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                                                                    EXHIBIT 10.3

                                                                  EXECUTION COPY

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                       FINANCIAL ASSET SECURITIES CORP.,

                                 as Purchaser,

                                      and

                           MEGO MORTGAGE CORPORATION,

                                   as Seller,


                          HOME LOAN PURCHASE AGREEMENT

================================================================================


                          Dated as of February 1, 1997
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                               Table of Contents
<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
         <S>          <C>                                                              <C>
                                        ARTICLE I.
                                       DEFINITIONS

         Section 1.1      Definitions.  . . . . . . . . . . . . . . . . . . . . . . .   1

                                       ARTICLE II.
                      SALE OF HOME LOANS; PAYMENT OF PURCHASE PRICE

         Section 2.1      Sale of Home Loans  . . . . . . . . . . . . . . . . . . . .   2
         Section 2.2      [Reserved]  . . . . . . . . . . . . . . . . . . . . . . . .   2
         Section 2.3      Obligations of Seller Upon Sale . . . . . . . . . . . . . .   2
         Section 2.4      Payment of Purchase Price for the Home Loans  . . . . . . .   5

                                       ARTICLE III.
                                   REPRESENTATIONS AND
                             WARRANTIES; REMEDIES FOR BREACH

         Section 3.1      Seller Representations and Warranties . . . . . . . . . . .   5

                                       ARTICLE IV.
                                    SELLER'S COVENANTS

         Section 4.1      Covenants of the Seller . . . . . . . . . . . . . . . . . .   7

                                        ARTICLE V.
                              INDEMNIFICATION BY THE SELLER

         Section 5.1      Indemnification . . . . . . . . . . . . . . . . . . . . . .   7
         Section 5.2      Limitation on Liability of the Seller . . . . . . . . . . .   8

                                       ARTICLE VI.
                                       TERMINATION

         Section 6.1      Termination . . . . . . . . . . . . . . . . . . . . . . . .  10

                                       ARTICLE VII.
                                 MISCELLANEOUS PROVISIONS

         Section 7.1      Amendment . . . . . . . . . . . . . . . . . . . . . . . . .  10
         Section 7.2      Governing Law . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 7.3      Notices . . . . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 7.4      Severability of Provisions  . . . . . . . . . . . . . . . .  11
         Section 7.5      Counterparts  . . . . . . . . . . . . . . . . . . . . . . .  11
         Section 7.6      Further Agreements  . . . . . . . . . . . . . . . . . . . .  11
         Section 7.7      Intention of the Parties  . . . . . . . . . . . . . . . . .  12
</TABLE>


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<TABLE>
         <S>           <C>                                                             <C>
         Section 7.8      Successors and Assigns; Assignment of
                          Purchase Agreement  . . . . . . . . . . . . . . . . . . . .  12
         Section 7.9      Survival  . . . . . . . . . . . . . . . . . . . . . . . . .  12
         Section 7.10     Third-Party Beneficiaries . . . . . . . . . . . . . . . . .  12
</TABLE>

                             EXHIBITS AND SCHEDULES

Schedule I    Schedule of Home Loans





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<PAGE>   4
                 HOME LOAN PURCHASE AGREEMENT (the "Purchase Agreement"), dated
as of February 1, 1997, between Mego Mortgage Corporation ("Mego" or the
"Seller") and FINANCIAL ASSET SECURITIES CORP., ("FASCO" and together with any
assignee of FASCO, the "Purchaser").

                              W I T N E S S E T H

                 WHEREAS, the Seller is the owner of a pool of (i) fixed-rate
home improvement and home equity loans and debt consolidation loans and retail
installment sale contracts (the "Mortgage Loans") secured by first and junior
mortgages, deeds of trust and security deeds on certain residential and
investment properties (the "Properties") and (ii) fixed-rate home improvement
loans and retail installment sale contracts unsecured by an interest in real
property (the "Unsecured Loans" and together with the Mortgage Loans, the "Home
Loans") as listed on Schedule I hereto referred to below and the Related
Documents thereto (as defined below);

                 WHEREAS, certain of the Home Loans will be partially insured
under the FHA Title I program (the "FHA Loans") and the remaining Home Loans
are home improvement or debt consolidation or home equity loans that have been
originated by the Seller and are not insured under the FHA Title I program;

                 WHEREAS, the parties hereto desire that the Seller sell all
its right, title and interest in and to the Home Loans and the Related
Documents to the Purchaser pursuant to the terms of this Purchase Agreement;
and

                 WHEREAS, pursuant to the terms of a Sale and Servicing
Agreement, dated as of February 1, 1997 (the "Sale and Servicing Agreement"),
among Mego Mortgage Home Loan Owner Trust 1997-1, as issuer (the "Trust"),
FASCO, as depositor (the "Depositor"), Mego, as Seller, servicer (the
"Servicer") and claims administrator (the "Claims Administrator"), Norwest Bank
Minnesota, N.A., as master servicer (the "Master Servicer"), and First Trust of
New York, National Association, as Indenture Trustee (the "Indenture Trustee"),
co-owner trustee (the "Co-Owner Trustee") and contract of insurance holder
(the "Contract of Insurance Holder"), the Purchaser will sell, transfer, assign
and otherwise convey to the Trust all its right, title and interest in and to
the Home Loans and this Purchase Agreement;

                 NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:

                                   ARTICLE I.
                                  DEFINITIONS

                 Section 1.1      Definitions.  Capitalized terms used but not
defined herein have the meanings assigned thereto in the Sale and Servicing
Agreement.

                 Registration Statement.  The Purchaser's registration
statement on Form S-3 (No. 333-10273), in the form in which it became effective
under the Securities Act of 1933, as amended, on August 20, 1996 including any
documents incorporated by reference therein.





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<PAGE>   5
                 Base Prospectus.  The prospectus, dated March 7, 1997 attached
to the Prospectus Supplement relating to the Notes.

                                  ARTICLE II.
                 SALE OF HOME LOANS; PAYMENT OF PURCHASE PRICE

                 Section 2.1      Sale of Home Loans.  The Seller, concurrently
with the execution and delivery of this Purchase Agreement, does hereby sell,
assign, set over, and otherwise convey to the Purchaser, without recourse other
than as expressly provided herein and in the Sale and Servicing Agreement, and
with respect to the FHA Loans, in accordance with the requirements for transfer
of an insured loan under Title I and 24 CFR Section 201.32(c), all of its
right, title and interest in, to and under the following, whether now existing
or hereafter acquired and wherever located: (i) as of the Cut-Off Date, the
Home Loans delivered to the Indenture Trustee on the Closing Date, including
the related Principal Balance and all payments and collections on account
thereof received on or with respect to such Home Loans after the Cut-Off Date
(including amounts due prior to the Cut-Off Date but received thereafter), (ii)
the rights to the FHA Insurance reserves attributable to the FHA Loans as of
the Cut-Off Date under Title I, (iii) the Home Loan Files, (iv) any Insurance
Policies and related Insurance Proceeds, (v) the Mortgages and security
interests in Mortgaged Properties which secure the Mortgage Loans, (vi) any and
all documents or electronic records relating to the Home Loans, (vii) all
proceeds of any of the foregoing.

                 Section 2.2      [Reserved].

                 Section 2.3      Obligations of Seller Upon Sale.  In
connection with any transfer pursuant to Section 2.1 hereof, the Seller further
agrees, at its own expense, on or prior to the Closing Date (a) to indicate in
its books and records that the Home Loans have been sold to the Purchaser
pursuant to this Purchase Agreement and (b) to deliver to the Purchaser a
computer file containing a true and complete list of all Home Loans specifying
for each Home Loan, as of the Cut-Off Date, (i) its account number and (ii) its
Principal Balance.  Such file, which forms a part of Exhibit A to the Sale and
Servicing Agreement, shall also be marked as Schedule I to this Purchase
Agreement and is hereby incorporated into and made a part of this Purchase
Agreement.

                 The Seller agrees to prepare, execute and file UCC-1 financing
statements with the County Clerk of Cobb (which shall have been filed on or
before the Closing Date with respect to the Home Loans describing the Home
Loans and naming the Seller as debtor and, the Purchaser as secured party (and
indicating that such loans have been assigned to the Trust) all necessary
continuation statements and any amendments to the UCC-1 financing statements
required to reflect a change in the name or corporate structure of the Seller
or the filing of any additional UCC-1 financing statements due to the change in
the principal office of the Seller, as are necessary to perfect the sale of the
Seller's interest in each Home Loan and the proceeds thereof.

                 In connection with any conveyance by the Seller, the Seller
shall on behalf of the Purchaser deliver to, and deposit with the Custodian, on
behalf of the Indenture Trustee, as assignee of the Purchaser, on or before the
Closing Date the following documents or





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<PAGE>   6
instruments with respect to each Home Loan (the "Related Documents"); provided,
that the documents or instruments listed in clause (f) below may be held in the
custody of the Seller on behalf of the Indenture Trustee.

                          With respect to each Home Loan:

                         (a)      The original Debt Instrument, showing a
         complete chain of endorsements or assignments from the named payee to
         the Trust and endorsed as follows:  "Pay to the order of First Trust
         of New York, National Association, as Indenture Trustee and Co-Owner
         Trustee for Mego Mortgage Home Loan Owner Trust 1997-1 without
         recourse";

                         (b)      If such Home Loan is a Mortgage Loan, the
         original Mortgage with evidence of recording indicated thereon (except
         that a true copy thereof certified by an appropriate public official
         may be substituted); provided, however, that if the Mortgage with
         evidence of recording thereon cannot be delivered concurrently with
         the execution and delivery of this Purchase Agreement solely because
         of a delay caused by the public recording office where such Mortgage
         has been delivered for recordation, there shall be delivered to the
         Indenture Trustee a copy of such Mortgage certified as a true copy in
         an Officer's Certificate which shall certify that such Mortgage has
         been delivered to the appropriate public recording office for
         recordation, and there shall be promptly delivered to the Indenture
         Trustee such Mortgage with evidence of recording indicated thereon
         upon receipt thereof from the public recording official (or a true
         copy thereof certified by an appropriate public official may be
         delivered to the Indenture Trustee);

                         (c)      If such Home Loan is a Mortgage Loan, an
         original Assignment of the Mortgage, in recordable form.  Such
         assignment may be a blanket assignment, to the extent that blanket
         assignments are effective under applicable law, for Mortgages covering
         Properties situated in the same county.  If the assignment of Mortgage
         is in blanket form, an assignment of Mortgage need not be included in
         the individual Home Loan File;

                         (d)      If such Home Loan is a Mortgage Loan, all
         original intermediate assignments of the Mortgage, showing a complete
         chain of assignments from the named mortgagee to the assignor to the
         Indenture Trustee, with evidence of recording thereon (or true copies
         thereof certified by appropriate public officials may be substituted);
         provided, however, that if the intermediate assignments of mortgage
         with evidence of recording thereon cannot be delivered concurrently
         with the execution and delivery of this Purchase Agreement solely
         because of a delay caused by the public recording office where such
         Assignments of Mortgage have been delivered for recordation, there
         shall be delivered to the Indenture Trustee a copy of each such
         assignment of Mortgage certified as a true copy in an Officer's
         Certificate which shall certify that each such assignment of Mortgage
         has been delivered to the appropriate public recording office for
         recordation, and there shall be promptly delivered to the Indenture
         Trustee such assignments of Mortgage with evidence of recording
         indicated thereon upon its receipt thereof from the public recording
         official (or true copies thereof certified by an appropriate public
         official may be delivered to the Indenture Trustee);





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<PAGE>   7
                          (e)      An original of each assumption or
         modification agreement, if any, relating to such Home Loan; and

                          (f) (i) If such Home Loan is an FHA Loan, an original
         or copy of a notice signed by the Obligor acknowledging HUD insurance,
         (ii) an original or copy of truth-in-lending disclosure, (iii) an
         original or copy of the credit application, (iv) an original or copy
         of the consumer credit report, (v) an original or copy of verification
         of employment and income, or verification of self-employment income,
         (vi) if such Home Loan is an FHA Loan and a Mortgage Loan, an original
         or copy of evidence of the Obligor's interest in the Property, (vii)
         an original or copy of contract of work or written description with
         cost estimates, (viii)(A) if such Home Loan is an FHA Loan either (1)
         an original or copy of the completion certificate or an original or
         copy of notice of non-compliance, if applicable or (2) an original or
         copy of report of inspection of improvements to the Property or an
         original or copy of notice of non-compliance, if applicable, or (B) if
         such Home Loan is a Mortgage Loan and a home improvement loan, an
         original or copy of report of inspection of improvements to the
         Property, (ix) if such Home Loan is a Mortgage Loan, to the extent not
         included in (iii), an original or a copy of a written verification
         that the Obligor at the time of origination was not more than 30 days
         delinquent on any senior mortgage or deed of trust on the Property,
         (x) (A) if such Home Loan is an FHA Loan for which an appraisal is
         required pursuant to the applicable regulations, an original or a copy
         of an appraisal of the Property as of the time of origination of such
         FHA Loan or (B) if such Home Loan is a Non-FHA Loan and secured by a
         Mortgage (1) if the original principal balance is greater than $25,000
         but less than $50,000, a copy of the HUD-1A Closing Statement
         indicating the sale price, or an existing Uniform Residential
         Appraisal Report, or a Drive-By Appraisal documented on Freddie Mac
         form 704, or a tax assessment, or (2) if the original principal
         balance exceeds $50,000, a full Uniform Residential Appraisal Report
         prepared by a national appraisal firm, (xi) an original or a copy of a
         title search as of the time of origination with respect to the
         Property, and (xii) if such Home Loan is an FHA Loan, any other
         documents required for the submission of a claim with respect to such
         FHA Loan to the FHA.

                 With respect to any documents referred to clauses (b) and (d)
above that are not delivered to the Custodian on behalf of the Indenture
Trustee because of a delay caused by the public recording office, such
documents shall be delivered to the Custodian on behalf of the Indenture
Trustee in accordance with the terms of such clauses by the Seller if such
documents are received by it or by the Purchaser if such documents are received
by it.

                 The Seller further hereby confirms to the Purchaser that, as
of the Closing Date it has caused the portions of the Seller's electronic
ledger relating to the Home Loans to be clearly and unambiguously marked to
indicate that the Home Loans have been sold to the Purchaser.

                 The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the Home Loans and other property, now existing and
hereafter created, conveyed to it pursuant to Section 2.1 hereof.





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<PAGE>   8
                 The parties hereto intend that each of the transactions set
forth herein be a sale by the Seller to the Purchaser of all the Seller's
right, title and interest in and to the Home Loans and other property described
above.  In the event the transactions set forth herein are deemed not to be a
sale, the Seller hereby grants to the Purchaser a security interest in all of
the Seller's right, title and interest in, to and under the Home Loans and
other property described above, whether now existing or hereafter created, to
secure all of the Seller's obligations hereunder; and this Purchase Agreement
shall constitute a security agreement under applicable law.

                 Section 2.4      Payment of Purchase Price for the Home Loans.
(a)  In consideration of the sale of the Home Loans from the Seller to the
Purchaser on the Closing Date, the Purchaser agrees to pay to the Seller on the
Closing Date by transfer of immediately available funds, an amount equal to
$86,092,410.64 (before deducting expenses payable by the Seller to the
Purchaser) (the "Purchase Price").

                 (b)  Within 60 days of the Closing Date, the Seller, at its
own expense, shall cause the Indenture Trustee to record each Assignment of
Mortgage in favor of the Indenture Trustee (which may be a blanket assignment
if permitted by applicable law) in the appropriate real property or other
records; provided, however, the Indenture Trustee need not record any
assignment which relates to a Home Loan in any jurisdiction under the laws of
which, as evidenced by an Opinion of Counsel delivered by the Seller (at the
Seller's expense) to the Indenture Trustee and the Securities Insurer, the
recordation of such Assignment is not necessary to protect the Indenture
Trustee's, the Securities Insurer's and the Securityholders' interest in the
related Home Loan. With respect to any Assignment of Mortgage as to which the
related recording information is unavailable within 60 days following the
Closing Date, such Assignment of Mortgage shall be submitted for recording
within 30 days after receipt of such information but in no event later than one
year after the Closing Date.  The Indenture Trustee shall be required to retain
a copy of each Assignment of Mortgage submitted for recording.  In the event
that any such Assignment of Mortgage is lost or returned unrecorded because of
a defect therein, the Seller shall promptly prepare a substitute Assignment of
Mortgage or cure such defect, as the case may be, and thereafter the Trustee
shall be required to submit each such Assignment of Mortgage for recording.

                                  ARTICLE III.
                              REPRESENTATIONS AND
                        WARRANTIES; REMEDIES FOR BREACH

                 Section 3.1      Seller Representations and Warranties.    (a)
The Seller represents and warrants to the Purchaser as of the Cut-Off Date and
the Closing Date that:

                         (i)      The Seller is a corporation duly organized,
         validly existing and in good standing under the laws of the State of
         Delaware with full power and authority to own its properties and
         conduct its business as such properties are presently owned and such
         business is presently conducted;

                        (ii)      The Seller has full power and authority to
         execute, deliver and perform, and to enter into and consummate all
         transactions required of it by this Purchase Agreement and each other
         Transaction Document to which it is a party; has





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<PAGE>   9
         duly authorized the execution, delivery and performance of this
         Purchase Agreement and each other Transaction Document to which it is
         a party; has duly executed and delivered this Purchase Agreement and
         each other Transaction Document to which it is a party; when duly
         authorized, executed and delivered by the other parties hereto, this
         Purchase Agreement and each other Transaction Document to which it is
         a party will constitute a legal, valid and binding obligation of the
         Seller enforceable against it in accordance with its terms, except as
         enforceability may be limited by bankruptcy, insolvency,
         reorganization or other similar laws affecting the enforcement of
         creditors' rights generally and by equitable limitations on the
         availability of specific remedies, regardless of whether such
         enforceability is considered in a proceeding in equity or at law;

                       (iii)      Neither the execution and delivery of this
         Purchase Agreement or any of the other Transaction Documents to which
         the Seller is a party, the consummation of the transactions required
         of it herein or under any other Transaction Document, nor the
         fulfillment of or compliance with the terms and conditions of this
         Purchase Agreement or any of the other Transaction Documents will
         conflict with or result in a breach of any of the terms, conditions or
         provisions of the Seller's charter or by-laws or any legal restriction
         or any material agreement or instrument to which the Seller is now a
         party or by which it is bound, or which would adversely affect the
         creation and administration of the Trust as contemplated hereby, or
         constitute a material default or result in an acceleration under any
         of the foregoing, or result in the violation of any law, rule,
         regulation, order, judgment or decree to which the Seller or its
         property is subject;

                        (iv)      There is no action, suit, proceeding,
         investigation or litigation pending against the Seller or, to its
         knowledge, threatened, which, if determined adversely to the Seller,
         would materially adversely affect the sale of the Home Loans, the
         execution, delivery or enforceability of this Purchase Agreement or
         any other Transaction Document, or which would have a material adverse
         affect on the financial condition of the Seller;

                         (v)      No consent, approval, authorization or order
         of any court or governmental agency or body is required for: (a) the
         execution, delivery and performance by the Seller of, or compliance by
         the Seller with, this Purchase Agreement, (b) the sale of the Home
         Loans or (c) the consummation of the transactions required of it by
         this Purchase Agreement;

                        (vi)      The Seller is not in default with respect to
         any order or decree of any court or any order, regulation or demand of
         any federal, state, municipal or governmental agency, which default
         might have consequences that would materially and adversely affect the
         condition (financial or other) or operations of the Seller or its
         properties or might have consequences that would materially and
         adversely affect its performance hereunder;

                       (vii)      The Seller received fair consideration and
         reasonably equivalent value in exchange for the sale of the Home Loans
         to the Purchaser;





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<PAGE>   10
                      (viii)      The Seller is a non-supervised lender in good
         standing under 24 CFR Section 202.5 and is authorized to originate,
         purchase, hold, service and/or sell loans insured under 24 CFR part
         201; and

                        (ix)      The Seller has transferred the Home Loans
         without any intent to hinder, delay or defraud any of its creditors.

                 (b)              The Seller further represents and warrants to
the Purchaser that with respect to the Home Loans as of the Closing Date each
of the representations and warranties contained in Section 3.03(b) of the Sale
and Servicing Agreement are true and correct.

                  It is understood and agreed that the representations and
warranties set forth in this Section 3.1(b) shall survive delivery of the
respective Home Loan Files to the Indenture Trustee on behalf of the Purchaser.
In the event that (a) any of the representations and warranties of the Seller
in Section 3.03(b) of the Sale and Servicing Agreement are determined to be
untrue in a manner that materially and adversely affects the interests of the
Securityholders or the Securities Insurer in any Home Loan with respect to
which such representation or warranty is made and (b) the Seller shall fail to
cure such breach within the time period specified in Section 3.05 of the Sale
and Servicing Agreement, the Seller shall be obligated to repurchase or
substitute the affected Home Loan(s) in accordance with the provisions of
Section 3.05 of the Sale and Servicing Agreement.

                 With respect to representations and warranties made by Mego
pursuant to this Section 3.1(b) that are made to the Seller's best knowledge,
if it is discovered by any of the Depositor, the Seller, the Trustee or the
Certificate Insurer that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of
the related Home Loan, notwithstanding the Seller's lack of knowledge, such
inaccuracy shall be deemed a breach of the applicable representation and
warranty.


                                  ARTICLE IV.
                               SELLER'S COVENANTS

                 Section 4.1      Covenants of the Seller.    The Seller hereby
covenants that except for the transfer hereunder, the Seller will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any lien on, any Home Loan, or any interest therein; and the
Seller will defend the right, title and interest of the Trust, as assignee of
the Purchaser, in, to and under the Home Loans, against all claims of third
parties claiming through or under the Seller.


                                   ARTICLE V.
                         INDEMNIFICATION BY THE SELLER

                 Section 5.1      Indemnification.    The Seller agrees to
indemnify and hold harmless the Purchaser from and against any loss, liability,
expense, damage, claim or injury (other than those resulting solely from
defaults on the Home Loans) arising out of or based on





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<PAGE>   11
this Agreement including, without limitation, in connection with the
origination or prior servicing of the Home Loans by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the
Seller, originator or prior servicer, including reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual
or threatened action, proceeding or claim; provided that the Seller shall not
indemnify the Purchaser if such loss, liability, expense, damage or injury is
due to the Purchaser's willful misfeasance, bad faith or negligence or by
reason of the Purchaser's reckless disregard of its obligations hereunder.  The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.

                 Section 5.2      Limitation on Liability of the Seller.
None of the directors or trustees or officers or employees or agents of the
Seller shall be under any liability to the Purchaser, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Purchase
Agreement; provided, however, that this provision shall not protect any such
Person against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder.  Except as expressly provided herein and in the Sale and Servicing
Agreement, the Seller shall not be under any liability to the Trust, the
Trustee or the Securityholders.  The Seller and any director or officer or
employee or agent of the Seller 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.

         Section 5.3 Indemnification    (a) The Seller agrees to indemnify and
hold harmless the Purchaser, the directors of the Purchaser and each person, if
any, who controls the Purchaser within the meaning of Section 15 of the
Securities Act of 1933 (the "Act") or Section 20 of the Securities Exchange Act
of 1934 (the "Exchange Act"), from and against any and all losses, claims,
damages, liabilities or judgments (including without limiting the foregoing the
reasonable legal and other expenses incurred in connection with any action,
suit or proceeding or any claim asserted) arising out of (i) any untrue
statement or alleged untrue statement of a material fact contained under any of
the captions "Mego Mortgage Corporation," "The Title I Loan Program and the
Contract of Insurance" and "The Pool" in the Prospectus Supplement or caused by
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading or (ii) any
information concerning the Seller, the Home Loans or the Seller's operations
based on any untrue statement or alleged untrue statement of a fact contained
in any information provided by the Seller to the Purchaser, or any material
omission from the information purported to be provided thereby, and
disseminated to any Rating Agency, the Securities Insurer, Deloitte & Touche or
prospective investors (directly or indirectly through available information
systems) in connection with the issuance, marketing or offering of the Notes.
This indemnity agreement will be in addition to any liability which the Seller
may otherwise have pursuant to this Agreement.

                 (b)  The Purchaser agrees to indemnify and hold harmless the
Seller and each person, if any, who controls the Seller within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages and liabilities caused by (A) any untrue
statement or alleged untrue statement of a material fact contained in (i) the
Prospectus Supplement under the caption "Description of the Securities,"
"Description of the Transfer and Servicing Agreements," and "Prepayment and
Yield





                                       8
<PAGE>   12
Considerations" (ii) the Base Prospectus or (iii) the Registration Statement
(other than the information with respect to the Seller contained in the
Prospectus Supplement) or (B) any omission or alleged omission to state a
material fact, in the case of the Registration Statement (other than the
information with respect to the Seller contained in the Prospectus Supplement),
required to be stated therein or necessary to make the statements therein not
misleading, and in the case of the section of the Prospectus Supplement
specified in clause (A) (i) of this sentence and the Base Prospectus, necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.] This indemnity agreement will be
in addition to any liability which the Purchaser may have pursuant to
Agreement.

                 (c)  In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (hereinafter called the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate and shall pay the
fees and disbursements of such counsel related to such proceeding.  In any such
action or proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (1) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (2) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them.  It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for  the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
any indemnified party and each person, if any, who controls such indemnified
party within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, and it is also understood that expenses shall be reimbursed as
they are incurred.  In the case of any such separate firm for any indemnified
party and any director, officer and control person of the indemnified party,
such firm shall be designated in writing by such indemnified party.  The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.  No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.

                 (d)  If the indemnification provided for in this Section 5.3
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,





                                       9
<PAGE>   13
claims, damages, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnified party
on the one hand and the indemnifying party on the other from the sale of the
Home Loans or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnified party on the one hand and the indemnifying
party on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.  For purposes of the foregoing,
the benefit received by the Seller from the sale of the Home Loans shall be
deemed to equal the amount of the gross proceeds received by the Seller from
such sale, and the benefit received by the Purchaser for such sale shall be
deemed to equal the Formula Amount (as defined below).  The relative fault of
the Purchaser on the one hand and the Seller on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Purchaser or by the Seller and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

                 The Seller and the Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 5.3(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph.  The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim.  Notwithstanding the provisions of this  Section 5.3(d), in no
event shall the Purchaser be required to contribute any amount in excess of
$753,844.  No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.


                                  ARTICLE VI.
                                  TERMINATION

                 Section 6.1      Termination.    The respective obligations
and responsibilities of the Seller and the Purchaser created hereby shall
terminate, except for the Seller's and Purchaser's indemnity obligations as
provided herein, upon the termination of the Trust as provided in Article XI of
the Sale and Servicing Agreement.


                                  ARTICLE VII.
                            MISCELLANEOUS PROVISIONS

                 Section 7.1      Amendment.  This Purchase Agreement may be
amended from time to time by the Seller and the Purchaser, with the consent of
the Securities Insurer, by written agreement signed by the Seller and the
Purchaser.





                                       10
<PAGE>   14
                 Section 7.2      Governing Law.    This Purchase Agreement
shall be governed by and construed in accordance with the laws of the State of
New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

                 Section 7.3      Notices.    All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at or mailed by registered mail, postage
prepaid, addressed as follows:

                 (a)      if to the Seller:

                                  Mego Mortgage Corporation
                                  1000 Parkwood Circle, Suite 500
                                  Atlanta, Georgia 30339
                                  Attention:  Jeff S. Moore, President

or, such other address as may hereafter be furnished to the Purchaser in
writing by the Seller.

                 (b)      if to FASCO

                                  Financial Asset Securities Corp.
                                  600 Steamboat Road
                                  Greenwich, Connecticut 06830
                                  Attention:  General Counsel

or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.


                 Section 7.4      Severability of Provisions.    If any one or
more of the covenants, agreements, provisions of terms of this Purchase
Agreement shall be held invalid for any reason whatsoever, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Purchase Agreement and shall
in no way affect the validity of enforceability of the other provisions of this
Purchase Agreement.

                 Section 7.5      Counterparts.    This Purchase Agreement may
be executed in one or more counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed to be
an original and such counterparts, together, shall constitute one and the same
agreement.

                 Section 7.6      Further Agreements.    The Purchaser and the
Seller each agree to execute and deliver to the other such amendments to
documents and such additional documents, instruments or agreements as may be
necessary or appropriate to effectuate the purposes of this Purchase Agreement
or in connection with the offering of securities representing interests in the
Home Loans.

                 Without limiting the generality of the foregoing, as a further
inducement for the Purchaser to purchase the Home Loans from the Seller, the
Seller will cooperate with the





                                       11
<PAGE>   15
Purchaser in connection with the sale of any of the securities representing
interests in the Home Loans.  In that connection, the Seller will provide to
the Purchaser any and all information and appropriate verification of
information, whether through letters of its auditors and counsel or otherwise,
as the Purchaser shall reasonably request and will provide to the Purchaser
such additional representations and warranties, covenants, opinions of counsel,
letters from auditors, and certificates of public officials or officers of the
Seller as are reasonably required in connection with such transactions and the
offering of securities rated "Aaa" and "AAA" by Moody's Investors Service, Inc.
and Standard & Poor's Rating Services, respectively.

                 Section 7.7      Intention of the Parties.    It is the
intention of the parties that the Purchaser is purchasing, and the Seller is
selling, the Home Loans rather than pledging the Home Loans to secure a loan by
the Purchaser to the Seller.  Accordingly, the parties hereto each intend to
treat the transaction for federal income tax purposes and all other purposes as
a sale by the Seller, and a purchase by the Purchaser, of the Home Loans.  The
Purchaser will have the right to review the Home Loans and the related Home
Loan Files to determine the characteristics of the Home Loans which will affect
the federal income tax consequences of owning the Home Loans and the Seller
will cooperate with all reasonable requests made by the Purchaser in the course
of such review.

                 Section 7.8      Successors and Assigns; Assignment of
Purchase Agreement.    The Agreement shall bind and inure to the benefit of and
be enforceable by the Seller, the Purchaser and the Trustee.  The obligations
of the Seller under this Purchase Agreement cannot be assigned or delegated to
a third party without the consent of the Purchaser, which consent shall be at
the Purchaser's sole discretion, except that the Purchaser acknowledges and
agrees that the Seller may assign its obligations hereunder to any Person into
which the Seller is merged or any corporation resulting from any merger,
conversion or consolidation to which the Seller is a party or any Person
succeeding to the business of the Seller.  The parties hereto acknowledge that
FASCO is acquiring the Home Loans for the purpose of contributing them to the
Trust that will issue (i) the Certificates representing undivided interests in
such Home Loans and (ii) the Notes which will be secured by such Home Loans.
As an inducement to FASCO to purchase the Home Loans, the Seller acknowledges
and consents to the assignment by FASCO to the Trust of all of FASCO's rights
against the Seller pursuant to this Purchase Agreement and to the enforcement
or exercise of any right or remedy against the Seller pursuant to this Purchase
Agreement by the Owner Trustee and Co-Owner Trustee under the Sale and
Servicing Agreement.  Such enforcement of a right or remedy by the Owner
Trustee and Co-Owner Trustee shall have the same force and effect as if the
right or remedy had been enforced or exercised by FASCO directly.

                 Section 7.9      Survival.    The representations and
warranties set forth in Article III and the provisions of Article V shall
survive the purchase of the Home Loans hereunder.

                 Section 7.10  Third-Party Beneficiaries.  This Purchase
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.  Except as otherwise
provided in this Section 7.10 no other Person shall have the right or
obligation hereunder.  Upon issuance of the Policy (as defined in the Sale and
Servicing Agreement), this Purchase Agreement shall also inure to the benefit
of the Securities Insurer.  Without limiting the generality of the foregoing,
all covenants and agreements in this





                                       12
<PAGE>   16
Purchase Agreement which expressly confer rights upon the Securities Insurer
shall be for the benefit of and run directly to the Securities Insurer, and the
Securities Insurer shall be entitled to rely on and enforce such covenants to
the same extent as if it were a party to this Purchase Agreement.   The
Securities Insurer may disclaim any of its rights and powers under this
Purchase Agreement (but not its duties and obligations under the Policy) upon
delivery of a written notice to the Indenture Trustee.





                                       13
<PAGE>   17
                 IN WITNESS WHEREOF, the Seller and the Purchaser have caused
         this Home Loan Purchase Agreement to be duly executed on their behalf
         by their respective officers thereunto duly authorized as of the day
         and year first above written.

                          FINANCIAL ASSET SECURITIES CORP.,
                              as Purchaser

                          By:
                             ------------------------------------------------
                                  Name:  John Anderson
                                  Title: Senior Vice President


                          MEGO MORTGAGE CORPORATION,
                              as Seller

                          By:
                             ------------------------------------------------
                                  Name:  James L. Belter
                                  Title: Executive Vice President
<PAGE>   18
STATE OF NEW YORK         )
                          )  ss.:
COUNTY OF NEW YORK        )


         On the 10th day of March, 1997 before me, a Notary Public in and for
said State, personally appeared John Anderson known to me to be a Senior Vice
President of FINANCIAL ASSET SECURITIES CORP., the corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.



                                           __________________________________
                                           Notary Public
<PAGE>   19

STATE OF                  )
                          )  ss.:
COUNTY OF                 )


         On the 10th day of March, 1997 before me, a Notary Public in and for
said State, personally appeared James L. Belter, known to me to be the
Executive Vice President of MEGO MORTGAGE CORPORATION, the company that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.



                                           __________________________________
                                           Notary Public
<PAGE>   20
                                   SCHEDULE I


                                 Loan Schedule


                 See Exhibit A to Sale and Servicing Agreement