<PAGE>   1
                                                                    EXHIBIT 10.6


                                                                  EXECUTION COPY


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                        FINANCIAL ASSET SECURITIES CORP.,

                                  as Purchaser,

                                       and

                           MEGO MORTGAGE CORPORATION,

                                   as Seller,

                          HOME LOAN PURCHASE AGREEMENT


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                             Dated as of May 1, 1997


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                                Table of Contents

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                            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>
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


                                      ii


<PAGE>   4
            HOME LOAN PURCHASE AGREEMENT (the "Purchase Agreement"), dated as of
May 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 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
attached hereto 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 retail installment contracts 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 May 1, 1997 (the "Sale and Servicing Agreement"), among Mego
Mortgage Home Loan Owner Trust 1997-2, 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. 333-21071), in the form in which it became effective under the
Securities Act of 1933, as amended, on March 25, 1997 including any documents
incorporated by reference therein.


                                       1
<PAGE>   5
            Base Prospectus.  The prospectus, dated May 21, 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 of principal in respect of Home Loans
received on or after the Cut-Off Date and payments of interest in respect of
Home Loans due on or after the Cut-Off Date, (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


                                       2
<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 1997-2 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 intervening 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 between $35,001 and
      $40,000, (A) evidence that the borrower has a FICO Score of at least 640,
      a debt to income ratio no greater than 45%, and disposable income of at
      least $1,500, or (B) (I) a copy of the HUD-1 Closing Statement indicating
      the sale price, or (II) an Uniform Residential Appraisal Report, or (III)
      a Drive-By Appraisal documented on either FHLMC Form 704 or FNMA Form
      2055, or (IV) a tax assessment, or (V) a broker's price opinion; (2) if
      the original principal balance is between $40,001 and $50,000, (A) a copy
      of the HUD-1 Closing Statement indicating the sale price, or (B) an
      Uniform Residential Appraisal, or (C) a Drive-By Appraisal documented on
      either FHLMC Form 704 or FNMA Form 2055, or (D) a tax assessment, or (E) a
      broker's price opinion, or (3) 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.


                                       4
<PAGE>   8
            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.

            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 $58,305,617.43
(plus accrued interest) (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;


                                       5
<PAGE>   9
                 (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 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;


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<PAGE>   10
                 (vii) The Seller received fair consideration and reasonably
      equivalent value in exchange for the sale of the Home Loans to the
      Purchaser;

                 (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 Indenture Trustee, the Owner
Trustee or the Securities 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


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<PAGE>   11
            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 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


                                       8
<PAGE>   12
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 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.


                                       9
<PAGE>   13
            (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, 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 amount
specified in the paragraph 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 $480,279.87. 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


                                       10
<PAGE>   14
            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.

            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


                                       11
<PAGE>   15
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 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 Residual
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.


                                       12
<PAGE>   16
            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 Guaranty 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 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 Guaranty 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:  Peter McMullin
                                    Title: 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 22nd day of May 1997 before me, a Notary Public in and for
said State, personally appeared Peter McMullin known to me to be a 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 NEW YORK        )
                         )  ss.:
COUNTY OF NEW YORK       )

            On the 22nd day of May 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