
   SECTION 5.6 Maintenance of Office or Agency...................................................................81

ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER.................................................................81
   SECTION 6.1 Respective Liabilities of the Depositor and the Master Servicer...................................81
   SECTION 6.2 Merger or Consolidation of the Depositor or the Master Servicer...................................81
   SECTION 6.3 Limitation on Liability of the Depositor, the Master Servicer and Others..........................81
   SECTION 6.4 Limitation on Resignation of Master Servicer......................................................82

ARTICLE VII DEFAULT..............................................................................................82
   SECTION 7.1 Events of Default.................................................................................82
   SECTION 7.2 Trustee to Act; Appointment of Successor..........................................................84
   SECTION 7.3 Notification to Certificateholders................................................................86

ARTICLE VIII CONCERNING THE TRUSTEE..............................................................................86
   SECTION 8.1 Duties of Trustee.................................................................................86
   SECTION 8.2 Certain Matters Affecting the Trustee.............................................................88
   SECTION 8.3 Trustee Not Liable for Certificates or Mortgage Loans.............................................89
   SECTION 8.4 Trustee May Own Certificates......................................................................90
   SECTION 8.5 Trustee's Fees and Expenses.......................................................................90
   SECTION 8.6 Eligibility Requirements for Trustee..............................................................90
   SECTION 8.7 Resignation and Removal of Trustee................................................................91
   SECTION 8.8 Successor Trustee.................................................................................91
   SECTION 8.9 Merger or Consolidation of Trustee................................................................92
   SECTION 8.10 Appointment of Co-Trustee or Separate Trustee....................................................92
   SECTION 8.11 Tax Matters......................................................................................94
   SECTION 8.12 Periodic Filings.................................................................................95

ARTICLE IX TERMINATION...........................................................................................96
   SECTION 9.1 Termination upon Liquidation or Purchase of all Mortgage Loans....................................96
   SECTION 9.2 Final Distribution on the Certificates............................................................96
   SECTION 9.3 Additional Termination Requirements...............................................................97

ARTICLE X [RESERVED].............................................................................................98

ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................98
   SECTION 11.1 Amendment........................................................................................98


                                       ii
<PAGE>

   SECTION 11.2 Recordation of Agreement; Counterparts..........................................................100
   SECTION 11.3 Governing Law...................................................................................100
   SECTION 11.4 Intention of Parties............................................................................100
   SECTION 11.5 Notices.........................................................................................101
   SECTION 11.6 Severability of Provisions......................................................................102
   SECTION 11.7 Assignment......................................................................................102
   SECTION 11.8 Limitation on Rights of Certificateholders......................................................102
   SECTION 11.9 Inspection and Audit Rights.....................................................................103
   SECTION 11.10 Certificates Nonassessable and Fully Paid......................................................103
   SECTION 11.11 Limitations on Actions; No Proceedings.........................................................103
   SECTION 11.12 Acknowledgment of Seller.......................................................................104

                                    SCHEDULES

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

                                    EXHIBITS

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


                                      iii
<PAGE>

      THIS POOLING AND SERVICING AGREEMENT, dated as of February 1, 2005, among
FIRST HORIZON ASSET SECURITIES INC., a Delaware corporation, as depositor (the
"Depositor"), FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation, as
master servicer (the "Master Servicer"), and THE BANK OF NEW YORK, a banking
corporation organized under the laws of the State of New York, as trustee (the
"Trustee").

                                 WITNESSETH THAT

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

                              PRELIMINARY STATEMENT

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

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

                  [Remainder of Page Intentionally Left Blank]


                                       1
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                              Initial Class             Initial                                 Integral Multiples
   Class Designation       Certificate Balance     Pass Through Rate    Minimum Denomination    in Excess Minimum
------------------------- ----------------------- --------------------- ---------------------- ---------------------
<S>                       <C>                     <C>                   <C>                    <C>
Class I-A-1               $     53,624,000.00          4.6483%(1)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class II-A-R              $            100.00         5.0405% (2)       $             100      $             N/A
--------------------------------------------------------------------------------------------------------------------
Class II-A-1              $     19,850,000.00         5.0405% (2)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class II-A-2              $     53,720,000.00         5.0405% (2)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class II-A-3              $     20,000,000.00         5.0405% (2)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class II-A-4              $      6,670,000.00         5.0405% (2)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class II-A-5              $      5,135,000.00         5.0405% (2)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class III-A-1             $     22,040,000.00         5.2807% (3)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class IV-A-1              $     61,313,000.00          5.3362%(4)       $          25,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class B-1                 $      5,821,000.00          5.0504%(5)       $         100,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class B-2                 $      1,772,000.00          5.0504%(5)       $         100,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class B-3                 $      1,139,000.00          5.0504%(5)       $         100,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class B-4                 $        886,000.00          5.0504%(5)       $         100,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class B-5                 $        633,000.00          5.0504%(5)       $         100,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
Class B-6                 $        506,583.54          5.0504%(5)       $         100,000      $           1,000
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Pass-Through Rate for the Class I-A-1 Certificates for each subsequent
Distribution Date will equal the Weighted Average Adjusted Net Mortgage Rate for
Pool I.

(2) The Pass-Through Rate for the Class II-A-R, Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4 and Class II-A-5 Certificates for each subsequent
Distribution Date will equal the Weighted Average Adjusted Net Mortgage Rate for
Pool II.

(3) The Pass-Through Rate for the Class III-A-1 Certificates for each subsequent
Distribution Date will equal the Weighted Average Adjusted Net Mortgage Rate for
Pool III.

(4) The Pass-Through Rate for the Class IV-A-1 Certificates for each subsequent
Distribution Date will equal the Weighted Average Adjusted Net Mortgage Rate for
Pool IV.

(5) 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
<PAGE>

Accretion Directed Certificates     None.
Accrual Certificates...........     None.
Accrual Components.............     None.
Book-Entry Certificates........     All Classes of Certificates other than the
                                    Physical Certificates.
Certificate Group..............     With respect to Pool I, the Group I Senior
                                    Certificates, with respect to Pool II, the
                                    Group II Senior Certificates, with respect
                                    to Pool III, the Group III Senior
                                    Certificates, and with respect to Pool IV,
                                    the Group IV Senior Certificates.  The
                                    Subordinated Certificates correspond to all
                                    ofthe Mortgage Pools.
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 Certificates.
Group II Senior Certificates...     The Class II-A-1, Class II-A-2, Class
                                    II-A-3, Class II-A-4, Class II-A-5 and Class
                                    II-A-R Certificates.
Group III Senior Certificates..     The Class III-A-1 Certificates.
Group IV Senior Certificates...     The Class IV-A-1 Certificates.
Insured Retail Certificates....     None.
Inverse Floating Rate
Certificates...................     None.
LIBOR Certificates.............     None.
Non-Delay Certificates.........     None.
Notional Amount Components.....     None.
Notional Certificates..........     None.
Offered Certificates...........     All Classes of the Certificates other than
                                    the Private Certificates.
Physical Certificates..........     The Private Certificates and the Residual
Planned Principal Classes......     Certificates.
                                    None.
Principal Only Certificates....     None.
Private Certificates...........     The Class B-4, Class B-5 and Class B-6
                                    Certificates.


                                       3
<PAGE>

Rating Agencies................     Moody's and S & P; except that, for the
                                    purposes of the Class B-1, Class B-2, Class
                                    B-3, Class B-4 and Class B-5 Certificates,
                                    S&P shall be the sole Rating Agency.
Regular Certificates...........     All Classes of Certificates, other than the
                                    Residual Certificates.
Residual Certificates..........     The Class II-A-R Certificates.
Scheduled Principal Classes....     None.
Senior Certificates............     The Group I Senior Certificates, the Group
                                    II Senior Certificates, the Group III Senior
                                    Certificates and the Group IV Senior
                                    Certificates, collectively.
Senior Support Certificates....     The Class II-A-5 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 II-A-2, Class II-A-3 Certificates
                                    and Class II-A-4 Certificates.
Support Classes................     The Class II-A-5 Certificates.
Targeted Principal Classes.....     None.
Underwriters...................     Credit Suisse First Boston LLC and Goldman,
                                    Sachs & Co.

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


                                       4
<PAGE>

                                   ARTICLE I
                                   DEFINITIONS

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

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

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

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

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

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

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

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

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


                                       5
<PAGE>

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:

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

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

      o     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;

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


                                       6
<PAGE>

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

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

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

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

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

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

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

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

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

      Certificate Account: The separate Eligible Account or Accounts created and
maintained by the Master Servicer pursuant to Section 3.5 with a depository
institution in the name of the Master Servicer for the benefit of the Trustee on
behalf of Certificateholders and designated "First Horizon Home Loan Corporation
in trust for the registered holders of First Horizon Asset Securities Inc.
Mortgage Pass-Through Certificates, Series 2005-AR1."


                                       7
<PAGE>

      Certificate Group: As specified in the Preliminary Statement.

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

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

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

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

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

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

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

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

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

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


                                       8
<PAGE>

      Closing Date: February 28, 2005.

      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.

      Component: Not applicable.

      Component Balance: Not applicable.

      Component Certificates: Not applicable.

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

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

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

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

      Corporate Trust Office: The designated office of the Trustee in the State
of New York at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at The Bank of New York, 101 Barclay
Street, 8W, New York, New York 10286 (Attn: Corporate Trust Mortgage-Backed


                                       9
<PAGE>

Securities Group, First Horizon Asset Securities Inc. Series 2005-AR1),
facsimile no. (212) 815-3986, and which is the address to which notices to and
correspondence with the Trustee should be directed.

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

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

      t 6 0 Custodial Agreement: The Custodial Agreement dated as of February
28, 2005 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: February 1, 2005.

      Cut-off Date Pool Principal Balance: With respect to Pool I,
$56,003,898.44; with respect to Pool II, $110,051,591.63; with respect to Pool
III, $23,019,258.93; and with respect to Pool IV, $64,034,934.54.

      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: Not applicable.

      Delay Delivery Mortgage Loans: The Mortgage Loans for which all or a
portion of a related Mortgage File is not delivered to Trustee on the Closing


                                       10
<PAGE>

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.

      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 2005-AR1." Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.

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

      Distribution Date: The 25th day of each calendar month after the initial
issuance of the Certificates, or if such 25th day is not a Business Day, the
next succeeding Business Day, commencing in March 2005.

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

      Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on


                                       11
<PAGE>

deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF, as applicable) and the uninsured
deposits in which accounts are otherwise secured such that, as evidenced by an
Opinion of Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or a
perfected first priority security interest against any collateral (which shall
be limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or creditors of the depository institution or
trust company in which such account is maintained, or (iii) a trust account or
accounts maintained with (a) the trust department of a federal or state
chartered depository institution or (b) a trust company, acting in its fiduciary
capacity or (iv) any other account acceptable to each Rating Agency. Eligible
Accounts may bear interest, and may include, if otherwise qualified under this
definition, accounts maintained with the Trustee.

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

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

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

      t 6 0 Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.6(a) hereof.

      Event of Default: As defined in Section 7.1 hereof.

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

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

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

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


                                       12
<PAGE>

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

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

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

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

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

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

      Fraud Loss Coverage Amount: As of the Closing Date, $5,062,194. 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 $2,531,097 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 I Senior Certificates: As specified in the Preliminary Statement.

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

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

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

      Group Subordinate Amount: For a Mortgage Pool and any Distribution Date;
the excess of (a) the Pool Principal Balance of such Mortgage Pool for the


                                       13
<PAGE>

immediately preceding Distribution Date, over (b) the aggregate Class
Certificate Balance of the Senior Certificates of the related Certificate Group
immediately prior to that Distribution Date.

      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.

      Initial Component Balance: Not applicable.

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

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

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

      Insured Retail Certificates: Not applicable.

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

      Interest Determination Date: Not applicable.

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

      Lender PMI Mortgage Loan: Not applicable.

      LIBOR: Not applicable.

      LIBOR Certificates: Not applicable.

      Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Master Servicer has determined (in accordance with this Agreement) that it has


                                       14
<PAGE>

received all amounts it expects to receive in connection with the liquidation of
such Mortgage Loan, including the final disposition of an REO Property.

      Liquidation Proceeds: Amounts, including Insurance Proceeds and any
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 Lower REMIC Interests, the RL 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 Loan Corporation, a Kansas
corporation, and its successors and assigns, in its capacity as master servicer
hereunder.

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

      Master Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an amount payable out of each full payment of interest received on such Mortgage
Loan and equal to one-twelfth of the Master Servicing Fee Rate multiplied by the
Stated Principal Balance of such Mortgage Loan as of the Due Date in the month
of such Distribution Date (prior to giving effect to any Scheduled Payments due
on such Mortgage Loan on such Due Date), subject to reduction as provided in
Section 3.14.

      Master Servicing Fee Rate: For each Mortgage Loan, a per annum rate equal
to 0.244%.


                                       15
<PAGE>

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

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

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

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

      MLPA: The Mortgage Loan Purchase Agreement dated as of February 28, 2005,
by and between First Horizon Home Loan Corporation, as seller, and First Horizon
Asset Securities Inc., as purchaser, as related to the transfer, sale and
conveyance of the Mortgage Loans.

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

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

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

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

            (1)   the loan number;

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

            (3)   the maturity date;

            (4)   the original principal balance;


                                       16
<PAGE>

            (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: Any of Pool I, Pool II, Pool III or Pool IV.

      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.


                                       17
<PAGE>

      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 or such Mortgage Pool during the
related Prepayment Period exceeds an amount equal to the Compensating Interest
paid in respect of such Mortgage Loans, if any, for such Distribution Date.

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

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

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

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

      Notional Amount: Not applicable.

      Notional Amount Components: Not applicable.

      Notional Certificates: Not applicable.

      Offered Certificates: As specified in the Preliminary Statement.

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

      Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Master Servicer, including, in-house counsel, reasonably


                                       18
<PAGE>

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

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

      OTS: The Office of Thrift Supervision.

      Outside Reference Date: Not applicable.

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

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

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

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

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

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

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


                                       19
<PAGE>

      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) 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);


                                       20
<PAGE>

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

                  (x) such other investments bearing interest or sold at a
            discount acceptable to each Rating Agency as will not result in the
            downgrading or withdrawal of the rating then assigned to the
            Certificates by either Rating Agency, as evidenced by a signed
            writing delivered by each Rating Agency;

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

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


                                       21
<PAGE>

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

      Physical Certificate: As specified in the Preliminary Statement.

      Planned Balance: Not applicable.

      Planned Principal Classes: Not applicable.

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

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

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

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

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

      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


                                       22
<PAGE>

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 Only Certificates: 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 Certificate: 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.

      PUD: Planned Unit Development.

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

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

      Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If any such organization or a successor is no longer in existence,


                                       23
<PAGE>

"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
a given rating category of a Rating Agency shall mean such rating category
without giving effect to any modifiers.

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

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

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

      Reference Bank: Not applicable.

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

      Regular Certificates: As specified in the Preliminary Statement.

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

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

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


                                       24
<PAGE>

      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: Any of the Lower 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.

      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.

      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
II-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
II-A-R Certificate.

      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.


                                       25
<PAGE>

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

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

      Seller: First Horizon Home Loan Corporation, a Kansas corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans 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 Optimal Principal Amount: As to a Mortgage Pool and with respect to
each Distribution Date, an amount equal to the sum of:

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

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

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

            (4) the lesser of:

                  (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


                                       26
<PAGE>

            claim under the related Insurance Policy minus (ii) the related
            Senior Percentage of the principal portion of Excess Losses (other
            than Debt Service Reductions) for such Mortgage Pool during the
            related Prepayment Period; and

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

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

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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Period (Dates Inclusive)                Senior Prepayment Percentage
--------------------------------------------------------------------------------------------------------------
<S>                                     <C>
March 2005 - February 2012              100%
--------------------------------------------------------------------------------------------------------------
                                        The related Senior Percentage plus 70% of the related Subordinated
March 2012 - February 2013              Percentage
--------------------------------------------------------------------------------------------------------------
                                        The related Senior Percentage plus 60% of the related Subordinated
March 2013 - February 2014              Percentage
--------------------------------------------------------------------------------------------------------------
                                        The related Senior Percentage plus 40% of the related Subordinated
March 2014 - February 2015              Percentage
--------------------------------------------------------------------------------------------------------------
                                        The related Senior Percentage plus 20% of the related Subordinated
March 2015 - February 2016              Percentage
--------------------------------------------------------------------------------------------------------------
March 2016 and thereafter               The related Senior Percentage
--------------------------------------------------------------------------------------------------------------
</TABLE>


provided however, (i) if on any Distribution Date the Senior Percentage for a
Certificate Group exceeds the initial Senior Percentage for such Certificate
Group, the Senior Prepayment Percentage for each Certificate Croup for such
Distribution Date will equal 100%, (ii) if on any Distribution Date before the
Distribution Date in March 2008, prior to giving effect to any distributions on
such Distribution Date, the Subordinated Percentage for such Certificate Group
for such Distribution Date is equal to or greater than twice the initial
Subordinated Percentage for such Certificate Group, then the Senior Prepayment
Percentage for such Certificate Group for such Distribution Date will equal the
Senior Percentage for such Certificate Group plus 50% of the Subordinated
Percentage for such Certificate Group and (iii) if on any Distribution Date on


                                       27
<PAGE>

or after the Distribution Date in March 2008, prior to giving effect to any
distributions on such Distribution Date, the Subordinated Percentage for such
Certificate Group for such Distribution Date is equal to or greater than twice
the initial Subordinated Percentage for such Certificate Group, then the Senior
Prepayment Percentage for such Certificate Group for such Distribution Date will
equal the Senior Percentage for such Certificate Group.

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

      (1)   the aggregate Stated Principal Balance of Mortgage Loans in all of
            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 Certificate
            Principal Balances of the Subordinated Certificates as of that date;
            and

      (2)   cumulative aggregate Realized Losses in all of the Mortgage Pools do
            not exceed:

            (a) 20% of the aggregate Original Group Subordinate Amount of the
            Mortgage Pools if such Distribution Date occurs between and
            including March 2005 and February 2008; and

            (b) 30% of the aggregate Original Group Subordinate Amount of the
            Mortgage Pools if such Distribution Date occurs on or after March
            2008.

      Senior Support Certificates: As specified in the Preliminary Statement.

      Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.9.

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

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

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

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


                                       28
<PAGE>

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

            (1) normal wear and tear;

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

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

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

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

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

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

                  (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, $6,008,309. As of any Distribution Date, the Special Hazard Loss
Coverage Amount will equal the greater of

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


                                       29
<PAGE>

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

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

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

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

      Startup Day: The Closing Date.

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

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

      Subordinated Certificates: As specified in the Preliminary Statement.

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

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

            (1) the related Subordinated Percentage of all Scheduled Payments of
principal due on each outstanding Mortgage Loan in the related Mortgage Pool on
the first day of the month in which the Distribution Date occurs, as specified


                                       30
<PAGE>

in the amortization schedule at the time applicable thereto, after adjustment
for previous principal prepayments and the principal portion of Debt Service
Reductions after the Bankruptcy Loss Coverage Amount has been reduced to zero,
but before any adjustment to such amortization schedule by reason of any other
bankruptcy or similar proceeding or any moratorium or similar waiver or grace
period;

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

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

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

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

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

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

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

      Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for a
Deleted Mortgage Loan which must, on the date of such substitution, as confirmed
in a Request for Release, substantially in the form of Exhibit L, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) have an Adjusted Net Mortgage Rate not lower than the Adjusted Net


                                       31
<PAGE>

Mortgage Rate of the Deleted Mortgage Loan, provided that the Master Servicing
Fee for the Substitute Mortgage Loan shall be equal to or greater than that of
the Deleted Mortgage Loan; (iii) have a maximum mortgage rate not more than 1%
per annum higher or lower than the maximum mortgage rate of the Deleted Mortgage
Loan; (iv) have a minimum mortgage rate specified in its related Mortgage Note
not more than 1% per annum higher or lower than the minimum mortgage rate of the
Deleted Mortgage Loan; (v) have the same mortgage index, reset period and
periodic rate as the Deleted Mortgage Loan and a gross margin not more than 1%
per annum higher or lower than that of the Deleted Mortgage Loan (vi) be
accruing interest at a rate no lower than and not more than 1% per annum higher
than, that of the Deleted Mortgage Loan; (iv) have a Loan-to-Value Ratio no
higher than that of the Deleted Mortgage Loan; (vii) have a remaining term to
maturity no greater than (and not more than one year less than that of) the
Deleted Mortgage Loan; (viii) not be a Cooperative Loan unless the Deleted
Mortgage Loan was a Cooperative Loan and (ix) comply with each representation
and warranty set forth in Section 2.3 hereof. Substitution Adjustment Amount:
The meaning ascribed to such term pursuant to Section 2.3.

      Super Senior Certificates: As specified in the Preliminary Statement.

      Support Classes: As specified in the Preliminary Statement.

      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 ss. 1.860F-4(d) and Treasury
regulation ss. 301.6231(a)(7)-1. Initially, the Tax Matters Person shall be the
Trustee.

      Tax Matters Person Certificate: The Class II-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.


                                       32
<PAGE>

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

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

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

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

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

      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.

      Underwriters: As specified in the Preliminary Statement.

      Underwriters' Exemption: Prohibited Transaction Exemption 89-40 or
Prohibited Transaction Exemption 89-88, each as amended (or any successor
thereto), or any substantially similar administrative exemption granted by the
U.S. Department of Labor.

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

      Voting Rights: The portion of the voting rights of all of the Certificates
which is allocated to any Certificate. As of any date of determination, (a) 99%
of all Voting Rights will be allocated among all Holders of the Certificates,
other than the Class II-A-R Certificates, in proportion to their then
outstanding Class Certificate Balances; and (b) 1.0% of all Voting Rights will
be allocated to the Class II-A-R Certificates (such Voting Rights to be
allocated among the Holders of Certificates of 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


                                       33
<PAGE>

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

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

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

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

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

            (iii) in the case of a Mortgage Loan that is not a MERS Mortgage
                  Loan, a duly executed assignment of the Mortgage in blank
                  (which may be included in a blanket assignment or
                  assignments), together with, except as provided below, all
                  interim recorded assignments of such mortgage (each such
                  assignment, when duly and validly completed, to be in
                  recordable form and sufficient to effect the assignment of and
                  transfer to the assignee thereof, under the Mortgage to which
                  the assignment relates); provided that, if the related


                                       34
<PAGE>

                  Mortgage has not been returned from the applicable public
                  recording office, such assignment of the Mortgage may exclude
                  the information to be provided by the recording office;

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

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

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

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

                  (B)   The executed Security Agreement;

                  (C)   The executed Proprietary Lease;

                  (D)   The executed Recognition Agreement;

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

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

      In the event that in connection with any Mortgage Loan 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


                                       35
<PAGE>

the relevant recording office, be made later than one year following the Closing
Date; provided, however, in the event the Depositor is unable to deliver or
cause to be delivered by such date each Mortgage and each such interim
assignment by reason of the fact that any such documents have not been returned
by the appropriate recording office, or, in the case of each such interim
assignment, because the related Mortgage has not been returned by the
appropriate recording office, the Depositor shall deliver or cause to be
delivered such documents to the Trustee or the Custodian on its behalf as
promptly as possible upon receipt thereof and, in any event, within 720 days
following the Closing Date. The Depositor shall forward or cause to be forwarded
to the Trustee or the Custodian on its behalf (a) from time to time additional
original documents evidencing an assumption or modification of a Mortgage Loan
and (b) any other documents required to be delivered by the Depositor or the
Master Servicer to the Trustee. In the event that the original Mortgage is not
delivered and in connection with the payment in full of the related Mortgage
Loan and the public recording office requires the presentation of a "lost
instruments affidavit and indemnity" or any equivalent document, because only a
copy of the Mortgage can be delivered with the instrument of satisfaction or
reconveyance, the Master Servicer shall execute and deliver or cause to be
executed and delivered such a document to the public recording office. In the
case where a public recording office retains the original recorded Mortgage or
in the case where a Mortgage is lost after recordation in a public recording
office, the Depositor shall deliver or cause to be delivered to the Trustee or
the Custodian on its behalf a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.

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


                                       36
<PAGE>

2005-AR1, The Bank of New York, as trustee for the holders of the Certificates",
(ii) cause such assignment to be in proper form for recording in the appropriate
public office for real property records and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Master Servicer has not received the
information required to prepare such assignment in recordable form, the Master
Servicer's obligation to do so and to deliver the same for such recording shall
be as soon as practicable after receipt of such information and in any event
within thirty (30) days after receipt thereof. Notwithstanding the foregoing,
the Master Servicer need not cause to be recorded any assignment which relates
to a Mortgage Loan in any state other than the Required Recordation States.

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

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

            SECTION 2.2 Acceptance by Trustee of the Mortgage Loans.

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


                                       37
<PAGE>

      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 of the Opinion of


                                       38
<PAGE>

Counsel required by Section 2.5 hereof, if any, and any substitution pursuant to
(a) above shall not be effected prior to the additional delivery to the Trustee
of a Request for Release substantially in the form of Exhibit L. No substitution
is permitted to be made in any calendar month after the Determination Date for
such month. The Purchase Price for any such Mortgage Loan shall be deposited by
the Seller in the Certificate Account on or prior to the Distribution Account
Deposit Date for the Distribution Date in the month following the month of
repurchase and, upon receipt of such deposit and certification with respect
thereto in the form of Exhibit M hereto, the Trustee shall cause the Custodian
to release the related Mortgage File to the Seller and shall execute and deliver
at the Seller's request such instruments of transfer or assignment prepared by
the Seller, in each case without recourse, as shall be necessary to vest in the
Seller, or a designee, the Trustee's interest in any Mortgage Loan released
pursuant hereto. 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(R) System in
accordance with MERS' rules and regulations or (ii) cause MERS to designate on
the MERS(R) 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 in the by the specific applicable local, state or federal predatory
and abusive lending laws.

            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


                                       39
<PAGE>

            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 and the Mortgage File for any such Substitute Mortgage Loan. The
            Seller shall promptly reimburse the Master Servicer and the Trustee
            for any expenses reasonably incurred by the Master Servicer or the
            Trustee in respect of enforcing the remedies for such breach. With
            respect to the representations and warranties described in this
            Section which are made to the best of the Seller's knowledge, if it
            is discovered by either the Depositor, the Seller or the Trustee
            that the substance of such representation and warranty is inaccurate
            and such inaccuracy materially and adversely affects the value of
            the related Mortgage Loan or the interests of the Certificateholders
            therein, notwithstanding the Seller's lack of knowledge with respect
            to the substance of such representation or warranty, such inaccuracy
            shall be deemed a breach of the applicable representation or
            warranty.

      With respect to any Substitute Mortgage Loan or Loans, the Seller shall
deliver to the Trustee or the Custodian on its behalf for the benefit of the
Certificateholders the Mortgage Note, the Mortgage, the related assignment of
the Mortgage, and such other documents and agreements as are required by Section
2.1, with the Mortgage Note endorsed and the Mortgage assigned as required by
Section 2.1. No substitution is permitted to be made in any calendar month after
the Determination Date for such month. Scheduled Payments due with respect to
Substitute Mortgage Loans in the month of substitution shall not be part of the
Trust Fund and will be retained by the Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
Certificateholders will include the monthly payment due on any Deleted Mortgage
Loan for such month and thereafter the Seller shall be entitled to retain all
amounts received in respect of such Deleted Mortgage Loan. The Master Servicer
shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders
to reflect the removal of such Deleted Mortgage Loan and the substitution of the


                                       40
<PAGE>

Substitute Mortgage Loan or Loans and the Master Servicer shall deliver the
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Schedule B to
the MLPA with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Certificate Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release or shall cause the Custodian to release the
Mortgage File held for the benefit of the Certificateholders relating to such
Deleted Mortgage Loan to the Seller and shall execute and deliver at the
Seller's direction such instruments of transfer or assignment prepared by the
Seller, in each case without recourse, as shall be necessary to vest title in
the Seller, or its designee, the Trustee's interest in any Deleted Mortgage Loan
substituted for pursuant to this Section 2.3.

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

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

      After giving effect to the sale of the Certificates by the Depositor to
the Underwriters, 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.


                                       41
<PAGE>

      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 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


                                       42
<PAGE>

                  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 Interests shall be the sole class of residual
interest in the Lower REMIC. The Lower REMIC Interests shall be uncertificated
and shall be held by the Trustee as assets of the Upper REMIC.

      The assets of the 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 II-A-R Certificate shall represent ownership of the RL
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.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                        Corresponding Class of Upper REMIC
   Lower REMIC                                                                       Interests
   Interest or          Lower REMIC          Lower REMIC Interest    ----------------------------------------
    Residual          Interest Balance               Rate                   Interest            Principal
-------------------------------------------------------------------------------------------------------------
<S>                <C>                       <C>                     <C>                    <C>
L-I-A-1            $        21,419.09                (2)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-I-A-2            $         2,379.90                (2)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-I-A-ZZZ          $    55,980,099.45                (2)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
RL                 $             0.00                N/A                       N/A                 N/A
-------------------------------------------------------------------------------------------------------------
L-II-A-1           $        42,088.42                (3)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-II-A-2           $         4,676.49                (3)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-II-A-ZZZ         $   110,004,826.72                (3)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-III-A-1          $         8,813.33                (4)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-III-A-2          $           979.26                (4)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-III-A-ZZZ        $    23,009,466.34                (4)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------


                                       43
<PAGE>

-------------------------------------------------------------------------------------------------------------
L-IV-A-1           $        24,497.41                (5)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-IV-A-2           $         2,721.93                (5)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-IV-A-ZZZ         $    64,007,715.20                (5)                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
Total
-------------------------------------------------------------------------------------------------------------
</TABLE>


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

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

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

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

      "L1 Interests" refers to the L-I-A-1 Lower REMIC Interest, the L-II-A-1
Lower REMIC Interests, L-III-A-1 Lower REMIC Interest, and the L-IV-A-1 Lower
REMIC Interests. "L2 Interests" refers to the L-I-A-2 Lower REMIC Interest,
L-II-A-2 Lower REMIC Interest, L-III-A-2 Lower REMIC Interest and the L-IV-A-2
Lower REMIC Interest. "LZZZ Interests" refers to L-I-A-ZZZ Lower REMIC Interest,
L-II-A-ZZZ Lower REMIC Interest, L-III-A-ZZZ Lower REMIC Interest and L-IV-A-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


                                       44
<PAGE>

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.

      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 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 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


                                       45
<PAGE>

Mortgage Pool shall be paid proportionately to the LZZZ Interests of the
Mortgage Pool or 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 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 from which the payment was reallocated it shall reimburse the
Upper REMIC for prior Realized Losses. If on any 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 Upper REMIC as reimbursement for prior Realized
Losses.

      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


                                       46
<PAGE>

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


                                       47
<PAGE>

related collections from the Mortgagors pursuant to Section 3.6, and further as
provided in Section 3.8. The costs incurred by the Master Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances of the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.

            SECTION 3.2 Subservicing; Enforcement of the Obligations of
Servicers.

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

      (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.


                                       48
<PAGE>

            SECTION 3.4 Trustee to Act as Master Servicer.

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

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

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

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


                                       49
<PAGE>

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

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

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

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

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

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

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

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

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

            In addition, with respect to any Mortgage Loan that is subject to a
      buydown agreement, on each Due Date for such Mortgage Loan, in addition to
      the monthly payment remitted by the Mortgagor, the Master Servicer shall


                                       50
<PAGE>

      cause funds to be deposited into the applicable subaccount of the
      Certificate Account in an amount required to cause an amount of interest
      to be paid with respect to such Mortgage Loan equal to the amount of
      interest that has accrued on such Mortgage Loan from the preceding Due
      Date at the related Adjusted Mortgage Rate on such date.

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

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


                                       51
<PAGE>

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

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


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<PAGE>

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

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

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

            (i)   to the extent not previously retained by the Master Servicer,
                  to pay to the Master Servicer the master servicing
                  compensation to which it is entitled pursuant to Section 3.14,


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<PAGE>

                  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;

            (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


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<PAGE>

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

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

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

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

      (a)   The Master Servicer shall cause to be maintained, for each Mortgage
            Loan, hazard insurance with extended coverage in an amount that is
            at least equal to the lesser of (i) the maximum insurable value of
            the improvements securing such Mortgage Loan or (ii) the greater of
            (y) the outstanding principal balance of the Mortgage Loan and (z)
            an amount such that the proceeds of such policy shall be sufficient
            to prevent the Mortgagor and/or the mortgagee from becoming a
            co-insurer. Each such policy of standard hazard insurance shall
            contain, or have an accompanying endorsement that contains, a
            standard mortgagee clause. Any amounts collected by the Master
            Servicer under any such policies (other than the amounts to be
            applied to the restoration or repair of the related Mortgaged
            Property or amounts released to the Mortgagor in accordance with the
            Master Servicer's normal servicing procedures) shall be deposited in
            the applicable subaccount of the Certificate Account. Any cost
            incurred by the Master Servicer in maintaining any such insurance


                                       55
<PAGE>

            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 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.


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<PAGE>

      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
            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.


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<PAGE>

      (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 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


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<PAGE>

Mortgaged Property, as provided in the definition of Liquidation Proceeds. If
the Master Servicer has knowledge that a Mortgaged Property which the Master
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a 1 mile radius of any site listed in the
Expenditure Plan for the Hazardous Substance Clean Up Bond Act of 1984 or other
site with environmental or hazardous waste risks known to the Master Servicer,
the Master Servicer will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with its established environmental
review procedures.

      With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trust Fund for the benefit of the Certificateholders,
or its nominee, on behalf of the Certificateholders. The Master Servicer shall
ensure that the title to such REO Property references the Pooling and Servicing
Agreement and the Trust Fund's capacity thereunder. Pursuant to its efforts to
sell such REO Property, the Master Servicer shall either itself or through an
agent selected by the Master Servicer protect and conserve such REO Property in
the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the interests of the Certificateholders, rent the same, or any part thereof, as
the Master Servicer deems to be in the best interest of the Certificateholders
for the period prior to the sale of such REO Property. The Master Servicer shall
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 hereunder as
defined in Section 860F of the Code or cause any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such Mortgaged Property (subject
to any conditions contained in such Opinion of Counsel). Notwithstanding any
other provision of this Agreement, no Mortgaged Property acquired by the Trust
Fund shall be rented (or allowed to continue to be rented) or otherwise used for
the production of income by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (ii) subject any REMIC hereunder to the imposition of any federal,
state or local income taxes on the income earned from such Mortgaged Property
under Section 860G(c) of the Code or otherwise, unless the Master Servicer has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.

      In the event of a default on a Mortgage Loan one or more of whose obligor
is not a United States Person, as that term is defined in Section 7701(a)(30) of
the Code, in connection with any foreclosure or acquisition of a deed in lieu of


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<PAGE>

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 the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest


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<PAGE>

in and to such Mortgage Loan and all security and documents related thereto. 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
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


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<PAGE>

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 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.


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            SECTION 3.16 Annual Statement as to Compliance.

      The Master Servicer shall deliver to the Depositor and the Trustee on or
before 120 days after the end of the Master Servicer's fiscal year, commencing
with its 2005 fiscal year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of the Master Servicer during the
preceding calendar year and of the performance of the Master Servicer under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.

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

      On or before 120 days after the end of the Master Servicer's fiscal year,
commencing with its 2005 fiscal year, the Master Servicer at its expense shall
cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Trustee and the
Depositor to the effect that-such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
of mortgage loans under pooling and servicing agreements substantially similar
to this Agreement (such statement to have attached thereto a schedule setting
forth the pooling and servicing agreements covered thereby) and that, on the
basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in
compliance with such pooling and servicing agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC requires it to report. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FNMA and FHLMC (rendered within one year of such statement) of independent
public accountants with respect to the related Subservicer. Copies of such
statement shall be provided by the Trustee to any Certificateholder or
Certificate Owner upon request at the Master Servicer's expense, provided such
statement is delivered by the Master Servicer to the Trustee.

            SECTION 3.18 Errors and Omissions Insurance; Fidelity Bonds.

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


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that any such policy or bond ceases to be in effect, the Master Servicer shall
obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.

            SECTION 3.19 Notification of Adjustments.

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

                                   ARTICLE IV
                DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER

            SECTION 4.1 Advances.

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


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

            SECTION 4.2 Priorities of Distribution.

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

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

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

            (iii) to the Classes of Senior Certificates of the related
                  Certificate Group, to the extent of remaining Available Funds
                  from the related Mortgage Pool, the related Senior Optimal
                  Principal Amount for such Distribution Date and, in the case
                  of the Group II Senior Certificates, in the order of priority
                  set forth below in Sections 4.2(b), 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(g), 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(g), 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(g), in
                  the following order: (1) the Accrued Certificate Interest
                  thereon for such Distribution Date, (2) any Accrued


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<PAGE>

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

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

            (ix)  to the Class B-6 Certificates, to the extent of remaining
                  Available Funds for each Mortgage Pool, but subject to the
                  prior payment of amounts described under Section 4.2(g), 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 II Senior Certificates pursuant to
            Section 4.2(a)(iii) above will be distributed in the following order
            of priority:

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

            (ii)  concurrently, to the Class II-A-1, Class II-A-2, Class II-A-3,
                  Class II-A-4 and Class II-A-5 Certificates as follows:

                  (1)   74.6903914591% of the remaining Senior Optimal Principal
                        Amount for Pool II for such Distribution Date,
                        concurrently to the Class II-A-1, Class II-A-2 and Class
                        II-A-5 Certificates, pro rata, until the respective
                        Class Certificate Balances thereof have each been
                        reduced to zero; and

                  (2)   25.3096085409% of the remaining Senior Optimal Principal
                        Amount for Pool II for such Distribution Date,
                        sequentially to the Class II-A-3 and Class II-A-4
                        Certificates, in that order, until the respective Class
                        Certificate Balances thereof are reduced to zero.


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<PAGE>

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

      (d)   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
            immediately prior to such Distribution Date, regardless of the
            priorities and amounts set forth in Section 4.2.

      (e)   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 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).

      (f)   In the event that in any calendar month the Master Servicer recovers
            an amount (an "Unanticipated Recovery") in respect of principal of a
            Mortgage Loan which had previously been allocated as a Realized Loss
            to any Class of Certificates pursuant to Section 4.4, on the
            Distribution Date in the next succeeding calendar month, the Trustee
            shall withdraw the Unanticipated Recovery from the Distribution
            Account and sequentially increase 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 such Realized Loss previously
            allocated to such Class, and shall distribute the amount of such
            Unanticipated Recovery to each such Class of Certificates in the
            order of payment priority described in Section 4.2(a) of this
            Agreement. 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 (f).
            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


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            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).

      (g)   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 with the priorities set
            forth in Section 4.2(b) 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 Pool not related to an
            Undercollateralized Group remaining after all required amounts for
            that Distribution Date have been distributed to the Senior
            Certificates of such other Certificate Group. In addition, the
            amount of any unpaid 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(g), no distribution of principal will be made to
            any Class of Subordinated Certificates until each
            Undercollateralized Group is no longer undercollateralized. If more
            than one Undercollateralized Group on any Distribution Date is
            entitled to an Undercollateralization Distribution, such
            Undercollateralization Distribution shall be allocated among the
            Undercollateralized Groups, pro rata, on the basis of the amount by
            which the aggregate Class Certificate Balance of the related Senior
            Certificates is greater than the aggregate Stated Principal Balance
            of the Mortgage Loans in the related Undercollateralized Groups. If
            more than one Certificate Group on any Distribution Date is required
            to make an Undercollateralization Distribution to an
            Undercollateralized Group, the payment of such
            Undercollateralization Distributions shall be allocated among such
            Certificate Groups, pro rata, on the basis of the aggregate Class
            Certificate Balance of the related Senior Certificates.


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<PAGE>

            In addition, if on any Distribution Date the total Class Certificate
            Balance of the Senior Certificates of a Certificate Group (after
            giving effect to distributions to be made on that Distribution Date)
            has been reduced to zero, all amounts otherwise distributable as
            prepayments of principal to the Subordinated Certificates, in
            reverse order of priority, will instead be distributed as principal
            to the Senior Certificates of the other Certificate Groups pro rata,
            on the basis of the aggregate Class Certificate Balance of the
            related Senior Certificates, unless (a) the weighted average of the
            Subordinated Percentages for the Mortgage Pools, weighted on the
            basis of the Stated Principal Balance of the Mortgage Loans in the
            related Mortgage Pool, is at least two times the weighted average of
            the initial Subordinate Percentage for the Mortgage Pools
            (calculated on such basis) and (b) the aggregate Stated Principal
            Balance of all of the Mortgage Loans in the Mortgage Pools
            delinquent 60 days or more (including for this purpose any such
            Mortgage Loans in foreclosure or subject to bankruptcy proceedings
            and Mortgage Loans with respect to which the related Mortgaged
            Property has been acquired by the Trust Fund), averaged over the
            preceding six month period, as a percentage of the then current
            aggregate Class Certificate Balance of the Subordinated
            Certificates, is less than 50%. Except as provided otherwise in this
            Section 4.2(g), all distributions described above will be made in
            accordance with the priorities set forth in Section 4.2(a) and (b).

            SECTION 4.3 Method of Distribution.

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

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


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      (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:

            (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;


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<PAGE>

            (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, 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 II-A-2 ,
                  Class II-A-3 and Class II-A-4 Certificates will instead be
                  borne first by the Class II-A-5 Certificates until its Class
                  Certificate Balance is reduced to zero (in addition to other
                  Realized Losses allocated to the Class II-A-5 Certificates),
                  and not by the Class II-A-2, Class II-A-3 and Class II-A-4
                  Certificates, for so long as the Class Certificate Balance of
                  the Class II-A-5 Certificates is greater than zero.

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

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

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

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

      (g)   Notwithstanding the foregoing, no such allocation of any Realized
            Loss shall be made on a Distribution Date to a Class of Certificates
            to the extent that such allocation would result in the reduction of
            the aggregate Class Certificate Balances of all the Senior
            Certificates of a related Certificate Group as of such Distribution
            Date plus the Apportioned Principal Balances of the Subordinated


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            Certificates of such Certificate Group as of such Distribution Date,
            after giving effect to all distributions and prior allocations of
            Realized Losses on such date, to an amount less than the aggregate
            Stated Principal Balance of the Mortgage Loans in the related
            Mortgage Pool as of the first day of the month of such Distribution
            Date, less any Deficient Valuations occurring on or prior to the
            Bankruptcy Coverage Termination Date (such limitation, the "Loss
            Allocation Limitation").

            SECTION 4.5 [RESERVED]

            SECTION 4.6 Monthly Statements to Certificateholders.

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

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

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

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

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

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

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

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

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

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


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            (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.

      (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),


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            (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 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


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            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,
            the Certificateholder desiring to effect such transfer and such
            Certificateholder's prospective transferee shall each certify to the
            Trustee in writing the facts surrounding the transfer in
            substantially the forms set forth in Exhibit I (the "Transferor
            Certificate") and (i) deliver a letter in substantially the form of
            either Exhibit J (the "Investment Letter") or Exhibit K (the "Rule
            144A Letter") or (ii) there shall be delivered to the Trustee at the
            expense of the transferor an Opinion of Counsel that such transfer
            may be made pursuant to an exemption from the Securities Act. The
            Depositor shall provide to any Holder of a Private Certificate and
            any prospective transferee designated by any such Holder,
            information regarding the related Certificates and the Mortgage
            Loans and such other information as shall be necessary to satisfy
            the condition to eligibility set forth in Rule 144A(d)(4) for
            transfer of any such Certificate without registration thereof under


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

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

            To the extent permitted under applicable law (including, but not
      limited to, ERISA), the Trustee shall be under no liability to any Person
      for any registration of transfer of any ERISA-Restricted Certificate that
      is in fact not permitted by this Section 5.2(b) or for making any payments


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      due on such Certificate to the Holder thereof or taking any other action
      with respect to such Holder under the provisions of this Agreement so long
      as the transfer was registered by the Trustee in accordance with the
      foregoing requirements.

      (c)   Each Person who has or who acquires any Ownership Interest in a
            Residual Certificate shall be deemed by the acceptance or
            acquisition of such Ownership Interest to have agreed to be bound by
            the following provisions, and the rights of each Person acquiring
            any Ownership Interest in a Residual Certificate are expressly
            subject to the following provisions:

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

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

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

            (iv)  Any attempted or purported Transfer of any Ownership Interest
                  in a Residual Certificate in violation of the provisions of
                  this Section 5.2(c) shall be absolutely null and void and
                  shall vest no rights in the purported Transferee. If any
                  purported transferee shall become a Holder of a Residual
                  Certificate in violation of the provisions of this Section
                  5.2(c), then the last preceding Permitted Transferee shall be
                  restored to all rights as Holder thereof retroactive to the
                  date of registration of Transfer of such Residual Certificate.
                  The Trustee shall be under no liability to any Person for any
                  registration of Transfer of a Residual Certificate that is in
                  fact not permitted by Section 5.2(b) and this Section 5.2(c)
                  or for making any payments due on such Certificate to the
                  Holder thereof or taking any other action with respect to such


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                  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.

            (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


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            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 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


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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.

            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.


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

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

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

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

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


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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.

            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, 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


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

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

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

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

      If an Event of Default described in clauses (i) to (v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, or at the direction of
the Holders of Certificates evidencing not less than 66 2/3% of the Voting
Rights evidenced by the Certificates, the Trustee shall by notice in writing to
the Master Servicer (with a copy to each Rating Agency), terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. If an Event of Default described in clause (vi) of
this Section shall occur, the Trustee shall immediately, by notice in writing to
the Master Servicer (with a copy to each Rating Agency), terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to
the Mortgage Loans and proceeds thereof, other than its rights as a
Certificateholder hereunder. On and after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee or another successor to the Master Servicer appointed by
the Trustee pursuant to Section 7.2. The Trustee, in its capacity as successor
to the Master Servicer, shall thereupon make any Advance which the Master
Servicer failed to make subject to Section 4.1 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written


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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.

            SECTION 7.2 Trustee to Act; Appointment of Successor.

      On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.1 hereof, the Trustee shall, subject to and to the extent
provided in Section 3.4, be the successor to the Master Servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Master Servicer by the terms and provisions hereof and applicable
law including the obligation to make Advances pursuant to Section 4.1. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans that the Master Servicer would have been entitled to charge
to the Certificate Account or Distribution Account if the Master Servicer had
continued to act hereunder. Notwithstanding the foregoing, if the Trustee has
become the successor to the Master Servicer in accordance with Section 7.1
hereof, the Trustee may, if it shall be unwilling to so act, or shall, if it is
prohibited by applicable law from making Advances pursuant to Section 4.1 hereof
or if it is otherwise unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution the appointment of which does not adversely affect the then current
rating of the Certificates by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer hereunder. Any successor to the
Master Servicer shall be an institution which is a FNMA and FHLMC approved
seller/servicer in good standing, which has a net worth of at least $10,000,000,
and which is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, which contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Master Servicer
(other than liabilities of the Master Servicer under Section 6.3 hereof incurred
prior to termination of the Master Servicer under Section 7.1), with like effect
as if originally named as a party to this Agreement; and provided further that
each Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced, as a result of such assignment and delegation. Pending appointment of a
successor to the Master Servicer hereunder, the Trustee, unless the Trustee is
prohibited by law from so acting, shall, subject to Section 3.4 hereof, act in
such capacity as provided above. In connection with such appointment and


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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 3.18.

      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(R) System to the successor Master Servicer or
(y) in causing MERS to designate on the MERS(R) 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 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.


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                                  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.

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

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

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


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            (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 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;


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            (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 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;


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            (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(R) 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.

            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


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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.

            SECTION 8.7 Resignation and Removal of Trustee.

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

      If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.6 hereof and shall fail to resign after written
request thereto by the Depositor, or if at any time the Trustee shall become


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incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Master Servicer
may remove the Trustee and appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Master Servicer and one copy to the
successor trustee.

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

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

            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.


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            SECTION 8.9 Merger or Consolidation of Trustee.

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

            SECTION 8.10 Appointment of Co-Trustee or Separate Trustee.

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


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

            (iii) The Trustee may at any time accept the resignation of or
                  remove any separate trustee or co-trustee; and (iv) The Master
                  Servicer, and not the Trustee, shall be liable for the payment
                  of reasonable compensation, reimbursement and indemnification
                  to any such separate trustee or co-trustee.

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

      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


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cause to be made elections that such assets be treated as a REMIC on the federal
tax return for its first taxable year (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the prepayment
assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Residual Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control conduct matters relating
to such assets at all times that any Certificates are outstanding so as to
maintain the status as a REMIC under the REMIC Provisions; (g) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of any REMIC status; (h) pay, from the sources specified in the last
paragraph of this Section 8.11, the amount of any federal or state tax,
including prohibited transaction taxes as described below, imposed on any such
REMIC prior to its termination when and as the same shall be due and payable
(but such obligation shall not prevent the Trustee or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall 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


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Depositor hereby indemnifies the Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee on a timely
basis.

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

            SECTION 8.12 Periodic Filings.

      The Depositor hereby directs the Trustee to prepare, execute (pursuant to
a limited power of attorney given to the Trustee by the Depositor) and file on
behalf of the Depositor all periodic reports required under the Securities
Exchange Act of 1934 in conformity with the terms of the "no-action" relief
granted by the SEC to issuers of asset-backed securities such as the
Certificates and the Trustee hereby agrees to do so. The Master Servicer will
also prepare and execute any certifications to be filed with the Form 10-K as
required under the Sarbanes-Oxley Act of 2002. In connection with the
preparation and filing of such periodic reports, the Depositor and the Master
Servicer shall timely provide to the Trustee all material information available
to them which is required to be included in such reports and not known to them
to be in the possession of the Trustee and such other information as the Trustee
reasonably may request from either of them and otherwise reasonably shall
cooperate with the Trustee. The Trustee shall have no liability with respect to
any failure to properly prepare or file such periodic reports resulting from or
relating to the Trustee's inability or failure to obtain any information not
resulting from its own negligence or willful misconduct.

                                   ARTICLE IX
                                   TERMINATION

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

      Subject to Section 9.3, the obligations and responsibilities of the
Depositor, the Master Servicer and the Trustee created hereby with respect to
the Trust Fund shall terminate upon the earlier of (a) the purchase by the
Master Servicer of all Mortgage Loans (and REO Properties) remaining in the
Trust Fund at the price equal to the sum of (i) 100% of the Stated Principal
Balance of each Mortgage Loan (other than a Mortgage Loan that has been
foreclosed and subject to clause (ii)) plus one month's accrued interest thereon
at the applicable Adjusted Mortgage Rate, (ii) the lesser of (x) the appraised
value of any REO Property as determined by the higher of two appraisals
completed by two independent appraisers selected by the Master Servicer at the


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

            SECTION 9.2 Final Distribution on the Certificates.

      If on any Determination Date, the Master Servicer determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the Certificate Account, the Master Servicer shall
direct the Trustee promptly to send a final distribution notice to each
Certificateholder. If the Master Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.1, at least 20 days prior to the date notice
is to be mailed to the affected Certificateholders, the Master Servicer shall
notify the Depositor and the Trustee of the date the Master Servicer intends to
terminate the Trust Fund and of the applicable repurchase price of the Mortgage
Loans and REO Properties.

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

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


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

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

                        (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.


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

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

                                   ARTICLE X
                                   [RESERVED]

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

            SECTION 11.1 Amendment.

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


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

      Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Trust Fund, to the effect that such amendment will not cause the
imposition of any tax on 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.


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<PAGE>

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

            SECTION 11.3 Governing Law.

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

            SECTION 11.4 Intention of Parties.

      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;


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

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

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

            (5)   The final payment to Certificateholders.

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

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

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

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

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

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

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

            SECTION 11.6 Severability of Provisions.

      If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the


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remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

            SECTION 11.7 Assignment.

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

            SECTION 11.8 Limitation on Rights of Certificateholders.

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

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


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            SECTION 11.9 Inspection and Audit Rights.

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

            SECTION 11.10 Certificates Nonassessable and Fully Paid.

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

            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.

                                                    * * * * * *


                                      103
<PAGE>

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

                      FIRST HORIZON ASSET SECURITIES INC.,
                      as Depositor


                      By:  ____________________________________________________
                               Alfred Chang
                               Vice President


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


                      By:  ____________________________________________________
                               Diane Pickett
                               Vice President


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


                      By:  ________________________________
                               Terry McCoy
                               Senior Vice President

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

FIRST HORIZON HOME LOAN CORPORATION,
in its capacity as Seller__

By:  ___________________________________
         Terry McCoy
         Senior Vice President



FHASI 2005-AR1
Pooling and Servicing Agreement - Signature Page

<PAGE>

                                   SCHEDULE I

                       First Horizon Asset Securities Inc.
               Mortgage Pass-Through Certificates Series 2005-AR1

                             Mortgage Loan Schedule

                      [Available Upon Request from Trustee]


                                      I-1
<PAGE>

                                   SCHEDULE II

                       First Horizon Asset Securities Inc.
               Mortgage Pass-Through Certificates Series 2005-AR1

              Representations and Warranties of the Master Servicer

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

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

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

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


                                      II-1
<PAGE>

      which First Horizon is a party or by which it may be bound, 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
<PAGE>

                                  SCHEDULE III

                       First Horizon Asset Securities Inc.
               Mortgage Pass-Through Certificates Series 2005-AR1

                     Form of Monthly Master Servicer Report

                              [Begins on Next Page]


                                     III-1
<PAGE>

                                    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
<PAGE>

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 Mortgage Pass-Through Trust 2005-AR1
               Mortgage Pass-Through Certificates, Series 2005-AR1
                                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 Loan Corporation, 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
<PAGE>

      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
<PAGE>

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

Dated:  February __, 2005

                                    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
<PAGE>

                                    EXHIBIT B

                       [FORM OF SUBORDINATED 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.]

[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


                                      B-1
<PAGE>

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
<PAGE>

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 Mortgage Pass-Through Trust 2005-AR1
               Mortgage Pass-Through Certificates, Series 2005-AR1
                                   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 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 Loan Corporation, 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
<PAGE>

      [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
<PAGE>

      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
<PAGE>

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

Dated:  February __, 2005

                                    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
<PAGE>

                                    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
<PAGE>

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 Mortgage Pass-Through Trust 2005-AR1
               Mortgage Pass-Through Certificates, Series 2005-AR1

            evidencing the distributions allocable to the Class II-A-R
      Certificates 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 Loan Corporation, 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 II-A-R


                                      C-2
<PAGE>

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

      No transfer of a Class II-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 II-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 II-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 II-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 II-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 II-A-R Certificate must be a Permitted Transferee, (ii)
no Ownership Interest in this Class II-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 II-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 II-A-R Certificate must agree
not to transfer an Ownership Interest in this Class II-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
II-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
<PAGE>

      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
<PAGE>

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

Dated:  February __, 2005

                                        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
<PAGE>

                                    EXHIBIT D

                        [Form of Reverse of Certificates]

               First Horizon Mortgage Pass-Through Trust 2005-AR1
                       Mortgage Pass-Through Certificates

      This Certificate is one of a duly authorized issue of Certificates
designated as First Horizon Mortgage Pass-Through Trust 2005-AR1 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


                                      D-1
<PAGE>

the transfer hereof or in exchange therefor or 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 Pool Principal Balance is less than
10% of the aggregate Cut-off Date Pool Principal Balance of Pool I, Pool II,
Pool III and Pool IV combined, 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
<PAGE>

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
<PAGE>

                                    EXHIBIT E

                   FORM OF INITIAL CERTIFICATION OF CUSTODIAN

                                     [date]

First Horizon Asset Securities Inc.
First Horizon Home Loan Corporation
4000 Horizon Way
Irving, Texas  75063

The Bank of New York_______
101 Barclay Street, 8W_____
New York, New York  10286

      Re:   Custodial Agreement dated as of February 28, 2005 by and among the
            Bank of New York, as Trustee, First Horizon Home Loan Corporation,
            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 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
<PAGE>

      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
<PAGE>

                                    EXHIBIT F

                      FORM OF DELAY DELIVERY CERTIFICATION

                                     [date]

First Horizon Asset Securities Inc.
First Horizon Home Loan Corporation
4000 Horizon Way
Irving, Texas  75063

The Bank of New York_______
101 Barclay Street, 8W_____
New York, New York  10286

      Re:   Custodial Agreement dated as of February 28, 2005 by and among the
            Bank of New York, as Trustee, First Horizon Home Loan Corporation,
            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 that is not a MERS Mortgage Loan,
the original recorded Mortgage, [and in the case of each Mortgage Loan that is a
MERS Mortgage Loan, the original 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, or a copy of the Mortgage certified by the public recording office in
which such Mortgage has been recorded]; and

      (iii) in the case of each Mortgage Loan that is not a MERS Mortgage Loan,
a duly executed 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 Custodian makes no representations as to: (i) the


                                      F-1
<PAGE>

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
<PAGE>

                                    EXHIBIT G

                  FORM OF SUBSEQUENT CERTIFICATION OF CUSTODIAN

                                     [date]


First Horizon Asset Securities Inc.
First Horizon Home Loan Corporation
4000 Horizon Way
Irving, Texas  75063

The Bank of New York_______
101 Barclay Street, 8W_____
New York, New York  10286

      Re:   Custodial Agreement dated as of February 28, 2005 by and among the
            Bank of New York, as Trustee, First Horizon Home Loan Corporation,
            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 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


                                      G-1
<PAGE>

            MERS, with evidence of recording indicated thereon, or a copy of the
            Mortgage certified by the public recording office in which such
            Mortgage has been recorded;

      (iii) in the case of each Mortgage Loan that is not a MERS Mortgage Loan,
            a duly executed assignment of the Mortgage in blank (which may be
            included in a blanket assignment or assignments), together with,
            except as provided in Section 2(c) of the Custodial Agreement, all
            interim recorded assignments of such mortgage (each such assignment,
            when duly and validly completed, to be in recordable form and
            sufficient to effect the assignment of and transfer to the assignee
            thereof, under the Mortgage to which the assignment related);
            provided that, if the related Mortgage has not been returned from
            the applicable public recording office, such assignment of the
            Mortgage may exclude the information to be provided by the recording
            office;

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

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

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

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

            (b)   The executed Security Agreement;

            (c)   The executed Proprietary Lease;

            (d)   The executed 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).

      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.


                                      G-2
<PAGE>

      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
<PAGE>

                                    EXHIBIT H

                               TRANSFER AFFIDAVIT

               First Horizon Mortgage Pass-Through Trust 2005-AR1
                       Mortgage Pass-Through Certificates
                                 Series 2005-AR1

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 II-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 Loan Corporation, 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.

      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 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.)


                                      H-1
<PAGE>

      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. Any distribution of the proceeds of any remaining assets of the Trust
Fund will be made only upon presentment and surrender of this Class II-A-R
Certificate at the Corporate Trust Office or the office or agency maintained by
the Trustee in New York, New York. This Class II-A-R Certificate represents an
ownership in the RL Interest and RU Interest, as defined in the Agreement.

      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.

      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


                                      H-2
<PAGE>

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
<PAGE>

                                                          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
<PAGE>

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


                                      H-5
<PAGE>

                                                          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.

            (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
<PAGE>

            (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
<PAGE>

                                    EXHIBIT I

                         FORM OF TRANSFEROR CERTIFICATE

                                                          _______________, 20___



First Horizon Asset Securities Inc.
First Horizon Home Loan Corporation
4000 Horizon Way
Irving, Texas  75063

The Bank of New York_______
101 Barclay Street, 8W_____
New York, New York  10286

      Re:   First Horizon Mortgage Pass-Through Trust 2005-AR1 Mortgage
            Pass-Through Certificates, Series 2005-AR1, 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 the 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 February 1, 2005, by
and among First Horizon Asset Securities Inc., as depositor, First Horizon Home
Loan Corporation, 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
<PAGE>

                                    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, 8W_____
New York, New York  10286__
Attention:  Mortgage-Backed Securities Group


      Re:   First Horizon Mortgage Pass-Through Trust 2005-AR1 Mortgage
            Pass-Through Certificates, Series 2005-AR1, 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


                                      J-1
<PAGE>

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 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
<PAGE>

                                    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, 8W_____
New York, New York  10286__
Attention:  Mortgage-Backed Securities Group


      Re:   First Horizon Mortgage Pass-Through Trust 2005-AR1 Mortgage
            Pass-Through Certificates, Series 2005-AR1, 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


                                      K-1
<PAGE>

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 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
<PAGE>

                                                            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

(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
<PAGE>

      subject to supervision by the 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 constitute a reaffirmation of this


                                      K-4
<PAGE>

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
<PAGE>

                                                            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
<PAGE>

      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
<PAGE>

                                    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)

[ ]   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).

[ ]   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
<PAGE>

                                    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