Document:

<PAGE>

                                                             EXHIBIT 4.3
================================================================================

                                TRUST AGREEMENT

                                     among

                     FIRST HORIZON ASSET SECURITIES INC.,
                                 as Depositor,

                       [-------------------------------]

                                      and

                       [-------------------------------]
                               as Owner Trustee

                        Dated as of ___________1, 200_

================================================================================
<PAGE>

                               Table of Contents

<TABLE>
<S>                                                                                                      <C>
ARTICLE I - Definitions.............................................................................     1
         Section  1.01   Capitalized Terms..........................................................     1
         Section  1.02   Other Definitional Provisions..............................................     4

ARTICLE II - ORGANIZATION...........................................................................     5
         Section  2.01   Name.......................................................................     5
         Section  2.02   Office.....................................................................     5
         Section  2.03   Purposes and Powers........................................................     5
         Section  2.04   Appointment of Owner Trustee...............................................     6
         Section  2.05   Initial Capital Contribution of Owner Trust Estate.........................     6
         Section  2.06   Declaration of Trust.......................................................     6
         Section  2.07   Liability of the Owners....................................................     6
         Section  2.08   Title to Trust Property....................................................     7
         Section  2.09   Situs of Trust.............................................................     7
         Section  2.10   Representations and Warranties of the Depositor and the Company............     7
         Section  2.11   Federal Income Tax Allocations.............................................     9

ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS..........................................    10
         Section  3.01   Initial Ownership..........................................................    10
         Section  3.02   The Trust Certificates.....................................................    10
         Section  3.03   Authentication of Trust Certificates.......................................    10
         Section  3.04   Registration of Transfer and Exchange of Trust Certificates................    10
         Section  3.05   Mutilated, Destroyed, Lost or Stolen Trust Certificates....................    11
         Section  3.06   Persons Deemed Owners......................................................    12
         Section  3.07   Access to List of Certificateholders' Names and Addresses..................    12
         Section  3.08   Maintenance of Office or Agency............................................    12
         Section  3.09   Appointment of Paying Agent................................................    12
         Section  3.10   Ownership by Company of Trust Certificates.................................    13
         Section  3.11   Book-Entry Trust Certificates..............................................    13
         Section  3.12   Notices to Clearing Agency.................................................    14
         Section  3.13   Definitive Trust Certificates..............................................    14

ARTICLE IV - ACTIONS BY OWNER TRUSTEE...............................................................    14
         Section  4.01   Prior Notice to Owners with Respect to Certain Matters.....................    14
         Section  4.02   Action by Owners with Respect to Certain Matters...........................    15
         Section  4.03   Action by Owners with Respect to Bankruptcy................................    15
         Section  4.04   Restrictions on Owners' Power..............................................    15
         Section  4.05   Majority Control...........................................................    16

ARTICLE V - APPLICATION OF TRUST FUNDS; CERTAIN DUTIES..............................................    16
         Section  5.01   Establishment of Trust Account.............................................    16
</TABLE>

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<TABLE>
<S>                                                                                                 <C>
         Section  5.02  Application of Trust Funds..................................................    16
         Section  5.03  Method of Payment...........................................................    17
         Section  5.04  No Segregation of Moneys; No Interest.......................................    17
         Section  5.05  Accounting and Reports to the Noteholders, Owners,
                        the Internal Revenue Service and Others.....................................    17
         Section  5.06  Signature on Returns; Tax Matters Partner...................................    17

ARTICLE  VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE.................................................    18
         Section  6.01  General Authority...........................................................    18
         Section  6.02  General Duties..............................................................    18
         Section  6.03  Action upon Instruction.....................................................    18
         Section  6.04  No Duties Except as Specified in this Agreement or in Instructions..........    19
         Section  6.05  No Action Except Under Specified Documents or Instructions..................    19
         Section  6.06  Restrictions................................................................    19

ARTICLE  VII - CONCERNING THE OWNER TRUSTEE.........................................................    20
         Section  7.01  Acceptance of Trusts and Duties.............................................    20
         Section  7.02  Furnishing of Documents.....................................................    21
         Section  7.03  Representations and Warranties..............................................    21
         Section  7.04  Reliance; Advice of Counsel.................................................    21
         Section  7.05  Not Acting in Individual Capacity...........................................    22
         Section  7.06  Owner Trustee Not Liable for Trust Certificates or Mortgage Loans...........    22
         Section  7.07  Owner Trustee May Own Trust Certificates and Notes..........................    22

ARTICLE  VIII - COMPENSATION OF OWNER TRUSTEE.......................................................    23
         Section  8.01  Owner Trustee's Fees and Expenses...........................................    23
         Section  8.02  Indemnification.............................................................    23
         Section  8.03  Payments to the Owner Trustee...............................................    23

ARTICLE  IX - TERMINATION OF TRUST AGREEMENT........................................................    23
         Section  9.01  Termination of Trust Agreement..............................................    23
         Section  9.02  Dissolution upon Bankruptcy of the Company..................................    24

ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES..................................    25
         Section 10.01  Eligibility Requirements for Owner Trustee..................................    25
         Section 10.02  Resignation or Removal of Owner Trustee.....................................    25
         Section 10.03  Successor Owner Trustee.....................................................    26
         Section 10.04  Merger or Consolidation of Owner Trustee....................................    26
         Section 10.05  Appointment of Co-Trustee or Separate Trustee...............................    27

ARTICLE XI - MISCELLANEOUS..........................................................................    28
         Section 11.01  Supplements and Amendments..................................................    28
         Section 11.02  No Legal Title to Owner Trust Estate in Owners..............................    29
         Section 11.03  Limitations on Rights of Others.............................................    29
</TABLE>

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<TABLE>
         <S>                                                                  <C>
         Section  11.04   Notices...........................................  29
         Section  11.05   Severability......................................  30
         Section  11.06   Separate Counterparts.............................  30
         Section  11.07   Successors and Assigns............................  30
         Section  11.08   Covenants of the Company..........................  30
         Section  11.09   No Petition.......................................  30
         Section  11.10   No Recourse.......................................  30
         Section  11.11   Headings..........................................  30
         Section  11.12   GOVERNING LAW.....................................  30
         Section  11.13   Depositor Payment Obligation......................  31
</TABLE>

EXHIBIT A               Form of Trust Certificate
EXHIBIT B               Form of Certificate of Trust
EXHIBIT C               Form of Certificate Depository Agreement

                                      iii
<PAGE>

         TRUST AGREEMENT (the "Trust Agreement") dated as of ________1, 200_,
among FIRST HORIZON ASSET SECURITIES INC., a Delaware corporation, as depositor
(the "Depositor"), [_______________________], a [_______] corporation (the
"Company"), and [____________], a [__________________], as owner trustee (the
"Owner Trustee").

         WHEREAS, the Company has agreed to assign to the Depositor any and all
of the Company's rights and interests with respect to the Mortgage Loans; and

         WHEREAS, in connection therewith, the Company is willing to assume
certain obligations pursuant hereto;

         NOW, THEREFORE, the Depositor, the Company and the Owner Trustee hereby
agree as follows:

                                   ARTICLE I

                                  Definitions
                                  -----------

         Section 1.01 Capitalized Terms. For all purposes of this Agreement,
                      -----------------
the following terms shall have the meanings set forth below:

         "Administration Agreement" shall mean the Administration Agreement
dated as of ________1, 200_, among the Trust, the Indenture Trustee and
[_________________________], as Administrator.

         "Agreement" shall mean this Trust Agreement, as the same may be amended
and supplemented from time to time.

         "Assignment" shall mean the assignment of right, title and interest of
the Depositor in the Mortgage Loans to the Trust.

         "Basic Documents" shall mean the Sale and Servicing Agreement, the
Indenture, the Administration Agreement and the other documents and certificates
delivered in connection therewith.

         "Benefit Plan" shall have the meaning assigned to such term in Section
11.13.

         "Book-Entry Trust Certificate" shall mean a beneficial interest in the
Trust Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11.

         "Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from
time to time.

                                       1
<PAGE>

         "Certificate" shall mean any of the Book-Entry Trust Certificates or
Definitive Trust Certificates.

         "Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.01.

         "Certificate of Trust" shall mean the Certificate of Trust in the form
Exhibit B filed for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.

         "Certificate Owner" shall mean, with respect to a Book-Entry Trust
Certificate, a Person who is the beneficial owner of such Book-Entry Trust
Certificate, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).

         "Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in and the registrar appointed pursuant to Section 3.04.

         "Certificateholder" or "Holder" shall mean a Person in whose name a
Trust Certificate is registered.

         "Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.

         "Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.

         "Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.

         "Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at
[____________________________], or at such other address as the Owner Trustee
may designate by notice to the Owners, the Depositor and the Company, or the
principal corporate trust office of any successor Owner Trustee at the address
designated by such successor Owner Trustee by notice to the Owners, the
Depositor and the Company.

         "Definitive Trust Certificates" shall have the meaning set forth in
Section 3.11.

         "Depositor" shall mean First Horizon Asset Securities Inc. in its
capacity as depositor hereunder.

         "Eligible Distribution Account" shall mean an account that is (i)
maintained with a depository institution whose debt obligations at the time of
any deposit therein have the highest

                                       2
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short-term debt rating by the Rating Agencies, (ii) one or more accounts with a
depository institution which accounts are fully insured by either the Savings
Association Insurance Fund or the Bank Insurance Fund of the Federal Deposit
Insurance Corporation established by such fund, (iii) a segregated trust account
maintained with the Owner Trustee or an affiliate of the Owner Trustee in its
fiduciary capacity or (iv) otherwise acceptable to each Rating Agency as
evidenced by a letter from each Rating Agency to the Owner Trustee, without
reduction or withdrawal of their then currently ratings of the Certificates.

         "ERISA" shall have the meaning assigned thereto in Section 11.13.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Expenses" shall have the meaning assigned to such term in Section
8.02.

         "Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.

         "Indenture" shall mean the Indenture dated as of ________, 200_ between
the Trust and [_____________________________], as Indenture Trustee.

         "Initial Certificate Balance" shall mean $__________.

         "Mortgage Loans" shall mean a pool of [adjustable rate] home equity
revolving credit line loans made or to be made in the future under certain home
quity revolving credit line loan agreements.

         "Owner" shall mean each Holder of a Trust Certificate.

         "Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to the
Assignment, all funds on deposit from time to time in the Trust Accounts and the
Certificate Distribution Account and all other property of the Trust from time
to time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement and the Administration Agreement.

         "Owner Trustee" shall mean [____________________], a [_________]
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.

         "Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to Section 3.09 and shall initially be [_____________].

         "Rating Agency" shall mean any nationally recognized statistical rating
organization asked to rate the Certificates.

                                       3
<PAGE>

         "Record Date" shall mean, with respect to any Distribution Date, the
close of business on the day prior to such Distribution Date occurs or, if
Definitive Trust Certificates are issued pursuant to Section 3.14, the last day
of the month preceding such Distribution Date.

         "Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of ________1, 200_, among the Trust, as issuer and [First
Horizon Home Loan Corporation], as master servicer, as the same may be amended
or supplemented from time to time.

         "Secretary of State" shall mean the Secretary of State of the State of
Delaware.

         "Treasury Regulations" shall mean regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.

         "Trust" shall mean the trust established by this Agreement.

         "Trust Account" shall mean any account set up by the Owner Trustee
pursuant to the provisions of Section 5.01.

         "Trust Certificate" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached hereto as
Exhibit A.

         Section 1.02 Other Definitional Provisions. (a) Capitalized terms used
                      -----------------------------
and not otherwise defined herein have the meanings assigned to them in the Sale
and Servicing Agreement or, if not defined therein, in the Indenture.

         (b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

         (c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.

         (d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".

                                       4
<PAGE>

         (e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.

         (f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

                                  ARTICLE II

                                 ORGANIZATION
                                 ------------

         Section 2.01 Name. The Trust created hereby shall be known as "[First
                      ----
Horizon] Home Equity Loan Trust 200 __-__ ," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.

         Section 2.02 Office. The office of the Trust shall be in care of the
                      ------
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners, the
Depositor and the Company.

         Section 2.03 Purposes and Powers. (a) The purpose of the Trust is to
                      -------------------
engage in the following activities:

               (i)   issue the Notes pursuant to the Indenture and the Trust
         Certificates pursuant to this Agreement and to sell the Notes and the
         Trust Certificates;

               (ii)  with the proceeds of the sale of the Notes and the Trust
         certificates, to purchase the Mortgage Loans, and to pay the
         organizational, start-up and transactional expenses of the Trust and to
         pay the balance to the Depositor pursuant to the Sale and Servicing
         Agreement;

               (iii) to assign, grant, transfer, pledge, mortgage and convey the
         Trust Estate pursuant to the Indenture and to hold, manage and
         distribute to the Owners pursuant to the terms of the Sale and
         Servicing Agreement any portion of the Trust Estate released from the
         Lien of, and remitted to the Trust pursuant to, the Indenture;

               (iv)  to enter into and perform its obligations under the Basic
         Documents to which it is to be a party;

               (v)   to engage in those activities, including entering into
         agreements, that are necessary, suitable or convenient to accomplish
         the foregoing or are incidental thereto or connected therewith; and

                                       5
<PAGE>

               (vi)  subject to compliance with the Basic Documents, to engage
         in such other activities as may be required in connection with
         conservation of the Owner Trust Estate and the making of distributions
         to the Owners and the Noteholders.

The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.

     Section 2.04 Appointment of Owner Trustee. The Depositor hereby appoints
                  ----------------------------
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.

     Section 2.05 Initial Capital Contribution of Owner Trust Estate. The
                  --------------------------------------------------
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $[_____________]. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.

     Section 2.06 Declaration of Trust. The Owner Trustee hereby declares that
                  --------------------
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Trust under the Basic Documents. It is the intention of the
parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a partnership,
with the assets of the partnership being the Mortgage Loans and other assets
held by the Trust, the partners of the partnership being the Certificateholders,
and the Notes being debt of the partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.

     Section 2.07 Liability of the Owners. (a) The Company shall be liable
                  -----------------------
directly to and will indemnify any injured party for all losses, claims,
damages, liabilities and expenses of the Trust (including Expenses, to the
extent not paid out of the Owner Trust Estate) to the extent that the Company
would be liable if the Trust were a partnership under the Delaware Revised
Uniform Limited Partnership Act in which the Company were a general partner;
provided, however, that the Company shall not be liable for any losses incurred
by a Certificateholder in the capacity of an investor in the Trust Certificates,
or a Noteholder in the capacity of an investor in the Notes. In addition, any
third party creditors of the Trust (other than in connection with the
obligations described in the preceding sentence for which the Company shall not
be liable) shall be deemed third party beneficiaries of this paragraph and
paragraph (c) below. The obligations of the Company under this paragraph shall
be evidenced by the Trust Certificates described in Section 3.10, which for

                                       6
<PAGE>

purposes of the Business Trust Statute shall be deemed to be a separate class of
Trust Certificates from all other Trust Certificates issued by the Trust;
provided that the rights and obligations evidenced by all Trust Certificates,
regardless of class, shall, except as provided in this Section, be identical.

     (b)  No Owner, other than to the extent set forth in paragraph (a), shall
have any personal liability for any liability or obligation of the Trust.

     Section 2.08 Title to Trust Property. Legal title to all the Owner Trust
                  -----------------------
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.

     Section 2.09 Situs of Trust. The Trust will be located and administered in
                  --------------
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
________. The Trust shall not have any employees in any state other than
Delaware; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or ________, and
payments will be made by the Trust only from Delaware or ________. The only
office of the Trust will be at the Corporate Trust Office in Delaware.

     Section 2.10 Representations and Warranties of the Depositor and the
                  -------------------------------------------------------
Company. (a) The Depositor hereby represents and warrants to the Owner Trustee
-------
that:

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

         (ii)  The Depositor is duly qualified to do business as a foreign
     corporation in good standing and has obtained all necessary licenses and
     approvals in all jurisdictions in which the ownership or lease of its
     property or the conduct of its business shall require such qualifications.

         (iii) The Depositor has the power and authority to execute and deliver
     this Agreement and to carry out its terms; the Depositor has full power and
     authority to sell and assign the property to be sold and assigned to and
     deposited with the Trust and the Depositor has duly authorized such sale
     and assignment and deposit to the Trust by all necessary corporate action;
     and the execution, delivery and performance of this Agreement have been
     duly authorized by the Depositor by all necessary corporate action.

         (iv)  The consummation of the transactions contemplated by this
     Agreement and the fulfillment of the terms hereof do not conflict with,
     result in any breach of any of the

                                       7
<PAGE>

     terms and provisions of, or constitute (with or without notice or lapse of
     time) a default under, the [articles of incorporation] [certificate of
     incorporation] or bylaws of the Company, or any indenture, agreement or
     other instrument to which the Company is a party or by which it is bound;
     nor result in the creation or imposition of any Lien upon any of its
     properties pursuant to the terms of any such indenture, agreement or other
     instrument (other than pursuant to the Basic Documents); nor violate any
     law or, to the best of the Company's knowledge, any order, rule or
     regulation applicable to the Company of any court or of any federal or
     state regulatory body, administrative agency or other governmental
     instrumentality having jurisdiction over the Company or its properties.

         (v)   To the Depositor's best knowledge, there are no proceedings or
     investigations pending or threatened before any court, regulatory body,
     administrative agency or other governmental instrumentality having
     jurisdiction over the Depositor or its properties: (A) asserting the
     invalidity of this Agreement, (B) seeking to prevent the consummation of
     any of the transactions contemplated by this Agreement or (C) seeking any
     determination or ruling that might materially and adversely affect the
     performance by the Depositor of its obligations under, or the validity or
     enforceability of, this Agreement.

          (iv) The representations and warranties of the Depositor in Sections
     [___________] of the [________________________] are true and correct.

     (b)  The Company hereby represents and warrants to the Owner Trustee that:

          (i)  The Company has been duly organized and is validly existing as a
     corporation in good standing under the laws of the State of [_________],
     with the power and authority to own its properties and to conduct its
     business as such properties are currently owned and such business is
     presently conducted.

          (ii) The Company is duly qualified to do business as a foreign
     corporation in good standing and has obtained all necessary licenses and
     approvals in all jurisdictions in which the ownership or lease of its
     property or the conduct of its business shall require such qualifications.

          (iii)The Company has the power and authority to execute and deliver
     this Agreement and to carry out its terms; the Company has full power and
     authority to purchase the Trust Certificates that the Company has agreed to
     purchase pursuant to Section 3.10; and the execution, delivery and
     performance of this Agreement has been duly authorized by the Company by
     all necessary corporate action.

          (iv) The consummation of the transactions contemplated by this
     Agreement and the fulfillment of the terms hereof do not conflict with,
     result in any breach of any of the terms and provisions of, or constitute
     (with or without notice or lapse of time) a default under, the [articles of
     incorporation] [certificate of incorporation] or bylaws of the Company, or
     any indenture, agreement or other instrument to which the Company is a
     party or by which it is bound; nor result in the creation or imposition of
     any Lien upon any of its properties pursuant to the terms of any such
     indenture, agreement or other instrument (other

                                       8
<PAGE>

     than pursuant to the Basic Documents); nor violate any law or, to the best
     of the Company's knowledge, any order, rule or regulation applicable to the
     Company of any court or of any federal or state regulatory body,
     administrative agency or other governmental instru mentality having
     jurisdiction over the Company or its properties.

          (v)  There are no proceedings or investigations pending or, to the
     Company's best knowledge, threatened before any court, regulatory body,
     administrative agency or other governmental instrumentality having
     jurisdiction over the Company or its properties: (A) asserting the
     invalidity of this Agreement, (B) seeking to prevent the consummation of
     any of the transactions contemplated by this Agreement or (C) seeking any
     determination or ruling that might materially and adversely affect the
     performance by the Company of its obligations under, or the validity or
     enforceability of, this Agreement.

          (vi) The representatives and warranties of the Company in Sections
     [_______] of the [____________________] are true and correct.

     Section 2.11 Federal Income Tax Allocations. Net income of the Trust for
                  ------------------------------
any month as determined for federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof) shall be
allocated:

     (a)  among the Certificate Owners as of the first Record Date following the
end of such month, in proportion to their ownership of principal amount of Trust
Certificates on such date, net income in an amount up to the sum of (i) the
Certificateholders' Monthly Interest Distributable Amount for such month, (ii)
interest on the excess, if any, of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date over the amount in
respect of interest that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date, to the extent permitted by law, at
the Pass-Through Rate from such preceding Distribution Date through the current
Distribution Date, (iii) the portion of the market discount on the Mortgage
Loans accrued during such month that is allocable to the excess, if any, of the
initial aggregate principal amount of the Trust Certificates over their initial
aggregate issue price, (iv) any amount expected to be distributed to the
Certificateholders pursuant to the Sale and Servicing Agreement (to the extent
not previously allocated pursuant to this clause), (v) any Certificateholders'
Prepayment Premium distributable to the Certificateholders with respect to such
month and (vi) any other amounts of income payable to the Certificateholders for
such month; such sum to be reduced by any amortization by the Trust of premium
on Mortgage Loans that corresponds to any excess of the issue price of
Certificates over their principal amount; and

     (b)  to the Company, to the extent of any remaining net income.

If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in the preceding
sentence. Net losses of the Trust, if any, for any month as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be

                                       9
<PAGE>

allocated to the Company to the extent the Company is reasonably expected to
bear the economic burden of such net losses, and any remaining net losses shall
be allocated among the Certificate Owners as of the first Record Date following
the end of such month in proportion to their ownership of principal amount of
Trust Certificates on such Record Date. The Company is authorized to modify the
allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income, gain or
loss to the Company or to the Certificate Owners, or as otherwise required by
the Code.

                                  ARTICLE III

                 TRUST CERTIFICATES AND TRANSFER OF INTERESTS
                 --------------------------------------------

     Section 3.01 Initial Ownership. Upon the formation of the Trust by the
                  -----------------
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Trust.

     Section 3.02 The Trust Certificates. The Trust Certificates shall be
                  -----------------------
issued in minimum denominations of $[_______] and in integral multiples of
$1,000 in excess thereof; provided, however, that the Trust Certificates issued
to the Company pursuant to Section 3.10 may be issued in such denomination as
required to include any residual amount. The Trust Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee. Trust Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Trust Certificates
or did not hold such offices at the date of authentication and delivery of such
Trust Certificates.

     A transferee of a Trust Certificate shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section 3.04.

     Section 3.03 Authentication of Trust Certificates. Concurrently with the
                  ------------------------------------
initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the Initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president, any vice president, secretary or any assistant treasurer, without
further corporate action by the Depositor, in authorized denominations. No Trust
Certificate shall entitle its Holder to any benefit under this Agreement or be
valid for any purpose unless there shall appear on such Trust Certificate a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Owner Trustee or [____________], as the Owner Trustee's
authenticating agent, by manual signature; such authentication shall constitute
conclusive evidence that such Trust Certificate shall have been duly
authenticated and delivered hereunder. All Trust Certificates shall be dated the
date of their authentication.

     Section 3.04 Registration of Transfer and Exchange of Trust Certificates.
                  -----------------------------------------------------------
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.08,

                                      10
<PAGE>

a Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Owner Trustee shall provide for the registration of Trust
Certificates and of transfers and exchanges of Trust Certificates as herein
provided. [___________] shall be the initial Certificate Registrar.

         Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.08, the Owner Trustee
shall execute, authenticate and deliver (or shall cause [_______________] as its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Trust Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by the
Owner Trustee or any authenticating agent. At the option of a Holder, Trust
Certificates may be exchanged for other Trust Certificates of authorized
denominations of a like aggregate amount upon surrender of the Trust
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.08.

         Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Trust Certificate surrendered for registration of transfer or exchange
shall be cancelled and subsequently disposed of by the Owner Trustee in
accordance with its customary practice.

         No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.

         The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.

         Section 3.05 Mutilated, Destroyed, Lost or Stolen Trust Certificates.
                      -------------------------------------------------------
If (a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Trust Certificate has been acquired by a
bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute and
the Owner Trustee or [_______________], as the Owner Trustee's authenticating
agent, shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Certificate, a newn Trust Certificate
of like tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Certificate shall be found at any time.

                                      11
<PAGE>

     Section 3.06 Persons Deemed Owners. Prior to due presentation of a Trust
                  ---------------------
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar or any Paying Agent may treat the Person in whose name any Trust
Certificate is registered in the Certificate Register as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.02
and for all other purposes whatsoever, and none of the Owner Trustee, the
Certificate Registrar or any Paying Agent shall be bound by any notice to the
contrary.

     Section 3.07 Access to List of Certificateholders' Names and Addresses.
                  ---------------------------------------------------------
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer
and the Depositor, within 15 days after receipt by the Owner Trustee of a
written request therefor from the Master Servicer or the Depositor, a list, in
such form as the Master Servicer or the Depositor may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record Date.
If three or more Certificateholders or one or more Holders of Trust Certificates
evidencing not less than 25% of the Certificate Balance apply in writing to the
Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Trust Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Trust Certificate, shall be deemed to have agreed not to
hold any of the Depositor, the Company, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.

     Section 3.08 Maintenance of Office or Agency. The Owner Trustee shall
                  -------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates
[_______________________________] as its office for such purposes. The Owner
Trustee shall give prompt written notice to the Company and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.

     Section 3.09 Appointment of Paying Agent. The Paying Agent shall make
                  ---------------------------
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent initially shall be
[___________], and any co-paying agent chosen by [___________] and acceptable to
the Owner Trustee. [____________] shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Owner Trustee. In the event that
[___________] shall no longer be the Paying Agent, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner

                                      12
<PAGE>

Trustee an instrument in which such successor Paying Agent or additional Paying
Agent shall agree with the Owner Trustee that, as Paying Agent, such successor
Paying Agent or additional Paying Agent will hold all sums, if any, held by it
for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner Trustee also in its
role as Paying Agent, for so long as the Owner Trustee shall act as Paying Agent
and, to the extent applicable, to any other paying agent appointed hereunder.
Any reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.

[    Section 3.10  Ownership by Company of Trust Certificates. The Company shall
                   ------------------------------------------
on the Closing Date purchase Trust Certificates representing at least __% of the
Initial Certificate Balance and shall thereafter retain beneficial and record
ownership of Trust Certificates representing at least __% of the Certificate
Balance. Any attempted transfer of any Trust Certificate that would reduce such
interest of the Company below __% of the Certificate Balance shall be void. The
Owner Trustee shall cause any Trust Certificate issued to the Company to contain
a legend stating "THIS CERTIFICATE IS NON-TRANSFERABLE".]

     Section 3.11  Book-Entry Trust Certificates.   The Trust Certificates, upon
                   -----------------------------
original issuance, will be issued in the form of a typewritten Trust Certificate
or Trust Certificates representing Book-Entry Trust Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust; provided, however, that one Definitive Trust
Certificate may be issued to the Company pursuant to Section 3.10. Such Trust
Certificate or Trust Certificates shall initially be registered on the
Certificate Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Certificate Owner will receive a definitive Trust
Certificate representing such Certificate Owner's interest in such Trust
Certificate, except as provided in Section 3.13. Unless and until definitive,
fully registered Trust Certificates (the "Definitive Trust Certificates") have
been issued to Certificate Owners pursuant to Section 3.13:

     (a)  The provisions of this Section shall be in full force and effect;

     (b)  The Certificate Registrar and the Owner Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Agreement (including the
payment of principal of and interest on the Trust Certificates and the giving of
instructions or directions hereunder) as the sole Holder of the Trust
Certificates and shall have no obligation to the Certificate Owners;

     (c)  To the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control;

     (d)  The rights of Certificate Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements
between such Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Trust Certificates are issued pursuant to Section

                                      13
<PAGE>

3.13, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of principal of
and interest on the Trust Certificates to such Clearing Agency Participants; and

     (e)  Whenever this Agreement requires or permits actions to be taken based
upon instructions or directions of Holders of Trust Certificates evidencing a
specified percentage of the Certificate Balance, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Trust Certificates and has delivered such
instructions to the Owner Trustee.

     Section 3.12  Notices to Clearing Agency.   Whenever a notice or other
                   --------------------------
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Trust Certificates shall have been issued to Certificate
Owners pursuant to Section 3.13, the Owner Trustee shall give all such notices
and communications specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.

     Section 3.13  Definitive Trust Certificates.   If (i) the Administrator
                   -----------------------------
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Trust Certificates and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Owner Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency or (iii) after the occurrence of an Event of Default or a Master Servicer
Default, Certificate Owners representing beneficial interests aggregating at
least a majority of the Certificate Balance advise the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing Agency
is no longer in the best interest of the Certificate Owners, then the Clearing
Agency shall notify all Certificate Owners and the Owner Trustee of the
occurrence of any such event and of the availability of the Definitive Trust
Certificates to Certificate Owners requesting the same. Upon surrender to the
Owner Trustee of the typewritten Trust Certificate or Trust Certificates
representing the Book-Entry Trust Certificates by the Clearing Agency,
accompanied by registration instructions, the Owner Trustee shall execute and
authenticate the Definitive Trust Certificates in accordance with the
instructions of the Clearing Agency. Neither the Certificate Registrar nor the
Owner Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Trust Certificates, the Owner
Trustee shall recognize the Holders of the Definitive Trust Certificates as
Certificateholders. The Definitive Trust Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Owner Trustee, as evidenced by its execution thereof.

                                    ARTICLE IV

                           ACTIONS BY OWNER TRUSTEE
                           ------------------------

     Section 4.01  Prior Notice to Owners with Respect to Certain Matters.  With
                   ------------------------------------------------------
respect to the following matters, the Owner Trustee shall not take action unless
at least 30 days before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the

                                      14
<PAGE>

proposed action and the Owners shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such Owners have
withheld consent or provided alternative direction:

     (a)  the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Mortgage Loans) and
the compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Mortgage Loans;

     (b)  the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);

     (c)  the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;

     (d)  the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;

     (e)  the amendment, change or modification of the Administration Agreement,
except to cure any ambiguity or to amend or supplement any provision in a manner
or add any provision that would not materially adversely affect the interests of
the Owners; or

     (f)  the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.

     Section 4.02 Action by Owners with Respect to Certain Matters. The Owner
                  ------------------------------------------------
Trustee shall not have the power, except upon the direction of the Owners, to
(a) remove the Administrator under the Administration Agreement pursuant to
Section [_] thereof, (b) appoint a successor Administrator pursuant to Section
[_] of the Administration Agreement, (c) remove the Master Servicer under the
Sale and Servicing Agreement pursuant to Section [_] thereof or (d) except as
expressly provided in the Basic Documents, sell the Mortgage Loans after the
termination of the Indenture. The Owner Trustee shall take the actions referred
to in the preceding sentence only upon written instructions signed by the
Owners.

     Section 4.03 Action by Owners with Respect to Bankruptcy. The Owner Trustee
                  -------------------------------------------
shall not have the power to commence a voluntary proceeding in bankruptcy
relating to the Trust without the unanimous prior approval of all Owners and the
delivery to the Owner Trustee by each such Owner of a certificate certifying
that such Owner reasonably believes that the Trust is insolvent.

     Section 4.04 Restrictions on Owners' Power. The Owners shall not direct the
                  -----------------------------
Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to

                                      15
<PAGE>

any obligation of the Trust or the Owner Trustee under this Agreement or any of
the Basic Documents or would be contrary to Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.

     Section 4.05 Majority Control. Except as expressly provided herein, any
                  ----------------
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Owners delivered pursuant to this Agreement shall be effective if signed by
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.

                                   ARTICLE V

                  APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
                  ------------------------------------------

     Section 5.01 Establishment of Trust Account. The Owner Trustee, for the
                  ------------------------------
benefit of the Certificateholders, shall establish and maintain in the name of
the Trust an Eligible Deposit Account (the "Certificate Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholders.

     The Owner Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof. Except as otherwise expressly provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Deposit Account, the
Owner Trustee (or the Depositor on behalf of the Owner Trustee, if the
Certificate Distribution Account is not then held by the Owner Trustee or an
affiliate thereof) shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Certificate Distribution Account as an Eligible Deposit Account and shall
transfer any cash and/or any investments to such new Certificate Distribution
Account.

     Section 5.02 Application of Trust Funds. (a) On each Distribution Date, the
                  --------------------------
Owner Trustee will distribute to Certificateholders, on a pro rata basis,
amounts deposited in the Certificate Distribution Account.

     (b)  On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Master Servicer pursuant to Section [____] of the Sale and Servicing
Agreement with respect to such Distribution Date.

     (c)  In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if

                                      16
<PAGE>

permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to an Owner shall be treated as cash
distributed to such Owner at the time it is withheld by the Trust and remitted
to the appropriate taxing authority. If there is a possibility that withholding
tax is payable with respect to a distribution (such as a distribution to a non-
U.S. Owner), the Owner Trustee may in its sole discretion withhold such amounts
in accordance with this paragraph (c).

     Section 5.03 Method of Payment. Subject to Section 9.01(c), distributions
                  -----------------
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Trust Certificates in the aggregate evidence a denomination of
not less than $[____________], or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register.

     Section 5.04 No Segregation of Moneys; No Interest. Subject to Sections
                  -------------------------------------
5.01 and 5.02, moneys received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.

     Section 5.05 Accounting and Reports to the Noteholders, Owners, the
                  ------------------------------------------------------
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain (or
-----------------------------------
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to each Owner, as may be required by
the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.02(c) with respect to income or distributions to
Owners. The Owner Trustee shall elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Mortgage Loans. The Owner Trustee shall not make the election provided under
Section 754 of the Code.

     Section 5.06 Signature on Returns; Tax Matters Partner. (a) The Owner
                  -----------------------------------------
Trustee shall sign on behalf of the Trust the tax returns of the Trust, unless
applicable law requires an Owner to sign such documents, in which case such
documents shall be signed by the Company.

     (b)  The Company shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.

                                      17
<PAGE>

                                  ARTICLE VI

                     AUTHORITY AND DUTIES OF OWNER TRUSTEE
                     -------------------------------------

         Section 6.01 General Authority. The Owner Trustee is authorized and
                      -----------------
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement or instrument, in each case, in such form as the
Company shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further authorized
from time to time to take such action as the Administrator recommends with
respect to the Basic Documents.

         Section 6.02 General Duties. It shall be the duty of the Owner Trustee
                      --------------
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Owners, subject to the
Basic Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be held
liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.

         Section 6.03 Action upon Instruction. (a) Subject to Article IV and in
                      -----------------------
accordance with the terms of the Basic Documents, the Owners may by written
instruction direct the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the Owners
pursuant to Article IV.

         (b)  The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.

         (c)  Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not

                                      18
<PAGE>

inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Owners, and shall have no liability to any Person
for such action or inaction.

         (d)  In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.

         Section 6.04 No Duties Except as Specified in this Agreement or in
                      -----------------------------------------------------
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
------------
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Basic Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.

         Section 6.05 No Action Except Under Specified Documents or
                      ---------------------------------------------
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
------------
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
and (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.03.

         Section 6.06 Restrictions. The Owner Trustee shall not take any action
                      ------------
(a) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (b) that, to the actual knowledge of the Owner Trustee, would result in
the Trust's becoming taxable as a corporation for

                                      19
<PAGE>

federal income tax purposes. The Owners shall not direct the Owner Trustee to
take action that would violate the provisions of this Section.

                                  ARTICLE VII

                         CONCERNING THE OWNER TRUSTEE
                         ----------------------------

         Section 7.01 Acceptance of Trusts and Duties. The Owner Trustee accepts
                      -------------------------------
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
[malfeasance, bad faith or gross] negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03 expressly
made by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):

         (a)     The Owner Trustee shall not be liable for any error of judgment
made by a Trust Officer of the Owner Trustee;

         (b)     The Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Administrator or any Owner;

         (c)     No provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;

         (d)     Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;

         (e)     The Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or the Company or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate, or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Owner, other than as expressly provided for herein or
expressly agreed to in the Basic Documents;

         (f)     The Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Seller or Depositor, the Company, the
Indenture Trustee or the Master Servicer under any of the Basic Documents or
otherwise and the Owner Trustee shall have no obligation or liability to perform
the obligations of the Trust under this Agreement or the Basic Documents that

                                      20
<PAGE>

are required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Master Servicer or
the Seller or Depositor under the Sale and Servicing Agreement; and

     (f)  The Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its [willful malfeasance, bad faith or gross
negligence] in the performance of any such act.

     Section 7.02 Furnishing of Documents. The Owner Trustee shall furnish to
                  -----------------------
the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.

     Section 7.03 Representations and Warranties. The Owner Trustee hereby
                  ------------------------------
represents and warrants to the Company, for the benefit of the Owners, that:

     (a)  It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.

     (b)  It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and deliver
this Agreement on its behalf.

     (c)  Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.

     Section 7.04 Reliance; Advice of Counsel.
                  ---------------------------

     (a)  The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors

                                      21
<PAGE>

or other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by the
treasurer or other authorized officers of the relevant party, as to such fact or
matter and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.

     (b)  In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled Persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such Persons and not contrary to this Agreement or
any Basic Document.

     Section 7.05 Not Acting in Individual Capacity. Except as provided in this
                  ---------------------------------
Article VII, in accepting the trusts hereby created [_____________________] acts
solely as Owner Trustee hereunder and not in its individual capacity, and all
Persons having any claim against the Owner Trustee by reason of the transactions
contemplated by this Agreement or any Basic Document shall look only to the
Owner Trust Estate for payment or satisfaction thereof.

     Section 7.06 Owner Trustee Not Liable for Trust Certificates or Mortgage
                  -----------------------------------------------------------
Loans. The recitals contained herein and in the Certificates (other than the
-----
signature and countersignature of the Owner Trustee on the Trust Certificates)
shall be taken as the statements of the Depositor and the Company, and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the Notes,
or of any Mortgage Loan or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage Loan, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition and
ownership of any property securing a Mortgage Loan; the existence and
enforceability of any insurance thereon; the validity of the assignment of any
Mortgage Loan to the Trust or of any intervening assignment; the performance or
enforcement of any Mortgage Loan; the compliance by the Depositor, the Company
or the Master Servicer with any warranty or representation made under any Basic
Document or in any related document or the accuracy of any such warranty or
representation, or any action of the Administrator, the Indenture Trustee or the
Master Servicer or any subservicer taken in the name of the Owner Trustee.

     Section 7.07 Owner Trustee May Own Trust Certificates and Notes. The Owner
                  --------------------------------------------------
Trustee in its individual or any other capacity may become the owner or pledgee
of Trust Certificates or

                                      22
<PAGE>

Notes and may deal with the Depositor, the Company, the Administrator, the
Indenture Trustee and the Master Servicer in banking transactions with the same
rights as it would have if it were not Owner Trustee.

                                 ARTICLE VIII

                         COMPENSATION OF OWNER TRUSTEE
                         -----------------------------

         Section 8.01 Owner Trustee's Fees and Expenses. The Owner Trustee shall
                      ---------------------------------
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.

         Section 8.02 Indemnification. The Depositor shall be liable as primary
                      ---------------
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Depositor shall not be
liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.01. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's choice of
legal counsel shall be subject to the approval of the Depositor, which approval
shall not be unreasonably withheld.

         Section 8.03 Payments to the Owner Trustee. Any amounts paid to the
                      -----------------------------
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.

                                  ARTICLE IX

                        TERMINATION OF TRUST AGREEMENT
                        ------------------------------

         Section 9.01 Termination of Trust Agreement. This Agreement (other than
                      ------------------------------
Article VIII) and the Trust shall terminate and be of no further force or effect
(i) upon the final distribution by the Owner Trustee of all moneys or other
property or proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture, the Sale and Servicing Agreement and Article V or (ii) at the
time provided in Section 9.02. The bankruptcy, liquidation, dissolution, death
or incapacity of any Owner,

                                      23
<PAGE>

other than the Company as described in Section 9.02, shall not (x) operate to
terminate this Agreement or the Trust or (y) entitle such Owner's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate or (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.

         (b)  Except as provided in Section 9.01(a), none of the Depositor, the
Company or any Owner shall be entitled to revoke or terminate the Trust.

         (c)  Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Master Servicer stating (i) the Distribution Date upon or
with respect to which final payment of the Trust Certificates shall be made upon
presentation and surrender of the Trust Certificates at the office of the Paying
Agent therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Trust Certificates at the office of the Paying Agent therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.02.

         In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed by the Owner
Trustee to the Company.

         (d)  Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.

         Section 9.02 Dissolution upon Bankruptcy of the Company. In the event
                      ------------------------------------------
that an Insolvency Event shall occur with respect to the Company, this Agreement
shall be terminated in accordance with Section 9.01 90 days after the date of
such Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from Holders of Certificates
(other than the Company) representing more than 50% of the Certificate Balance
(not including the Certificate Balance of the Trust Certificates held by the
Company), to the effect that each such party disapproves of the liquidation of
the Mortgage Loans and of the Trust. Promptly

                                      24
<PAGE>

after the occurrence of any Insolvency Event with respect to the Company, (A)
the Company shall give the Indenture Trustee and the Owner Trustee written
notice of such Insolvency Event, (B) the Owner Trustee shall, upon the receipt
of such written notice from the Company, give prompt written notice to the
Certificateholders and the Indenture Trustee, of the occurrence of such event
and (C) the Indenture Trustee shall, upon receipt of written notice of such
Insolvency Event from the Owner Trustee or the Company, give prompt written
notice to the Noteholders of the occurrence of such event; provided, however,
that any failure to give a notice required by this sentence shall not prevent or
delay, in any manner, a termination of the Trust pursuant to the first sentence
of this Section 9.02. Upon a termination pursuant to this Section, the Owner
Trustee shall direct the Indenture Trustee promptly to sell the assets of the
Trust (other than the Trust Accounts and the Certificate Distribution Account)
and, on behalf of the Company, in a commercially reasonable manner and on
commercially reasonable terms. The proceeds of such a sale of the assets of the
Trust shall be treated as collections under the Sale and Servicing Agreement.

                                   ARTICLE X

                    SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
                    ---------------------------------------
                                OWNER TRUSTEES
                                --------------

         Section 10.01 Eligibility Requirements for Owner Trustee. The Owner
                       ------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least [____] by
[__________]. If such corporation shall publish reports of condition at least
annually pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.02.

         Section 10.02 Resignation or Removal of Owner Trustee. The Owner
                       ---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.

         If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall

                                      25
<PAGE>

take charge or control of the Owner Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the
Administrator may remove the Owner Trustee. If the Administrator shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee,
and shall pay all fees owed to the outgoing Owner Trustee.

         Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.

         Section 10.03 Successor Owner Trustee. Any successor Owner Trustee
                       -----------------------
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective, and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.

         No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.

         Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.

         Section 10.04 Merger or Consolidation of Owner Trustee. Any corporation
                       ----------------------------------------
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section

                                      26
<PAGE>

10.01 and, provided, further, that the Owner Trustee shall mail notice of such
merger or consolidation to the Rating Agencies.

         Section 10.05 Appointment of Co-Trustee or Separate Trustee.
                       ---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate may at the time be located, the Administrator and the
Owner Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Administrator and
Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or as
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Trust or
any part thereof and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Administrator and the
Owner Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor Owner Trustee pursuant
to Section 10.01 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.03.

         Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

         (a) All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Owner Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;

         (b) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and

         (c) The Administrator and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee.

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

                                      27
<PAGE>

Each such instrument shall be filed with the Owner Trustee and a copy thereof
given to the Administrator.

         Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co- trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.

                                  ARTICLE XI

                                 MISCELLANEOUS
                                 -------------

         Section 11.01 Supplements and Amendments. This Agreement may be amended
                       --------------------------
by the Depositor, the Company and the Owner Trustee, with prior written notice
to the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.

         This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority of the Principal Balance of the Notes and
the consent of the Holders of Certificates evidencing not less than a majority
of the Certificate Balance, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Mortgage Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Principal Balance of the Notes and
the Certificate Balance required to consent to any such amendment, without the
consent of the holders of all the outstanding Notes and Certificates.

         Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.

         It shall not be necessary for the consent of Certificateholders,
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this

                                      28
<PAGE>

Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.

         Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.

         Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment that affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.

         Section 11.02  No Legal Title to Owner Trust Estate in Owners. The
                        ----------------------------------------------
Owners shall not have legal title to any part of the Owner Trust Estate. The
Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title or interest
of the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.

         Section 11.03  Limitations on Rights of Others. Except for Section
                        -------------------------------
2.07, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Company, the Owners, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.

         Section 11.04  Notices. (a) Unless otherwise expressly specified or
                        -------
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Depositor, addressed to First Horizon Asset Securities Inc., 4000 Horizon
Way, Irving, Texas 75063, Attention: [______________]; if to the Company,
addressed to [_____________________________], Attention: [____________]; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party.

         (b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.

                                      29
<PAGE>

         Section 11.05  Severability. Any provision of this Agreement that is
                        ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         Section 11.06  Separate Counterparts. This Agreement may be executed by
                        ---------------------
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

         Section 11.07  Successors and Assigns. All covenants and agreements
                        ----------------------
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Company, the Owner Trustee and its successors and each Owner and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an Owner
shall bind the successors and assigns of such Owner.

         Section 11.08  Covenants of the Company. The Company will not at any
                        ------------------------
time institute against the Trust any bankruptcy proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, the Trust Agreement
or any of the Basic Documents.

         Section 11.09  No Petition. The Owner Trustee, by entering into this
                        -----------
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Company or the Trust, or join in any institution against the Company
or the Trust of, any bankruptcy proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, this Agreement or any of the Basic Documents.

         Section 11.10  No Recourse. Each Certificateholder by accepting a Trust
                        -----------
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Master Servicer, the Company, the
Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Agreement, the Trust Certificates
or the Basic Documents.

         Section 11.11  Headings. The headings of the various Articles and
                        --------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

         Section 11.12  GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
                        -------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                      30
<PAGE>

         Section 11.13  Depositor Payment Obligation. The Depositor shall be
                        ----------------------------
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and liabilities
of the Administrator incurred thereunder.

                          *    *    *    *    *    *

                                      31
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.

                                       FIRST HORIZON ASSET SECURITIES INC.,
                                       as Depositor,

                                       By:____________________________
                                       Name:__________________________
                                       Title:[________________________],

                                       By:____________________________
                                       Name:__________________________
                                       Title:[________________________],

                                       [______________________________],
                                       not in its individual capacity but
                                       solely as Owner Trustee,

                                       By:____________________________
                                       Name:__________________________
                                       Title:[________________________],

                                      32
<PAGE>

                                   EXHIBIT A
                           FORM OF TRUST CERTIFICATE

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

NUMBER                                       $_________R-__________
CUSIP NO. _________

          [FIRST HORIZON] HOME EQUITY LOAN TRUST 200__-__ [_____]% HOME EQUITY
LOAN ASSET BACKED CERTIFICATES, SERIES 200__-__ evidencing a fractional
undivided beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of [fixed-rate] [adjustable rate] home equity
revolving credit line loans caused to be sold to the Trust by [_______________].

     (This Trust Certificate does not represent an interest in or obligation of
First Horizon Asset Securities Inc., First Horizon Home Loan Corporation or any
of their respective affiliates, except to the extent described below.)

     THIS CERTIFIES THAT [________________________] is the registered owner of
[____________________] DOLLARS nonassessable, fully paid, fractional undivided
interest in [FIRST HORIZON] HOME EQUITY LOAN TRUST 200__-__ (the "Trust") formed
by First Horizon Asset Securities Inc., a Delaware corporation (the
"Depositor"), and [_______________], a [__________] corporation (the "Company").

          OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Trust
Certificates referred to in the within-mentioned Trust Agreement.

[___________________], or as Owner Trustee [___________________],as Owner
Trustee

by: _______________________         by:  [_______________],
    Authorized Signatory                 as Authenticating Agent

                                    by:  [_______________],

                                      A-1
<PAGE>

                                            Authorized Signatory

     The Trust was created pursuant to a Trust Agreement, dated as of , 200__
(the "Trust Agreement"), among the Depositor, the Company and [____________], as
owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Trust Agreement or the Master Servicing Agreement dated as of ___________,
200__ (as amended and supplemented from time to time, the "Master Servicing
Agreement"), among the Trust, the Depositor and [_______________], as servicer
(the "Master Servicer"), as applicable.

     This Certificate is one of a duly authorized issue of Home Equity Loan
Asset-Backed Certificates, Series 200__-__ (herein called the "Trust
Certificates"). Also issued under the Indenture dated as of ___________, 200__
between the Trust and [________________], as indenture trustee, are the
[_______] classes of Notes designated as [_________________________
________________________________________________________________________________
______________________________________________] (collectively, the "Notes").
This Trust Certificate is issued under and is subject to the terms, provisions
and conditions of the Trust Agreement, to which Trust Agreement the Holder of
this Trust Certificate by virtue of its acceptance hereof assents and by which
such Holder is bound. The property of the Trust consists of a pool of
[adjustable rate] home equity loan revolving credit line loans made or to be
made int he future (the "Mortgage Loans"), under certain home equity revolving
credit line loan agreements and secured primarily by second [deeds of trust]
[mortgages] on residential properties that are primarily one- to four-family
properties (the "Mortgaged Properties"); the collections in respect of the
Mortgage Loans received after the Cut-off Date; property that secured a Mortgage
Loan which has been acquired by foreclosure or deed in lieu of foreclosure; [a
surety bond] [a letter of credit]; an assignment of the Depositor's rights under
the [________________]; rights under certain hazard insurance policies covering
the Mortgaged Properties; and certain other property. [The rights of the Holders
of the Trust Certificates are subordinated to the rights of the Holders of the
Notes, as set forth in the Sale and Servicing Agreement.]

     Under the Trust Agreement, there will be distributed on the [_______] day
of each month or, if such [_______] day is not a Business Day, the next Business
Day (each, a "Distribution Date"), commencing on ___________, 200__, to the
Person in whose name this Trust Certificates is registered at the close of
business on the first day of the month or, if Definitive Certificates are
issued, the [_______] day of the prior month (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date. No distributions of
principal will be made on any Certificate until all of the Notes have been paid
in full.

                                      A-2
<PAGE>

     [The Holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.]

     It is the intent of the Depositor, the Company, the Master Servicer and the
Certificateholders that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Company) will be treated
as partners in that partnership. The Company and the other Certificateholders,
by acceptance of a Trust Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Trust Certificates for such tax purposes
as partnership interests in the Trust.

     Each Certificateholder or Certificate Owner, by its acceptance of a Trust
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Trust Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Company, or join in any institution against the Company of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.

     Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon,
except that with respect to Trust Certificates registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as otherwise provided in
the Trust Agreement and notwithstanding the above, the final distribution on
this Trust Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Trust Certificate at the office or agency maintained for that purpose by the
Owner Trustee in the Borough of Manhattan, The City of New York.

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

     Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual signature, this Trust
Certificate shall not entitle the Holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.

                                      A-3
<PAGE>

     THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Trust Certificate to be duly executed.

                                      FIRST HORIZON ASSET SECURITIES INC.

                                      By:  [_____________________], not in its

                                            individual capacity but solely as
                                            Owner Trustee
Dated:                                By: ____________________________
                                               Authorized Signatory

                                      A-4
<PAGE>

                         [REVERSE OF TRUST CERTIFICATE]

     The Trust Certificates do not represent an obligation of, or an interest
in, the Depositor, the Master Servicer, the Company, the Owner Trustee or any
affiliates of any of them and no recourse may be had against such parties or
their assets, except as expressly set forth or contemplated herein or in the
Trust Agreement or the Basic Documents. In addition, this Trust Certificate is
not guaranteed by any governmental agency or instrumentality and is limited in
right of payment to certain collections and recoveries with respect to the
Mortgage Loans (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. A copy of each of the Sale and
Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Depositor and at such other places, if any, designated
by the Depositor.

     The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the Company and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor, the Company and the Owner Trustee
with the consent of the Holders of the Trust Certificates and the Notes, each
voting as a class, evidencing not less than a majority of the Certificate
Balance and the outstanding principal balance of the Notes of each such class.
Any such consent by the Holder of this Trust Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Trust Certificate and
of any Trust Certificate issued upon the transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent is made upon this
Trust Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Trust Certificates.

     As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form satisfactory to the
Owner Trustee and the Certificate Registrar duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Trust Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is
[_________________], New York, New York.

     Except as provided in the Trust Agreement, the Trust Certificates are
issuable only as registered Trust Certificates without coupons in denominations
of $[__________] and in integral multiples of $[_______] in excess thereof. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Trust Certificates are exchangeable for new Trust Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or

                                      A-5
<PAGE>

exchange, but the Owner Trustee or the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.

     The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.

     The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part of
the Owner Trust Estate. The Master Servicer of the Mortgage Loans may at its
option purchase the Owner Trust Estate at a price specified in the Sale and
Servicing Agreement, and such purchase of the Mortgage Loans and other property
of the Trust will effect early retirement of the Trust Certificates; however,
such right of purchase is exercisable only as of the last day of any Collection
Period as of which the Pool Balance is less than or equal to [____]% of the
Original Pool Balance.

     The Trust Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a 'Benefit Plan'). By accepting and holding this
Trust Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.

                                      A-6
<PAGE>

                                  ASSIGNMENT

        FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE

________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)

________________________________________________________________________________
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing

________________________________________________________________________________
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.

Dated:

                                ___________________________________________*/
                                              Signature Guaranteed:
                                            ____________________________*/
_________________

*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.

                                      A-7
<PAGE>

                                   EXHIBIT B
                            CERTIFICATE OF TRUST OF
                 [FIRST HORIZON] HOME EQUITY LOAN TRUST 200___

     THIS Certificate of Trust of [FIRST HORIZON] HOME EQUITY LOAN TRUST 200__-
__ (the "Trust"), dated _______, 200__, is being duly executed and filed by
[_____________________], a [___________________________], as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, ss. 3801 et
seq.).

     1.   Name. The name of the business trust formed hereby is [FIRST HORIZON]
          HOME EQUITY LOAN TRUST 200__-__.

     2.   Delaware Trustee. The name and business address of the trustee of the
          Trust in the State of Delaware is [______________], Delaware [____],
          Attention: [_______________________________].

     IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.

                                 [_____________________],
                                 not in its individual capacity but solely as
                                 owner trustee under a Trust Agreement dated
                                 _________________, 200__

                                 By:_______________________
                                 Name:_____________________
                                 Title:____________________

                                      B-1
<PAGE>

                                   EXHIBIT C
                  [Form of Certificate Depository Agreement]

                                      C-1<PAGE>

                                                                    EXHIBIT 10.1

                         SALE AND SERVICING AGREEMENT

                            Dated as of [         ]

                                     among

                     First Horizon Asset Securities Inc.,
                                   Depositor

                                      and

              First Horizon Home Equity Loan Trust 200[  ]-[  ],
                                    Issuer

                                      and

                  First Tennessee Bank National Association,
                          Seller and Master Servicer

                                      and

                                 [         ],
                                    Trustee

                        Relating to the Mortgage Loans
                    Pledged as Collateral for the Issuer's
              Asset Backed Notes [and Asset Backed Certificates],
                             Series 200[  ]-[  ],
                           in the Aggregate Initial
                      Principal Amount of $[       ]
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                                          <C>
Section 1.  Defined Terms...................................................................   4

Section 2.  Conveyance of Mortgage Loans; Representations and Warranties....................  21
              Conveyance of Mortgage Loans; Retention of Obligation
                to Fund Advances Under Credit Line Agreements...............................  21
              Acceptance by Trustee; Retransfer of Mortgage Loans...........................  24
              Documents, Records and Funds in Possession of Master Servicer
                to be Held for Trustee......................................................  26
              Representations, Warranties and Covenants of the Seller and the
                Master Servicer.............................................................  27
              Covenants of the Master Servicer..............................................  29
              Covenants of the Depositor....................................................  29

Section 3.  Administration and Servicing of Mortgage Loans..................................  30
              Master Servicer to Service Mortgage Loans.....................................  30
              Subservicing; Enforcement of the Obligations of Servicers.....................  32
              Successor Servicers...........................................................  33
              Liability of the Master Servicer..............................................  34
              No Contractual Relationship Between Subservicers and the Trustees.............  34
              Rights of the Depositor and the Trustees in Respect of the Master Servicer....  34
              Trustee to Act as Master Servicer.............................................  34
              Collection of Mortgage Loan Payments; Collection Accounts; Payment
                Account.....................................................................  35
              Collection of Taxes, Assessments and Similar Items; Escrow Accounts...........  38
              Access to Certain Documentation and Information Regarding the
                Mortgage Loans..............................................................  39
              Permitted Withdrawals from the Note Account...................................  39
              Maintenance of Hazard Insurance; Maintenance of Primary Insurance Policies....  41
              Enforcement of Due-On-Sale Clauses; Assumption Agreements.....................  43
              Realization Upon Defaulted Mortgage Loans; Repurchase of Certain
                Mortgage Loans..............................................................  44
              Access to Certain Documentation...............................................  47
              Annual Statement as to Compliance.............................................  47
              Annual Independent Public Accountants' Servicing Statement; Financial
                Statements..................................................................  47
              Errors and Omissions Insurance; Fidelity Bonds................................  48
              Master Servicer Monthly Data..................................................  48

Section 4.  Advances........................................................................  48

Section 5.  Servicing Compensation..........................................................  49
</TABLE>

                                      -2-
<PAGE>

<TABLE>
<S>                                                                                            <C>
Section 6.  The Master Servicer..............................................................  49
              Respective Liabilities of the Depositor and the Master Servicer................  49
              Merger or Consolidation of the Depositor or the Master Servicer................  49
              Limitation on Liability of the Depositor, the Seller, Master Servicer
                and Others...................................................................  50
              Limitation on Resignation of the Master Servicer...............................  50

Section 7.  Default..........................................................................  51
              Events of Default..............................................................  51
              Trustee to Act; Appointment of Successor.......................................  53
              Notification to Securityholders................................................  54

Section 8.  Miscellaneous....................................................................  54
              Term of Sale and Servicing Agreement...........................................  54
              Assignment.....................................................................  54
              Notices........................................................................  54
              Inspection and Audit Rights....................................................  55
              Governing Law..................................................................  56
              Amendment......................................................................  56
              Severability of Provisions.....................................................  57
              No Joint Venture...............................................................  58
              Recordation of Agreement; Counterparts.........................................  58
              Limitation of Liability of [owner trustee].....................................  58
              Nonpetition Covenants..........................................................  58
</TABLE>

                                      -3-
<PAGE>

                          SALE AND SERVICING AGREEMENT

     THIS SALE AND SERVICING AGREEMENT is made and entered into as of [ ], by
and among First Horizon Home Equity Loan Trust 200[ ]-[ ], a statutory business
trust formed under the laws of the State of [ ] (the "Issuer"), First Horizon
Asset Securities Inc., a Kansas corporation (the "Depositor"), First Tennessee
Bank National Association, a national banking association (the "Master Servicer"
or, in its capacity as seller, the "Seller") and [ ], a [state] corporation (in
its capacity as trustee under the Indenture referred to below, the "Trustee").

                             PRELIMINARY STATEMENT

     The Issuer was formed for the purpose of issuing asset backed notes [and
asset backed certificates] secured by mortgage collateral. The Issuer has
entered into a trust indenture, dated as of [ ] (the "Indenture"), between the
Issuer and the Trustee, pursuant to which the Issuer intends to issue its Home
Equity Loan Asset Backed Notes [and Home Equity Loan Asset Backed Certificates],
Series 200[  ]-[  ], in the aggregate initial principal amount of $[  ] (the
"Securities"). Pursuant to the Indenture, as security for the indebtedness
represented by such Securities, the Issuer is and will be pledging to the
Trustee, or granting the Trustee a security interest in, among other things,
certain Mortgage Loans and Additional Balances, its rights under this Agreement,
the Payment Account, the Collection Account [and certain Insurance Policies] (as
each such term is defined herein).

     The parties desire to enter into this Agreement to provide, among other
things, for the servicing of the Mortgage Loans by the Master Servicer. The
Master Servicer acknowledges that, in order further to secure the Securities,
the Issuer is and will be granting to the Trustee a security interest in, among
other things, its rights under this Agreement, and the Master Servicer agrees
that all covenants and agreements made by the Master Servicer herein with
respect to the Mortgage Loans shall also be for the benefit and security of the
Trustee and Holders of the Securities. For its services hereunder, the Master
Servicer will receive a Master Servicing Fee (as defined herein) with respect to
each Mortgage Loan serviced hereunder.

     Section 1.   Defined Terms.

     Except as otherwise specified or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Agreement, and the definitions of such terms are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms:

     Advance: The payment required to be made by the Master Servicer with
respect to any Distribution Date pursuant to Section 4, the amount of any such
payment being equal to the aggregate of payments of principal and interest (net
of the Master Servicing Fee and net of any net income in the case of any REO
Property) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date, less the

                                      -4-
<PAGE>

aggregate amount of any such delinquent payments that the Master Servicer has
determined would constitute a Nonrecoverable Advance if advanced.

     Additional Balance: With respect to any Mortgage Loan, any future Draw made
by the related Mortgagor pursuant to the related Loan Agreement after the Cut-
off Date in the case of an Initial Loan, or after the Deposit Date in the case
of an Additional Loan; provided, however, that if an Amortization Event occurs,
then any Draw after such Amortization Event shall not be acquired by the Issuer
and shall not be an Additional Balance.

     Additional Loans: All home equity line of credit loans sold by the
Depositor to the Issuer after the Closing Date pursuant to Section 2 of the Loan
Purchase Agreement.

     Administration Agreement:  The Administration Agreement dated as of
___________, 200_ among the Issuer, the Trustee and [______________], as
Administrator, as it may be amended from

time to time.

     Administrator:  [______________], as administrator under the Administration
Agreement or any successor Administrator appointed pursuant to the terms of the
Administration Agreement.

     Agreement:  Means this Sale and Servicing Agreement, as the same may be
amended or supplemented from time to time.

     Appraised Value: With respect to any Mortgaged Property, either (x) the
value set forth in an appraisal of such Mortgaged Property made to establish
compliance with the underwriting criteria then in effect in connection with the
later of the application for the Mortgage Loan secured by such Mortgaged
Property or any subsequent increase or decrease in the related Credit Limit or
to reduce or eliminate the amount of any primary insurance, or (y) if the sales
price of the Mortgaged Property is considered in accordance with the
underwriting criteria applicable to the Mortgage Loan, the lesser of (i) the
appraised value referred to in (x) above and (ii) the sales price of such
Mortgaged Property.

     Asset Balance: With respect to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any day, the related Cut-off Date Asset Balance or
Deposit Date Asset Balance, [plus (i) any Additional Balances in respect of such
Mortgage Loan conveyed to the Issuer,] minus [(ii)] all collections credited as
principal in respect of any such Mortgage Loan in accordance with the related
Loan Agreement (except for any such collections that are allocable to the
Excluded Amount) and applied in reduction of the Asset Balance thereof. For
purposes of this definition, a Liquidated Mortgage Loan shall be deemed to have
an Asset Balance equal to the Asset Balance of the related Mortgage Loan
immediately prior to the final recovery of all related Liquidation Proceeds and
an Asset Balance of zero thereafter.

     Assignment of Mortgage: With respect to any Mortgage, an assignment, notice
of transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction in which the related Mortgaged Property is located to
reflect the conveyance of the Mortgage, which

                                      -5-
<PAGE>

assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction.

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

     Basic Documents: The Trust Agreement, the Certificate of Trust, the
Indenture, the Loan Purchase Agreement, the Insurance Agreement, the
Administration Agreement, the Sale and Servicing Agreement, the Custodial
Agreement and the other documents and certificates delivered in connection with
any of the above.

     Billing Cycle:  With respect to any Mortgage Loan and Due Date, the
calendar month preceding such Due Date.

     Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in the State of New York, [_______________] or
[_____________] are required or authorized by law to be closed.

     [Certificateholder: The Person in whose name a Certificate is registered in
the Certificate Register except that, any Certificate registered in the name of
the Issuer, the Owner Trustee or the Trustee or any Affiliate of any of them
shall be deemed not to be outstanding and the registered holder will not be
considered a Certificateholder or a holder for purposes of giving any request,
demand, authorization, direction, notice, consent or waiver under the Indenture
or the Trust Agreement provided that, in determining whether the Trustee or the
Owner Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates that the
Trustee or the Owner Trustee knows to be so owned shall be so disregarded.
Owners of Certificates that have been pledged in good faith may be regarded as
Holders if the pledgee establishes to the satisfaction of the Trustee or the
Owner Trustee, as the case may be, the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Issuer, any other obligor upon
the Certificates or any Affiliate of any of the foregoing Persons.]

     [Certificates: The Home Equity Loan Asset Backed Certificates, Series 200[
]-[  ], each evidencing undivided beneficial interests in the Issuer and
executed by the Owner Trustee in substantially the form set forth in Exhibit A
to the Trust Agreement.]

     Class:  The Notes [or the Certificates, as the case may be].

     Closing Date:  ___________, 200[  ].

     Code:  The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

     Collateral:  The meaning specified in the Granting Clause of the Indenture.

                                      -6-
<PAGE>

     Collection Account:  Means the Eligible Account or Accounts established and
maintained by the Master Servicer in accordance with Section 3(h)(iii).

     Collection Period: With respect to any Mortgage Loan and Payment Date other
than the first Payment Date, the calendar month preceding any such Payment Date
and with respect to the first Payment Date, the period from _____________
through [___________].

     Combined Loan-to-Value Ratio: With respect to any Mortgage Loan and any
date, the percentage equivalent of a fraction, the numerator of which is the sum
of (i) the greater of (x) the Credit Limit and (y) the Cut-off Date Asset
Balance of such Mortgage Loan and (ii) the outstanding principal balance as of
the date of the origination of such Mortgage Loan (or any subsequent date as of
which such outstanding principal balance may be determined in connection with an
increase or decrease in the Credit Limit or to reduce the amount of primary
insurance for such Mortgage Loan) of any mortgage loan or mortgage loans that
are secured by liens on the Mortgaged Property that are senior or subordinate to
the Mortgage and the denominator of which is the Appraised Value of the related
Mortgaged Property.

     Corporate Trust Office: The designated office of the Trustee in the State
of ________ at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at ____________________________ (Attn:
___________________________, facsimile no. ________________, and which is the
address to which notices to and correspondence with the Trustee should be
directed.

     Credit Limit: With respect to any Mortgage Loan, the maximum Asset Balance
permitted under the terms of the related Loan Agreement.

     Custodial Agreement:  Any Custodial Agreement between the Custodian, the
Trustee, the Issuer and the Master Servicer relating to the custody of the
Mortgage Loans and the Related Documents.

     Custodian:  With respect to the Mortgage Loans, [______________], a
[_______________], and its successors and assigns.

     Cut-Off Date:  With respect to the Initial Loans ________, 200[ ].

     [DCR: Means Duff & Phelps Credit Rating Company, or any successor thereto.
If DCR is designated as a Rating Agency in the Indenture, for purposes of
Section 8(c) the address for notices to DCR shall be Duff & Phelps Credit Rating
Company, 55 E. Monroe Street, 35th Floor, Chicago, Illinois 60603, Attention:
MBS Monitoring, or such other address as DCR may hereafter furnish to the Issuer
and the Master Servicer.]

     Deleted Mortgage Loan: Has the meaning ascribed thereto in Section 5.

                                      -7-
<PAGE>

     [Deposit Date: The applicable date as of which any Additional Loan is sold
to the Issuer pursuant to the Loan Purchase Agreement.

     Deposit Date Asset Balance:  With respect to any Additional Loan, the Asset
Balance thereof as of the Deposit Date.]

     Depositor:  First Horizon Asset Securities Inc., or its successor in
interest.

     Determination Date: As to any Distribution Date, the ____ day of each month
or if such ____ day is not a Business Day the next preceding Business Day;
provided, however, that if such ____ day or such Business Day, whichever is
applicable, is less than two Business Days prior to the related Distribution
Date, the Determination Date shall be the first Business Day which is two
Business Days preceding such Distribution Date.

     Distribution Date: The ____ day of each calendar month after the initial
issuance of the Certificates, or if such ____ day is not a Business Day, the
next succeeding Business Day, commencing in ____________, 200[ ].

     Draw: With respect to any Mortgage Loan, a borrowing by the Mortgagor under
the related Loan Agreement.

     Due Date: With respect to the Mortgage Loans, the [__]th day of the month.

     Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the short-
term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest short-
term ratings of each Rating Agency at the time any amounts are held on deposit
therein, or (ii) an account or accounts in a depository institution or trust
company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Securityholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may bear interest,
and may include, if otherwise qualified under this definition, maintained with
the Trustee.

     Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Depositor for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the Trustee,
(i) have an outstanding principal balance, after deduction of the

                                      -8-
<PAGE>

principal portion of the monthly payment due in the month of substitution (or in
the case of a substitution of more than one Mortgage Loan for a Deleted Mortgage
Loan, an aggregate outstanding principal balance, after such deduction), not in
excess of the outstanding principal balance of the Deleted Mortgage Loan (the
amount of any shortfall to be deposited by the Seller in the Collection Account
in the month of substitution); (ii) have a Loan Rate not less than the Loan Rate
of the Deleted Mortgage Loan and not more than __% in excess of the Loan Rate of
such Deleted Mortgage Loan; (iii) have a Loan Rate based on the same index with
adjustments to such Loan Rate made on the same interest rate adjustment date as
that of the Deleted Mortgage Loan; (iv) have a Margin that is not less than the
Margin of the Deleted Mortgage Loan and not more than _____ basis points higher
than the Margin for the Deleted Mortgage Loan; (v) have a mortgage of the same
or higher level of priority as the mortgage relating to the Deleted Mortgage
Loan; (vi) have a remaining term to maturity not more than ____ months earlier
and not more than ____ months later than the remaining term to maturity of the
Deleted Mortgage Loan; (vii) comply with each representation and warranty as to
the Mortgage Loans set forth in the Loan Purchase Agreement (deemed to be made
as of the date of substitution); (viii) in general, have an original Combined
Loan-to-Value Ratio not greater than that of the Deleted Mortgage Loans; and
(ix) satisfy certain other conditions specified in the Purchase Agreement. To
the extent the Principal Balance of an Eligible Substitute Mortgage Loan is less
than the Principal Balance of the related Deleted Mortgage Loan, the Seller will
be required to make a deposit to the Collection Account equal to such
difference; and (x) not be __ days or more delinquent.

     Escrow Account:  Means the Eligible Account or Accounts established and
maintained pursuant to Section 3(i) hereof.

     Excess Proceeds: With respect to any Liquidated Mortgage Loan, the amount,
if any, by which the sum of any Liquidation Proceeds of such Mortgage Loan
received in the calendar month in which such Mortgage Loan became a Liquidated
Mortgage Loan, net of any amounts previously reimbursed to the Master Servicer
as Nonrecoverable Advance(s) with respect to such Mortgage Loan pursuant to
Section 3(k)(i)(C), exceeds (i) the unpaid principal balance of such Liquidated
Mortgage Loan as of the Due Date in the month in which such Mortgage Loan became
a Liquidated Mortgage Loan plus (ii) accrued interest at the Mortgage Rate from
the Due Date as to which interest was last paid or advanced (and not reimbursed)
to Securityholders up to the Due Date applicable to the Distribution Date
immediately following the calendar month during which such liquidation occurred.

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

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

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

                                      -9-
<PAGE>

     First Tennessee:  First Tennessee Bank National Association and its
successors and assigns.

     [Fitch: Fitch Investors Service, L.P., or any successor thereto. If Fitch
is designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 8(c) the address for notices to Fitch shall be Fitch Investors Service,
L.P., One State Street Plaza, New York, New York 10004, Attention:
_______________________________________, or such other address as Fitch may
hereafter furnish to the Depositor and the Master Servicer.]

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

     Gross Margin: With respect to any Mortgage Loan, the percentage set forth
as the "Gross Margin" for such Mortgage Loan on the Mortgage Loan Schedule, as
adjusted from time to time with respect to any [______________] Loan in
accordance with the terms of this Agreement.

     Holder:  Any of the Noteholders or Securityholders.

     Increased Senior Lien Limitation:  shall have the meaning set forth in
Section 3(a).

     Indenture: Means the trust indenture, dated as of the date hereof, between
the Issuer and the Trustee, as such Indenture may be amended or supplemented
from time to time in accordance with its terms.

     [Insurance Agreement:  The insurance and reimbursement agreement dated as
of ______________, 200[ ] among the Master Servicer, the Seller, the Depositor,
the Issuer and the Credit Enhancer, including any amendments and supplements
thereto.]

     Insurance Policy: Means, with respect to any Mortgage Loan, any insurance
policy, including all riders and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.

     Insurance Proceeds: Proceeds paid by any insurer pursuant to any insurance
policy covering a Mortgage Loan which are required to be remitted to the Master
Servicer, or amounts required to be paid by the Master Servicer pursuant to the
last sentence of Section [_____] of the Sale and Servicing Agreement, net of any
component thereof (i) covering any expenses incurred by or on behalf of the
Master Servicer in connection with obtaining such proceeds, (ii) that is applied
to the restoration or repair of the related Mortgaged Property, (iii) released
to the Mortgagor in accordance with the Master Servicer's normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to
such Mortgage Loan.

     Interest Period: With respect to any Payment Date other than the first
Payment Date, the period beginning on the preceding Payment Date and ending on
the day preceding such Payment

                                      -10-
<PAGE>

Date, and in the case of the first Payment Date, the period beginning on the
Closing Date and ending on the day preceding the first Payment Date.

     Issuer:  First Horizon Home Equity Loan Trust 200[ ]-[ ], a Delaware
business trust, or its successor in interest.

     Issuer Request: A written order or request signed in the name of the Issuer
by any one of its Authorized Officers and delivered to the Trustee.

     Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section [_____] of the Sale and
Servicing Agreement shall not be deemed to constitute a Lien.

     Lifetime Rate Cap: With respect to each Mortgage Loan with respect to which
the related Mortgage Note provides for a lifetime rate cap, the maximum Loan
Rate permitted over the life of such Mortgage Loan under the terms of such
Mortgage Note, as set forth on the Mortgage Loan Schedule and initially as set
forth on Exhibit A to the Sale and Servicing Agreement.

     Liquidated Mortgage Loan: With respect to any Payment Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified in the Sale and Servicing Agreement, as of
the end of the related Collection Period that substantially all Liquidation
Proceeds which it reasonably expects to recover with respect to the disposition
of the related REO have been recovered.

     Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) which
are incurred by or on behalf of the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
such expenses including, without limitation, legal fees and expenses, any
unreimbursed amount expended (including, without limitation, amounts advanced to
correct defaults on any mortgage loan which is senior to such Mortgage Loan and
amounts advanced to keep current or pay off a mortgage loan that is senior to
such Mortgage Loan) respecting the related Mortgage Loan and any related and
unreimbursed expenditures for real estate property taxes or for property
restoration, preservation or insurance against casualty loss or damage.

     Liquidation Loss Amounts: With respect to any Payment Date and any Mortgage
Loan that became a Liquidated Mortgage Loan during the related Collection
Period, the unrecovered portion of the related Asset Balance thereof at the end
of such Collection Period, after giving effect to the Net Liquidation Proceeds
applied in reduction of the Asset Balance.

                                      -11-
<PAGE>

     Liquidation Proceeds: Proceeds (including Insurance Proceeds [but not
including amounts drawn under the Credit Enhancement Instrument]) received in
connection with the liquidation of any Mortgage Loan or related REO, whether
through trustee's sale, foreclosure sale or otherwise.

     Loan Agreement: With respect to any Mortgage Loan, the credit line account
agreement executed by the related Mortgagor and any amendment or modification
thereof.

     Loan Purchase Agreement: The Loan Purchase Agreement, dated as of the Cut-
off Date, between the Seller, as seller, and the Depositor, as purchaser, with
respect to the Mortgage Loans.

     Loan Rate:  With respect to any Mortgage Loan and any day, the sum of the
Index Rate and the Margin.

     Loan-to-Value Ratio: With respect to any Mortgage Loan and as to any date
of determination, (i) the principal balance of such Mortgage Loan divided by
(ii) the Collateral Value of the related Mortgaged Property.

     Margin:  The [spread].

     Master Servicer: Means First Tennessee and its successors and assigns, in
its capacity as master servicer hereunder.

     Master Servicer Advance Date:  Means as to any Distribution Date, 12:30
p.m. Pacific time on the Business Day immediately preceding such Distribution
Date.

     Master Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an amount payable out of each full payment of interest received on such Mortgage
Loan and equal to one-twelfth of the Master Servicing Fee Rate multiplied by the
Stated Principal Balance of such Mortgage Loan as of the Due Date in the month
of such Distribution Date (prior to giving effect to any Scheduled Payments due
on such Mortgage Loan on such Due Date), subject to reduction as provided in
Section 5.

     Master Servicing Fee Rate:  Means with respect to each Mortgage Loan, [ ]%
per annum.

     [Moody's: Moody's Investors Service, Inc., or any successor thereto. If
Moody's is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 8(c) the address for notices to Moody's shall be Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
___________________________________, or such other address as Moody's may
hereafter furnish to the Depositor or the Master Servicer.]

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

                                      -12-
<PAGE>

     Mortgage File: The file containing the Related Documents pertaining to a
particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to the Loan Purchase Agreement or the Sale and
Servicing Agreement.

     Mortgage Loan Schedule:  With respect to any date, the schedule of Mortgage
Loans included in the Trust Estate on such date. The initial schedule of
Mortgage Loans as of the Cut-Off Date is the schedule set forth in Exhibit A of
the Sale and Servicing Agreement, which schedule sets forth as to each Mortgage
Loan (i) the Cut-Off Date Trust Balance, (ii) the Credit Limit, (iii) the Gross
Margin, (iv) the name of the Mortgagor, (v) the Lifetime Rate Cap, if any, (vi)
the loan number, (vii) an indication as to the applicable Mortgage Loan Group,
and (viii) the lien position of the related Mortgage. The Mortgage Loan Schedule
will be amended from time to time by annex to reflect Additional Loans.

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

     Mortgage File: The mortgage documents listed in Section 2(a)(i) hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.

     Mortgage Loans: At any time, collectively, all Initial Loans [and
Additional Loans, in each case including Additional Balances, if any, that have
been sold to the Depositor under the Loan Purchase Agreement,] in each case
together with the Related Documents, and that remain subject to the terms
thereof. Such schedule shall also set forth the total of the amounts described
under (iv) and (v) above for all of the Mortgage Loans.

     Mortgage Note: With respect to a Mortgage Loan, the Loan Agreement pursuant
to which the related mortgagor agrees to pay the indebtedness evidenced thereby
and secured by the related Mortgage as modified or amended.

     Mortgaged Property:  The underlying property, including real property and
improvements thereon, securing a Mortgage Loan.

     Mortgagor:  The obligor or obligors under a Loan Agreement.

     Net Liquidation Proceeds:  With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.

     Net Loan Rate:  With respect to any Mortgage Loan and any day, the related
Loan Rate less the related Servicing Fee Rate.

     Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Master Servicer that, in the good faith judgment of
the Master Servicer, will not be

                                      -13-
<PAGE>

ultimately recoverable by the Master Servicer from the related Mortgagor,
related Liquidation Proceeds or otherwise.

     Notes:  The Notes designated as the "Notes" in the Indenture.

     Noteholder or Holder:  Means the Person in whose name a Note is registered
in the Note Register (as defined in the Indenture).

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

     Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Master Servicer, including, in-house counsel, reasonably
acceptable to the Trustee; provided, however, that with respect to the
interpretation or application of the REMIC Provisions, such counsel must (i) in
fact be independent of the Depositor and the Master Servicer, (ii) not have any
direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and (iii) not be connected with the-Depositor or the Master
Servicer as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.

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

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

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

     Owner Trust Estate: The corpus of the Issuer created by the Trust Agreement
which consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account and/or the Payment Account allocable to the
Mortgage Loans in accordance with the Trust Agreement, property that secured a
Mortgage Loan and that has become REO, certain hazard insurance policies
maintained by the Mortgagors or by or on behalf of the Master Servicer in
respect of the Mortgage Loans, [the Credit Enhancement Instrument,] an
assignment of the Depositor's rights under the Loan Purchase Agreement and the
obligation of the Depositor to purchase Additional Balances under the Loan
Purchase Agreement and all proceeds of each of the foregoing.

     Owner Trustee: [______________], and its successors and assigns or any
successor owner trustee appointed pursuant to the terms of the Trust Agreement.

                                      -14-
<PAGE>

     Paying Agent:  Any paying agent or co-paying agent appointed pursuant to
Section 3.03 of the Indenture, which initially shall be [______________].

     Payment Account: The account established by the Trustee pursuant to Section
8.02 of the Indenture and Section [    ] of the Sale and Servicing Agreement.
The Payment Account shall be an Eligible Account.

     [Payment Account: The separate Eligible Account created and maintained by
the Trustee pursuant to Section 3(h) in the name of the Trustee for the benefit
of the Securityholders and designated "_________________________ in trust for
registered holders of Home Equity Loan Trust Asset Backed Certificates, Series
200[ ]-[ ]." Funds in the Payment Account shall be held in trust for the
Securityholders for the uses and purposes set forth in this Agreement.]

     Payment Account Deposit Date:  As to any Distribution Date, 12:30 p.m.
[Pacific] time on the Business Day immediately preceding such Distribution Date.

     Payment Date:  The [___] day of each month, or if such day is not a
Business Day, then the next Business Day.

     Percentage Interest: With respect to any Note, the percentage obtained by
dividing the Security Balance of such Note by the aggregate of the Security
Balances of all Notes of the same Class. [With respect to any Certificate, the
percentage obtained by dividing the denomination specified on such Certificate
by the Initial Principal Balance of the Certificates.]

     Permitted Investments: At any time, any one or more of the following
obligations and securities: (i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States; (ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency rating the related Series of
Securities, or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Securities by each such Rating
Agency; (iii) commercial or finance company paper (including, without
limitation, commercial paper issued by First Tennessee or any of its affiliates)
which is then receiving the highest commercial or finance company paper rating
of each such Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the Securities by each
such Rating Agency; (iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof and
subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long term unsecured debt
obligations of such depository institution or trust company (or in the case of
the principal depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company, but only
if Moody's Investors Service, Inc. ("Moody's") is not a Rating Agency) are then
rated one of the two highest long-term and the highest short-term ratings of
each such Rating Agency for such securities, or such lower ratings as will not

                                      -15-
<PAGE>

result in the downgrading or withdrawal of the rating then assigned to the
Securities by any such Rating Agency; (iv) demand or time deposits or
certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC; (v)
guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Securities by any such Rating Agency; (vi)
repurchase obligations with respect to any security described in clauses (i) and
(ii) above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iv) above; (vii) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold at
a discount issued by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such investment, have one of
the two highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of Moody's for
any such securities), or such lower rating as will not result in the downgrading
or withdrawal of the rating then assigned to the Securities by any such Rating
Agency, as evidenced by a signed writing delivered by each such Rating Agency;
and (viii) such other investments having a specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency as will not
result in the downgrading or withdrawal of the rating then assigned to the
Securities of such Series by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency; provided that no such instrument
shall be a Permitted Investment if such instrument evidences the right to
receive interest only payments with respect to the obligations underlying such
instrument.

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

     [Policy: The irrevocable and unconditional limited financial guaranty
insurance policy number [__________], dated as of the Closing Date, issued by
the Credit Enhancer to the Trustee for the benefit of the Noteholders and to the
Certificate Paying Agent as agent for the Issuer for the benefit of the
Securityholders.]

     Pool Balance:  With respect to any date, the aggregate of the Asset
Balances of all Mortgage Loans as of such date.

     Prepayment Period: As to any Distribution Date, the period from the __th
day of the calendar month preceding the month of such Distribution Date (or, in
the case of the first Distribution Date, from the Cut-off Date) through the __th
of the month of such Distribution Date.

     Principal Balance: With respect to any Payment Date, the Initial Principal
Balance thereof, reduced by all distributions of principal thereon prior to such
Payment Date.

                                      -16-
<PAGE>

     Principal Prepayment: Any payment of principal by a Mortgagor on a Mortgage
Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Master Servicer in accordance with
the terms of the related Mortgage Note.

     Principal Prepayment in Full:  Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Mortgage Loan.

     Prospectus Supplement:  Means the Prospectus Supplement dated [ ] relating
to the Notes.

     Purchase Price: With respect to any Mortgage Loan required to be purchased
by the Seller pursuant to Section 2(a)(ii) or 2(d)(iv) hereof or purchased at
the option of the Master Servicer pursuant to Section 3(n), an amount equal to
the sum of (i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase, and (ii) accrued interest thereon at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the purchaser
is the Master Servicer or (y) if the purchaser is the Seller and the Seller is
the Master Servicer) from the date through which interest was last paid by the
Mortgagor to the Due Date in the month in which the Purchase Price is to be
distributed to Securityholders.

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

     Rating Agency: Any nationally recognized statistical rating organization,
or its successor, that rated the Securities at the request of the Depositor at
the time of the initial issuance of the Securities. Initially, [________] or
[__________]. If such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Trustee. References herein to the
highest short term unsecured rating category of a Rating Agency shall mean [___]
or better in the case of [__________]and [___] or better in the case of [_____]
and in the case of any other Rating Agency shall mean such equivalent ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "[___]" in the case of [__________] and [_____] in the case of
[________] and in the case of any other Rating Agency, such equivalent rating.

     Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation,

                                      -17-
<PAGE>

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

     Relief Act:  The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.

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

     REO Property: A Mortgaged Property acquired by the Issuer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.

     Repurchase Price: With respect to any Mortgage Loan required to be
repurchased on any date pursuant to the Loan Purchase Agreement or purchased by
the Master Servicer pursuant to the Sale and Servicing Agreement, an amount
equal to the sum of (i) 100% of the Asset Balance thereof (without reduction for
any amounts charged off) and (ii) unpaid accrued interest at the Loan Rate on
the outstanding principal balance thereof from the Due Date to which interest
was last paid by the Mortgagor to the first day of the month following the month
of purchase. No portion of any Repurchase Price shall be included in the
Excluded Amount for any Payment Date.

     Request for Release: The Request for Release submitted by the Master
Servicer to the Trustee, substantially in the form of Exhibits C and D, as
appropriate.

     Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement.

     SAIF:  Means the Savings Association Insurance Fund, or any successor
thereto.

                                      -18-
<PAGE>

     [S&P: Means Standard & Poor's Ratings Group, a division of McGraw-Hill Inc.
If S&P is designated as a Rating Agency in the Indenture, for purposes of
Section 8(c) the address for notices to S&P shall be Standard & Poor's Ratings
Group, 26 Broadway, 15th Floor, New York, New York 10004, Attention: Mortgage
Surveillance Monitoring, or such other address as S&P may hereafter furnish to
the Issuer and the Master Servicer.]

     Securities Act:  The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

     Security:  Any of the [Certificates or] Notes.

     Securityholder or Holder:  Any Noteholder or any Certificateholder.

     Seller:  First Tennessee, and its successors and assigns.

     Servicer Advance:  Means the meaning ascribed to such term in Section
3(h)(iv).

     Servicing Account:  Means the separate Eligible Account or Accounts created
and maintained pursuant to Section 3(h)(ii).

     Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses incurred in the performance by the Master Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master Servicer pursuant to Section 3(n) and any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3(l).

     Servicing Default:  Means a servicing default as described under Section
7(a) of this Agreement.

     Servicing Fee: Means, as to each Mortgage Loan and any Distribution Date,
an amount equal to one month's interest at the applicable Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan.

     Servicing Fee Rate:  Means, with respect to any Mortgage Loan, the per
annum rate set forth in the Mortgage Loan Schedule for such Mortgage Loan.

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

                                      -19-
<PAGE>

     Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer pursuant to
Section 3(b).

     Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section [ ] of the Sale and Servicing Agreement.

     Subservicing Fee: With respect to any Mortgage Loan and any Collection
Period, the fee retained monthly by the Subservicer (or, in the case of a
nonsubserviced Mortgage Loan, by the Master Servicer) equal to the product of
(i) the Subservicing Fee Rate divided by 12 and (ii) the aggregate Asset Balance
of the Mortgage Loans as of the first day of such Collection Period.

     Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for a
Deleted Mortgage Loan which must, on the date of such substitution, as confirmed
in a Request for Release, substantially in the form of Exhibit C, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than the Stated Principal Balance of the Deleted Mortgage
Loan; (ii) be accruing interest at a rate no lower than and not more than 1% per
annum higher than, that of the Deleted Mortgage Loan; (iii) have a Loan-to-Value
Ratio no higher than that of the Deleted Mortgage Loan; (iv) have a remaining
term to maturity no greater than (and not more than one year less than that of)
the Deleted Mortgage Loan; and (v) comply with each representation and warranty
set forth in Section 2(d) hereof.

     Substitution Adjustment Amount:  The meaning ascribed to such term pursuant
to Section 2(d)(iv).

     Trust Agreement: Means the Trust Agreement, dated as of [ ], between the
Depositor and the Owner Trustee, as such Trust Agreement may be amended or
supplemented from time to time.

     Trustee: Shall mean [______________], and its successors and assigns or any
successor trustee appointed pursuant to the terms of the Indenture.

     Trustees: Shall mean the Trustee and the Owner Trustee.

     Trust Estate:  Shall have the meaning ascribed to such term in the
Indenture.

     UCC:  The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.

     Withdrawal Date:  Means the ____ day of each month, or if such day is not a
Business Day, the next preceding Business Day.

                                      -20-
<PAGE>

     Section 2. Conveyance of Mortgage Loans; Representations and Warranties.

     (a) Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances
Under Credit Line Agreements.

     The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey to the
Trust without recourse (subject to Sections 2(b) and 2(d) all of its right,
title and interest in and to (i) each Mortgage Loan, including its Asset Balance
(including all Additional Balances) and all collections in respect thereof
received on or after the Cut-off Date (excluding payments in respect of accrued
interest due prior to the Cut-off Date or due in the month of ____________);
(ii) property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Depositor's rights under the Loan
Purchase Agreement; (iv) [the Depositor's rights under the hazard insurance
policies,] (v) the Collection Account (excluding net earnings thereon); (vi) the
Policy, (vii) the Payment Account and (viii) all other assets included or to be
included in the Trust for the benefit of Securityholders; provided, however,
neither the Trustee nor the Trust assumes the obligation under any Credit Line
Agreement that provides for the funding of future advances to the Mortgagor
thereunder, and neither the Trust nor the Trustee shall be obligated or
permitted to fund any such future advances. Additional Balances shall be part of
the related Asset Balance and are hereby transferred to the Trust on the Closing
Date pursuant to this Section 2(a), and therefore part of the Trust property. In
addition, on or prior to the Closing Date, the Depositor shall cause the Credit
Enhancer to deliver the Policy to the Trustee for the benefit of the
Securityholders. The foregoing transfer, assignment, set-over and conveyance to
the Trust shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.

     The Depositor agrees to take or cause to be taken such actions and execute
such documents (including without limitation the filing of all necessary
continuation statements for the UCC-1 financing statements filed in the State of
__________ (which shall have been filed within 90 days of the Closing Date)
describing the Cut-off Date Asset Balances and Additional Balances and naming
the Depositor as debtor and the Trustee as secured party and any amendments to
UCC-1 financing statements required to reflect a change in the name or corporate
structure of the Depositor or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Depositor (within 90
days of any event necessitating such filing) as are necessary to perfect and
protect the Securityholders' and Credit Enhancer's interests in each Cut-off
Date Asset Balance and Additional Balances and the proceeds thereof (other than
maintaining possession by the Trustee of the Mortgage Loans and the Mortgage
Files, which possession will, subject to the terms hereof, be maintained by the
Master Servicer as custodian and bailee of the Trustee).

     In connection with such transfer and assignment by the Depositor, the
Master Servicer acknowledges that it is holding as custodian and bailee for the
Trustee the following documents or instruments (the "Related Documents") with
respect to each Mortgage Loan:

     (A) the original Mortgage Note endorsed in blank;

                                      -21-
<PAGE>

     (B) an original Assignment of Mortgage in blank in recordable form;

     (C) the original recorded Mortgage or, if, in connection with any Mortgage
Loan, the original recorded Mortgage with evidence of recording thereon cannot
be delivered on or prior to the Closing Date because of a delay caused by the
public recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, the Seller, at the
direction of the Depositor, shall deliver or cause to be delivered to the
Custodian, as agent for the Trustee, a true and correct copy of such Mortgage,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Depositor stating that such original Mortgage
has been dispatched to the appropriate public recording official or (ii) in the
case of an original Mortgage that has been lost, a certificate by the
appropriate county recording office where such Mortgage is recorded;

     (D) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the Depositor or,
if any such original Intervening Assignment has not been returned from the
applicable recording office or has been lost, a true and correct copy thereof,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Seller stating that such original Intervening
Assignment has been dispatched to the appropriate public recording official for
recordation or (ii) in the case of an original Intervening Assignment that has
been lost, a certificate by the appropriate county recording office where such
Mortgage is recorded;

     (E) either (1) for each Mortgage Loan with a Credit Limit in excess of
$_________, a title policy or (2) for all other Mortgage Loans, either a title
policy, a title search or guaranty of title with respect to the related
Mortgaged Property;

     (F) the original of any guaranty executed in connection with the Mortgage
Note;

     (G) the original of each assumption, modification, consolidation or
substitution agreement, if any, relating to the Mortgage Loan; and

     (H) any security agreement, chattel mortgage or equivalent instrument
executed in connection with the Mortgage; provided, however, that as to any
Mortgage Loan, if (a) as evidenced by an Opinion of Counsel delivered to and in
form and substance satisfactory to the Trustee and the Credit Enhancer, (x) an
optical image or other representation of the related documents specified in
clauses (i) through (viii) above are enforceable in the relevant jurisdictions
to the same extent as the original of such document and (y) such optical image
or other representation does not impair the ability of an owner of such Mortgage
Loan to transfer its interest in such Mortgage Loan, and (b) the retention of
such documents in such format will not result in a reduction in the then current
rating of the Notes [or Certificates], without regard to the Policy, such
optical image or other representation may be held by the Master Servicer, as
custodian for the Trustee or assignee in lieu of the physical documents
specified above.

                                      -22-
<PAGE>

     The Seller hereby confirms to the Trustee that it has caused the portions
of its electronic ledgers relating to the Mortgage Loans to be clearly and
unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trust at the direction of the Depositor. The Master Servicer hereby
confirms to the Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that such Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with the terms hereof.

     The parties hereto intend that the transaction set forth herein be a sale
by the Depositor to the Trust of all the Depositor's right, title and interest
in and to the Mortgage Loans and other property described above. In the event
the transaction set forth herein is deemed not to be a sale, the Depositor
hereby grants to the Trust a security interest in all of the Depositor's right,
title and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all monies due or to become due on the Mortgage Loans and all
proceeds of any thereof; and this Agreement shall constitute a security
agreement under applicable law.

     Except as hereinafter provided, the Master Servicer shall be entitled to
maintain possession of all of the foregoing documents and instruments and shall
not be required to deliver any of them to the Trustee or the Owner Trustee. In
the event, however, that possession of any of such documents or instruments is
required by any Person (including any such Trustee) acting as successor servicer
pursuant to Section 6(d) or 7(b) in order to carry out the duties of Master
Servicer hereunder, then such successor shall be entitled to request delivery,
at the expense of the Master Servicer, of such documents or instruments by the
Master Servicer and to retain such documents or instruments for servicing
purposes; provided that the Trustee or such servicers shall maintain such
documents at such offices as may be required by any regulatory body having
jurisdiction over such Mortgage Loans.

     The Master Servicer's right to maintain possession of the documents
enumerated above shall continue so long as the long term unsecured debt of First
Tennessee is assigned ratings of at least "____" by __________________ and
"____" by _______________. At such time as the condition specified in the
preceding sentence is not satisfied, as promptly as practicable but in no event
more than __ days in the case of clause (i) below and __ days in the case of
clause (ii) below following the occurrence of such event (a "Delivery Event"),
the Master Servicer shall, at its expense, (i) either (x) record an assignment
of Mortgage in favor of the Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other records
or (y) deliver to the Trustee the assignment of such Mortgage in favor of the
Trustee in form for recordation, together with an Opinion of Counsel addressed
to the Trustee and the Credit Enhancer to the effect that recording is not
required to protect the Trustee's right, title and interest in and to the
related Mortgage Loan or, in case a court should recharacterize the sale of the
Mortgage Loans as a financing, to perfect a first priority security interest in
favor of the Trustee in the related Mortgage Loan, which Opinion of Counsel also
shall be reasonably acceptable to each of the Rating Agencies (as evidenced in
writing) and the Credit Enhancer, and (ii) unless an Opinion of Counsel,
reasonably acceptable to the Trustee, the Rating Agencies (as evidenced in
writing) and the Credit Enhancer,

                                      -23-
<PAGE>

is delivered to the Trustee and the Credit Enhancer to the effect that delivery
of the Mortgage Files is not necessary to protect the Trustee's right, title and
interest in the related Mortgage Loans; provided that the lack of delivery will
not result in a reduction in the then current rating of the "Notes [or
Certificates]", without regard to the Policy, deliver the related Mortgage Files
to the Trustee or to a custodian located in the State of [California] appointed
by the Trustee and acceptable to the Rating Agencies and the Credit Enhancer to
be held by the Custodian on behalf of the Trustees in trust, upon the terms
herein set forth, for the use and benefit of all present and future
Securityholders and the Custodian on behalf of the Trustee shall retain
possession thereof except to the extent the Master Servicer requires any
Mortgage Files for normal servicing as contemplated by Section _____. The
Trustee is hereby appointed as the attorney-in-fact of the Master Servicer with
the power to prepare, execute and record Assignments of Mortgages in the event
that the Master Servicer fails to do so on a timely basis as provided in this
paragraph.

     Within 90 days following delivery, if any, of the Mortgage Files to the
Trustee pursuant to the preceding paragraph, the Trustee shall review each such
Mortgage File to ascertain that all required documents set forth in this Section
2(a) have been executed and received, and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule and in so doing the
Trustee may rely on the purported due execution and genuineness of any signature
thereon. If within such 90-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule
or, if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall promptly
upon the conclusion of its review notify the Issuer and the Credit Enhancer, and
the Seller shall have a period of 90 days after such notice within which to
correct or cure any such defect.

     The Trustee shall have no responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2(a). In reviewing any Mortgage
File pursuant to this Section, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, whether any Person executing any document is authorized
to do so or whether any signature thereon is genuine, but shall only be required
to determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.

     (b) Acceptance by Trustee; Retransfer of Mortgage Loans.

     The Trustee hereby acknowledges its receipt of the Policy and the Mortgage
Loans, and declares that the Trustee holds and will hold such instrument, and to
the extent that any documents are delivered to it pursuant to Section 2(a), will
hold such documents, and all amounts received by it thereunder and hereunder, in
trust, upon the terms herein set forth, for the use and benefit of all present
and future Securityholders and the Credit Enhancer. If the time to cure any
defect in respect

                                      -24-
<PAGE>

of any Mortgage Loan of which the Trustee has notified the Issuer and the
Depositor following the review pursuant to Section 2(a) has expired or if at any
time any loss is suffered by the Trustee on behalf of the Securityholders or the
Credit Enhancer, in respect of any Mortgage Loan as a result of (i) a defect in
any document constituting a part of its Mortgage File or (ii) an Assignment of
Mortgage to the Trustee not having been recorded as required by Section 2(a),
then on the next succeeding Business Day upon satisfaction of the applicable
conditions described herein, all right, title and interest of the Trust in and
to such Mortgage Loan shall be deemed to be retransferred, reassigned and
otherwise reconveyed, without recourse, representation or warranty, to the
Depositor on such Business Day and the Asset Balance of such Mortgage Loan shall
be deducted from the Pool Balance; provided, however, that interest accrued on
the Asset Balance of such Mortgage Loan to the end of the related Collection
Period shall be the property of the Trust. Upon receipt of any Eligible
Substitute Mortgage Loan or then as promptly as practicable following such
deemed transfer, the Trustee shall execute such documents and instruments of
transfer presented by the Seller, in each case without recourse, representation
or warranty, and take such other actions as shall reasonably be requested by the
Seller to effect such transfer by the Trust of such Defective Mortgage Loan
pursuant to this Section.

     The Master Servicer, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall amend the
Mortgage Loan Schedule and make appropriate entries in its general account
records to reflect such transfer. The Master Servicer shall, following such
retransfer, appropriately mark its records to indicate that it is no longer
servicing such Mortgage Loan on behalf of the Trust. The Seller, promptly
following such transfer, shall appropriately mark its electronic ledger and make
appropriate entries in its general account records to reflect such transfer.

     As to any Eligible Substitute Mortgage Loan or Loans, the Seller shall, if
a Delivery Event has occurred, deliver to the Trustee with respect to such
Eligible Substitute Mortgage Loan or Loans such documents and agreements as are
required to be held by the Trustee in accordance with Section 2(a). For any
Collection Period during which the Seller substitutes one or more Eligible
Substitute Mortgage Loans, the Master Servicer shall determine the Substitution
Adjustment Deposit Amount which amount shall be deposited by the Seller in the
Collection Account at the time of substitution. All amounts received in respect
of the Eligible Substitute Mortgage Loan or Loans during the Collection Period
in which the circumstances giving rise to such substitution occur shall not be a
part of the Issuer and shall not be deposited by the Master Servicer in the
Collection Account. All amounts received by the Master Servicer during the
Collection Period in which the circumstances giving rise to such substitution
occur in respect of any Defective Mortgage Loan so removed by the Issuer shall
be deposited by the Master Servicer in the Collection Account. Upon such
substitution, the Eligible Substitute Mortgage Loan or Loans shall be subject to
the terms of this Agreement in all respects, and the Seller shall be deemed to
have made with respect to such Eligible Substitute Mortgage Loan or Loans, as of
the date of substitution, the covenants, representations and warranties set
forth in Section 2(d). The procedures applied by the Seller in selecting each
Eligible Substitute Mortgage Loan shall not be materially adverse to the
interests of the Trustees, the Securityholders and the Credit Enhancer.

                                      -25-
<PAGE>

     (c) Documents, Records and Funds in Possession of Master Servicer to be
Held for Trustee.

          (i)  Notwithstanding any other provisions of this Agreement, the
               Master Servicer shall transmit to the Trustee as required by this
               Agreement all documents and instruments in respect of a Mortgage
               Loan coming into the possession of the Master Servicer from time
               to time and shall account fully to the Trustees for any funds
               received by the Master Servicer or which otherwise are collected
               by the Master Servicer as Liquidation Proceeds or Insurance
               Proceeds in respect of any Mortgage Loan. All Mortgage Files and
               funds collected or held by, or under the control of, the Master
               Servicer in respect of any Mortgage Loans, whether from the
               collection of principal and interest payments or from Liquidation
               Proceeds, including but not limited to, any funds on deposit in
               the Collection Account, shall be held by the Master Servicer for
               and on behalf of the Trustees and shall be and remain the sole
               and exclusive property of the Trustees, subject to the applicable
               provisions of this Agreement. The Master Servicer also agrees
               that it shall not create, incur or subject any Mortgage File or
               any funds that are deposited in the Collection Account, Payment
               Account or any Escrow Account, or any funds that otherwise are or
               may become due or payable to the Trustee for the benefit of the
               Securityholders, to any claim, lien, security interest, judgment,
               levy, writ of attachment or other encumbrance, or assert by legal
               action or otherwise any claim or right of setoff against any
               Mortgage File or any funds collected on, or in connection with, a
               Mortgage Loan, except, however, that the Master Servicer shall be
               entitled to set off against and deduct from any such funds any
               amounts that are properly due and payable to the Master Servicer
               under this Agreement.

          (ii  The Master Servicer hereby acknowledges that concurrently with
               the execution of this Agreement, the Trustee has acquired and
               holds a security interest in the Trustee Mortgage Files and in
               all Mortgage Loans represented by such Mortgage Files and in all
               funds now or hereafter held by, or under the control of, the
               Master Servicer that are collected by the Master Servicer in
               connection with the Mortgage Loans, whether as Scheduled
               Payments, as Principal Prepayments, or as Liquidation Proceeds or
               Insurance Proceeds, and in all proceeds of the foregoing and
               proceeds of proceeds (but excluding any Master Servicing Fees,
               Servicing Fees, Trustee Fees and any other amounts or
               reimbursements to which the Master Servicer is entitled under
               this Agreement). The Master Servicer agrees that so long as the
               Mortgage Loans are assigned to the Trustee, all Master Servicer
               Mortgage Files and Trustee Mortgage Files (and any documents or
               instruments constituting a part of such files), and such funds
               which come into the possession or custody of, or which are
               subject to the control of, the Master Servicer shall be held by
               the Master

                                      -26-
<PAGE>

                 Servicer for and on behalf of the Trustee as the Trustee's
                 agent and bailee for purposes of perfecting the Trustee's
                 security interest therein, as provided by Section 9-305 of the
                 Uniform Commercial Code of the state in which such property is
                 located, or by other laws, as specified in Section _____ of the
                 Indenture. The Master Servicer hereby accepts such agency and
                 acknowledges that the Trustee, as secured party, will be deemed
                 to have possession at all times of all Mortgage Files and any
                 other documents or instruments constituting a part of such
                 files, such funds and other items for purposes of Section 9-305
                 of the Uniform Commercial Code of the state in which such
                 property is held by the Master Servicer.

     (d) Representations, Warranties and Covenants of the Seller and the Master
Servicer.

          (i)    First Tennessee, in its capacities as Seller and Master
                 Servicer, hereby makes the representations and warranties set
                 forth in Schedule II hereto, and by this reference incorporated
                 herein, to the Depositor and the Trustee, as of the Closing
                 Date, or if so specified therein, as of the Cut-off Date.

          (ii)   The Seller, in its capacity as Seller, hereby makes the
                 representations and warranties set forth in Schedule III
                 hereto, and by this reference incorporated herein, to the
                 Depositor and the Trustee, as of the Closing Date, or if so
                 specified therein, as of the Cut-off Date.

          (iii)  Upon discovery by any of the parties hereto of a breach of a
                 representation or warranty made pursuant to Section 2(d)(ii)
                 that materially and adversely affects the interests of the
                 Securityholders in any Mortgage Loan, the party discovering
                 such breach shall give prompt notice thereof to the other
                 parties. The Seller hereby covenants that within 90 days of the
                 earlier of its discovery or its receipt of written notice from
                 any party of a breach of any representation or warranty made
                 pursuant to Section 2(d)(ii) which materially and adversely
                 affects the interests of the Securityholders in any Mortgage
                 Loan, it shall cure such breach in all material respects, and
                 if such breach is not so cured, shall, (i) if such 90-day
                 period expires prior to the second anniversary of the Closing
                 Date, remove such Mortgage Loan (a "Deleted Mortgage Loan")
                 from the Issuer and substitute in its place a Substitute
                 Mortgage Loan, in the manner and subject to the conditions set
                 forth in this Section; or (ii) repurchase the affected Mortgage
                 Loan or Mortgage Loans from the Trustee at the Purchase Price
                 in the manner set forth below; provided, however, that any such
                 substitution pursuant to (i) above shall not be effected prior
                 to the delivery to the Trustees of the Opinion of Counsel
                 required by [Section ____ {delivery of opinion}] hereof, if
                 any, and any such substitution pursuant to (i) above shall not
                 be effected prior to the additional delivery to the Trustee of
                 a Request for Release substantially in the form of

                                      -27-
<PAGE>

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

     With respect to any Substitute Mortgage Loan or Loans, the Seller shall
deliver to the Trustee for the benefit of the Securityholders the Mortgage Note,
the Mortgage, the related assignment of the Mortgage, and such other documents
and agreements as are required by Section 2(a), with the Mortgage Note endorsed
and the Mortgage assigned as required by Section 2(a). No substitution is
permitted to be made in any calendar month after the Determination Date for such
month. Scheduled Payments due with respect to Substitute Mortgage Loans in the
month of substitution shall not be part of the Issuer and will be retained by
the Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Securityholders will include the monthly payment
due on any Deleted Mortgage Loan for such month and thereafter the Seller shall
be entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Master Servicer shall amend the Mortgage Loan Schedule for the benefit
of the Securityholders to reflect the removal of such Deleted Mortgage Loan and
the substitution of the Substitute Mortgage Loan or Loans and the Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustees. Upon
such substitution, the Substitute Mortgage Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the Seller shall be deemed to have
made with respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2(d)(ii) with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Collection Account of the amount required to be deposited therein
in connection with such substitution as described in the following paragraph,
the Trustee shall release the Mortgage File held for the benefit of the
Securityholders relating to such Deleted Mortgage Loan to the Seller and shall
execute and deliver at the Seller's direction such instruments of transfer or
assignment prepared by the Seller, in each case without recourse, as shall be
necessary to vest title in the Seller, or its designee, the Trustee's interest
in any Deleted Mortgage Loan substituted for pursuant to this Section 2(d).

     For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (after
application of the scheduled principal portion of the monthly payments due in
the month of

                                      -28-
<PAGE>

substitution). The amount of such shortage (the "Substitution Adjustment
Amount") plus an amount equal to the aggregate of any unreimbursed Advances with
respect to such Deleted Mortgage Loans shall be deposited in the Collection
Account by the Seller on or before the Payment Account Deposit Date for the
Distribution Date in the month succeeding the calendar month during which the
related Mortgage Loan became required to be purchased or replaced hereunder.

     In the event that the Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Collection Account pursuant to
Section 3(h) on or before the Payment Account Deposit Date for the Distribution
Date in the month following the month during which the Seller became obligated
hereunder to repurchase or replace such Mortgage Loan and upon such deposit of
the Purchase Price, the delivery of the Opinion of Counsel required by Section
2(d) and receipt of a Request for Release in the form of Exhibit D hereto, the
Trustee shall release the related Mortgage File held for the benefit of the
Securityholders to such Person, and the Trustee shall execute and deliver at
such Person's direction such instruments of transfer or assignment prepared by
such Person, in each case without recourse, as shall be necessary to transfer
title from the Trustee. It is understood and agreed that the obligation under
this Agreement of any Person to cure, repurchase or replace any Mortgage Loan as
to which a breach has occurred and is continuing shall constitute the sole
remedy against such Persons respecting such breach available to Securityholders,
the Depositor or the Trustees on their behalf.

     The representations and warranties made pursuant to this Section 2(d) shall
survive delivery of the respective Mortgage Files to the Trustee for the benefit
of the Securityholders.

     (e)  Covenants of the Master Servicer.

     The Master Servicer hereby covenants to the Depositor and the Trustees as
follows:

          (i)  the Master Servicer shall comply in the performance of its
               obligations under this Agreement with all reasonable rules and
               requirements of the insurer under each Required Insurance Policy;
               and

          (ii) no written information, certificate of an officer, statement
               furnished in writing or written report delivered to the
               Depositor, any affiliate of the Depositor or any Trustee and
               prepared by the Master Servicer pursuant to this Agreement will
               contain any untrue statement of a material fact or omit to state
               a material fact necessary to make such information, certificate,
               statement or report not misleading.

     (f)  Covenants of the Depositor.

     The Depositor hereby covenants that, except for the transfer under the
Indenture, the Depositor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Mortgage Loan, whether now existing or hereafter created, or any

                                      -29-
<PAGE>

interest therein; the Depositor will notify the Trustee of the existence of any
Lien on any Mortgage Loan immediately upon discovery thereof; and the Depositor
will defend the right, title and interest of the Trust in, to and under the
Mortgage Loans, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Depositor; provided, however, that
nothing in this Section 2(e) shall prevent or be deemed to prohibit the
Depositor from suffering to exist upon any of the Mortgage Loans any Liens for
municipal or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the
Depositor shall currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate reserves
with respect thereto.

     Section 3.  Administration and Servicing of Mortgage Loans.

     The parties agree that, subject to the provisions of Section 7 hereof, the
Master Servicer shall service the Mortgage Loans in the manner and on the terms
and conditions set forth below:

     (a) Master Servicer to Service Mortgage Loans.

          (i)  The Master Servicer shall service and administer the Mortgage
               Loans in a manner consistent with the terms of this Agreement and
               with general industry practice and shall have full power and
               authority, acting alone or through a subservicer, to do any and
               all things in connection with such servicing and administration
               which it may deem necessary or desirable, it being understood,
               however, that the Master Servicer shall at all times remain
               responsible to the Trustees, the Securityholders and the Credit
               Enhancer for the performance of its duties and obligations
               hereunder in accordance with the terms hereof. Any amounts
               received by any subservicer in respect of a Mortgage Loan shall
               be deemed to have been received by the Master Servicer whether or
               not actually received by it. Without limiting the generality of
               the foregoing, the Master Servicer shall continue, and is hereby
               authorized and empowered by the Trustee, to execute and deliver,
               on behalf of itself, the Securityholders and the Trustee, or any
               of them, any and all instruments of satisfaction or cancellation,
               or of partial or full release or discharge and all other
               comparable instruments, with respect to the Mortgage Loans and
               with respect to the Mortgaged Properties. The Trustee shall, upon
               the written request of a Servicing Officer, furnish the Master
               Servicer with any powers of attorney and other documents
               necessary or appropriate to enable the Master Servicer to carry
               out its servicing and administrative duties hereunder. The Master
               Servicer in such capacity may also consent to the placing of a
               lien senior to that of any Mortgage on the related Mortgaged
               Property, provided that (x) such Mortgage succeeded to a first
               lien position after the related Mortgage Loan was conveyed to the
               Trust and, immediately following the placement of such senior
               lien, such Mortgage is in a second lien position and the
               outstanding principal amount of the mortgage loan secured by such

                                      -30-
<PAGE>

               subsequent senior lien is no greater than the outstanding
               principal amount of the senior mortgage loan secured by the
               Mortgaged Property as of the date the related Mortgage Loan was
               originated; or (y) the Mortgage relating to such Mortgage Loan
               was in a second lien position as of the Cut-off Date and the new
               senior lien secures a mortgage loan that refinances an existing
               first mortgage loan and the outstanding principal amount of the
               replacement first mortgage loan immediately following such
               refinancing is not greater than the outstanding principal amount
               of such existing first mortgage loan at the date of origination
               of such Mortgage Loan; provided, further, that such senior lien
               does not secure a note that provides for negative amortization.
               Notwithstanding the foregoing, the Master Servicer can consent to
               the placing of liens senior to that of a Mortgage on the related
               Mortgaged Property which have a principal balance in excess of
               the principal balance of the senior lien it replaces on Mortgage
               Loans having in the aggregate Asset Balances not in excess of
               ___% of the Cut-off Date Pool Balance; provided, however, that,
               with respect to Mortgage Loans which as of the Cut-off Date had
               Combined Loan-to-Value Ratios in excess of ___%, the aggregate
               Asset Balance of such Mortgage Loans with respect to which the
               senior lien may be so modified shall not exceed _____% of the
               Cut-off Date Pool Balance (such ___% and _____% herein referred
               to as the "Increased Senior Lien Limitation"). Any such increase
               to the principal balance of the senior lien shall not exceed the
               greater of $_______ and _____% of the principal balance of the
               senior lien prior to such increase.

     The Master Servicer may also, without prior approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limits on Mortgage Loans
provided that (i) new appraisals are obtained and the Combined Loan-to-Value
Ratios of the Mortgage Loans after giving effect to such increase are less than
or equal to the Combined Loan-to-Value Ratios or the Mortgage Loans as of the
Cut-off Date and (ii) such increases are consistent with the Master Servicer's
underwriting policies. In addition, the Master Servicer may increase the Credit
Limits on Mortgage Loans having aggregate balances of up to ____% of the
aggregate Cut-off Date Pool Balance, without obtaining new appraisals provided
that (i) the increase in the Credit Limit does not cause the Combined Loan-to-
Value Ratios of the Mortgage Loans to exceed _____% and (ii) the increase is
consistent with the Master Servicer's underwriting policies.

     Furthermore, the Master Servicer may, without prior approval from the
Rating Agencies and the Credit Enhancer solicit Mortgagors for a reduction in
Loan Rates; provided that the Master Servicer can only reduce such Loan Rates on
up to ____% of the Mortgage Loans by Cut-off Date Pool Balance. Any such
solicitations shall not result in a reduction in the weighted average Gross
Margin of the Mortgage Loans in the pool by more than ____ basis points taking
into account any such prior reductions.

                                      -31-
<PAGE>

     In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the Mortgagor provided that such changes (i) do
not materially and adversely affect the interests of Securityholders or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Trustee and the Credit Enhancer.

     In addition to the foregoing, the Master Servicer may solicit Mortgagors to
change any other terms of the related Mortgage Loans, provided that such changes
(i) do not materially and adversely affect the interest of Securityholders or
the Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Trustee and the Credit Enhancer. Nothing herein shall limit the right of
the Master Servicer to solicit Mortgagors with respect to new loans (including
mortgage loans) that are not Mortgage Loans.

     The relationship of the Master Servicer (and of any successor to the Master
Servicer as servicer under this Agreement) to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.

          (ii)  In the event that the rights, duties and obligations of the
                Master Servicer are terminated hereunder, any successor to the
                Master Servicer in its sole discretion may, to the extent
                permitted by applicable law, terminate the existing subservicer
                arrangements with any subservicer or assume the terminated
                Master Servicer's rights under such subservicing arrangements
                which termination or assumption will not violate the terms of
                such arrangements.

     (b)  Subservicing; Enforcement of the Obligations of Servicers.

          (i)   The Master Servicer may arrange for the subservicing of any
                Mortgage Loan by a Subservicer pursuant to a subservicing
                agreement; provided, however, that such subservicing arrangement
                and the terms of the related subservicing agreement must provide
                for the servicing of such Mortgage Loans in a manner consistent
                with the servicing arrangements contemplated hereunder. Unless
                the context otherwise requires, references in this Agreement to
                actions taken or to be taken by the Master Servicer in servicing
                the Mortgage Loans include actions taken or to be taken by a
                Subservicer on behalf of the Master Servicer. Notwithstanding
                the provisions of any subservicing agreement, any of the
                provisions of this Agreement relating to agreements or
                arrangements between the Master Servicer and a Subservicer or
                reference to actions taken through a Subservicer or otherwise,
                the Master Servicer shall remain obligated and liable to the
                Depositor, the Trustees and the Securityholders for the
                servicing and administration of the Mortgage Loans in accordance
                with the provisions of this Agreement without diminution of such
                obligation or

                                      -32-
<PAGE>

                liability by virtue of such subservicing agreements or
                arrangements or by virtue of indemnification from the
                Subservicer and to the same extent and under the same terms and
                conditions as if the Master Servicer alone were servicing and
                administering the Mortgage Loans. All actions of each
                Subservicer performed pursuant to the related subservicing
                agreement shall be performed as an agent of the Master Servicer
                with the same force and effect as if performed directly by the
                Master Servicer.

          (ii)  For purposes of this Agreement, the Master Servicer shall be
                deemed to have received any collections, recoveries or payments
                with respect to the Mortgage Loans that are received by a
                Subservicer regardless of whether such payments are remitted by
                the Subservicer to the Master Servicer.

          (iii) As part of its servicing activities hereunder, the Master
                Servicer, for the benefit of the Trustees and the
                Securityholders, shall use its best reasonable efforts to
                enforce the obligations of each Subservicer under the related
                Subservicing Agreement, to the extent that the non-performance
                of any such obligation would have material and adverse effect on
                a Mortgage Loan. Such enforcement, including, without
                limitation, the legal prosecution of claims, termination of
                Subservicing Agreements and the pursuit of other appropriate
                remedies, shall be in such form and carried out to such an
                extent and at such time as the Master Servicer, in its good
                faith business judgment, would require were it the owner of the
                related Mortgage Loans. The Master Servicer shall pay the costs
                of such enforcement at its own expense, and shall be reimbursed
                therefor only (i) from a general recovery resulting from such
                enforcement to the extent, if any, that such recovery exceeds
                all amounts due in respect of the related Mortgage Loan or (ii)
                from a specific recovery of costs, expenses or attorneys fees
                against the party against whom such enforcement is directed.

     (c)  Successor Servicers.

     The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loan or enter into a Subservicing
Agreement with a successor Subservicer which will be bound by the terms of the
related Subservicing Agreement. If the Master Subservicer or any affiliate of
the Master Servicer acts as Subservicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Subservicer enters into a Subservicing Agreement with a successor
Subservicer, the Master Servicer shall use reasonable efforts to have the
successor Subservicer assume liability for the representations and warranties
made by the terminated Subservicer in respect of the related Mortgage Loans and,
in the

                                      -33-
<PAGE>

event of any such assumption by the successor Subservicer, the Master Servicer
may, in the exercise of its business judgment, release the terminated Servicer
from liability for such representations and warranties.

     (d) Liability of the Master Servicer.

     Notwithstanding any Subservicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer or
a Subservicer or references to actions taken through a Subservicer or otherwise,
the Master Servicer shall remain obligated and liable to the Trustees and
Securityholders for the servicing and administering of the Pledged Mortgages in
accordance with the provisions of Section 3(a) without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Pledged Mortgages. The Master
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.

     (e) No Contractual Relationship Between Subservicers and the Trustees.

     Any Servicing Agreement that may be entered into and any other transactions
or services relating to the Mortgage Loans involving a Servicer in its capacity
as such and not as an originator shall be deemed to be between the Subservicer
and the Master Servicer alone and the Trustees and Securityholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer in its capacity as such except as
set forth in Section 3(g).

     (f) Rights of the Depositor and the Trustees in Respect of the Master
Servicer.

     The Depositor may, but is not obligated to, enforce the obligations of the
Master Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
and in connection with any such defaulted obligation to exercise the related
rights of the Master Servicer hereunder; provided that the Master Servicer shall
not be relieved of any of its obligations hereunder by virtue of such
performance by the Depositor or its designee. Neither the Trustees nor the
Depositor shall have any responsibility or liability for any action or failure
to act by the Master Servicer nor shall the Trustees or the Depositor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.

     (g) Trustee to Act as Master Servicer.

     In the event that the Master Servicer shall for any reason no longer be the
Master Servicer hereunder (including by reason of an Event of Default), the
Trustee or its successor shall thereupon assume all of the rights and
obligations of the Master Servicer hereunder arising thereafter (except

                                      -34-
<PAGE>

that the Trustee shall not be (i) liable for losses of the Master Servicer
pursuant to Section 3(l) hereof or any acts or omissions of the predecessor
Master Servicer hereunder), (ii) obligated to make Advances if it is prohibited
from doing so by applicable law, (iii) obligated to effectuate repurchases or
substitutions of Mortgage Loans hereunder including, but not limited to,
repurchases or substitutions of Mortgage Loans pursuant to Section 2(c)(ii) or
2(d) hereof, (iv) responsible for expenses of the Master Servicer pursuant to
Section 2(d) or (v) deemed to have made any representations and warranties of
the Master Servicer hereunder). Any such assumption shall be subject to Section
7(b) hereof. If the Master Servicer shall for any reason no longer be the Master
Servicer (including by reason of any Event of Default), the Trustee or its
successor shall succeed to any rights and obligations of the Master Servicer
under each subservicing agreement.

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

     (h) Collection of Mortgage Loan Payments; Collection Accounts; Payment
Account.

          (i)  The Master Servicer shall make reasonable efforts in accordance
               with the customary and usual standards of practice of prudent
               mortgage servicers to collect all payments called for under the
               terms and provisions of the Mortgage Loans to the extent such
               procedures shall be consistent with this Agreement and the terms
               and provisions of any related Required Insurance Policy.
               Consistent with the foregoing, the Master Servicer may in its
               discretion (i) waive any late payment charge or any prepayment
               charge or penalty interest in connection with the prepayment of a
               Mortgage Loan and (ii) extend the due dates for payments due on a
               Mortgage Note for a period not greater than 180 days; provided,
               however, that the Master Servicer cannot extend the maturity of
               any such Mortgage Loan past the date on which the final payment
               is due on the latest maturing Mortgage Loan as of the Cut-off
               Date. In the event of any such arrangement, the Master Servicer
               shall make Advances on the related Mortgage Loan in accordance
               with the provisions of Section 4 during the scheduled period in
               accordance with the amortization schedule of such Mortgage Loan
               without modification thereof by reason of such arrangements. The
               Master Servicer shall not be required to institute or join in
               litigation with respect to collection of any payment (whether
               under a Mortgage, Mortgage Note or otherwise or against any
               public or governmental authority with respect to a taking or
               condemnation) if it reasonably believes that enforcing the
               provision of the Mortgage or other instrument pursuant to which
               such payment is required is prohibited by applicable law.

                                      -35-
<PAGE>

          (ii)  The Master Servicer shall establish and maintain a Collection
                Account into which the Master Servicer shall deposit or cause to
                be deposited on a daily basis within one Business Day of
                receipt, except as otherwise specifically provided herein, the
                following payments and collections remitted by Subservicers or
                received by it in respect of Mortgage Loans subsequent to the
                Cut-off Date (other than in respect of principal and interest
                due on the Mortgage Loans on or before the Cut-off Date) and the
                following amounts required to be deposited hereunder:

                (A) all collections on account of principal on the Mortgage
                    Loans;

                (B) all collections on account of interest on the Mortgage
                    Loans, net of the related Master Servicing Fee;

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

                (D) any amount required to be deposited by the Master Servicer
                    pursuant to Section 3(h)(v) in connection with any losses on
                    Permitted Investments;

                (E) any amounts required to be deposited by the Master Servicer
                    pursuant to Section 3(l)(ii), 3(l)(iv), and in respect of
                    net monthly rental income from REO Property pursuant to
                    Section 3(n) hereof;

                (F) all Substitution Adjustment Amounts;

                (G) all Advances made by the Master Servicer pursuant to Section
                    4; and

                (H) any other amounts required to be deposited hereunder.

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

                                      -36-
<PAGE>

in the Collection Account shall be held in trust for the Securityholders until
withdrawn in accordance with Section 3(k).

          (iii)  The Trustee shall establish and maintain, on behalf of the
                 Securityholders, the Payment Account. The Trustee shall,
                 promptly upon receipt, deposit in the Payment Account and
                 retain therein the following:

                 (A) the aggregate amount remitted by the Master Servicer to the
                     Trustee pursuant to Section 3(k)(i)(I);

                 (B) any amount deposited by the Master Servicer pursuant to
                     Section 3(h)(iv) in connection with any losses on Permitted
                     Investments; and

                 (C) any other amounts deposited hereunder which are required to
                     be deposited in the Payment Account.

     In the event that the Master Servicer shall remit any amount not required
to be remitted, it may at any time direct the Trustee to withdraw such amount
from the Payment Account, any provision herein to the contrary notwithstanding.
Such direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Payment Account.
All funds deposited in the Payment Account shall be held by the Trustee in trust
for the Securityholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3(k). In no event shall the Trustee incur
liability for withdrawals from the Payment Account at the direction of the
Master Servicer.

          (iv)  Each institution at which the Collection Account or the Payment
                Account is maintained shall invest the funds therein as directed
                in writing by the Master Servicer in Permitted Investments,
                which shall mature not later than (i) in the case of the
                Collection Account, the second Business Day next preceding the
                related Payment Account Deposit Date (except that if such
                Permitted Investment is an obligation of the institution that
                maintains such account, then such Permitted Investment shall
                mature not later than the Business Day next preceding such
                Payment Account Deposit Date) and (ii) in the case of the
                Payment Account, the Business Day next preceding the
                Distribution Date (except that if such Permitted Investment is
                an obligation of the institution that maintains such fund or
                account, then such Permitted Investment shall mature not later
                than such Distribution Date) and, in each case, shall not be
                sold or disposed of prior to its maturity. All such Permitted
                Investments shall be made in the name of the Trustee, for the
                benefit of the Securityholders. All income and gain net of any
                losses realized from any such investment of funds on deposit in
                the Collection Account or the Payment Account shall be for the
                benefit of the Master Servicer as servicing compensation and
                shall be remitted to it monthly as provided herein. The amount
                of any realized losses

                                      -37-
<PAGE>

                in the Collection Account or the Payment Account incurred in any
                such account in respect of any such investments shall promptly
                be deposited by the Master Servicer in the Collection Account or
                paid to the Trustee for deposit into the Payment Account, as
                applicable. The Trustee in its fiduciary capacity shall not be
                liable for the amount of any loss incurred in respect of any
                investment or lack of investment of funds held in the Collection
                Account or the Payment Account and made in accordance with this
                Section 3(h).

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

     (i)  Collection of Taxes, Assessments and Similar Items; Escrow Accounts.

          (i)   To the extent required by the related Mortgage Note and not
                violative of current law, the Master Servicer shall establish
                and maintain one or more accounts (each, an "Escrow Account")
                and deposit and retain therein all collections from the
                Mortgagors (or advances by the Master Servicer) for the payment
                of taxes, assessments, hazard insurance premiums or comparable
                items for the account of the Mortgagors. Nothing herein shall
                require the Master Servicer to compel a Mortgagor to establish
                an Escrow Account in violation of applicable law.

          (ii)  Withdrawals of amounts so collected from the Escrow Accounts may
                be made only to effect timely payment of taxes, assessments,
                hazard insurance premiums, condominium or PUD association dues,
                or comparable items, to reimburse the Master Servicer out of
                related collections for any payments made pursuant to Sections
                3(a) hereof (with respect to taxes and assessments and insurance
                premiums) and 3(l) hereof (with respect to hazard insurance), to
                refund to any Mortgagors any sums determined to be overages, to
                pay interest, if required by law or the terms of the related
                Mortgage or Mortgage Note, to Mortgagors on balances in the
                Escrow Account or to clear and terminate the Escrow Account at
                the termination of this Agreement in accordance with Section
                8(a) hereof. The Escrow Accounts shall not be a part of the
                Issuer.

          (iii) The Master Servicer shall advance any payments referred to in
                Section 3(i)(i) that are not timely paid by the Mortgagors on
                the date when the tax, premium or other cost for which such
                payment is intended is due, but the Master Servicer shall be
                required so to advance only to the extent that such advances,

                                      -38-
<PAGE>

               in the good faith judgment of the Master Servicer, will be
               recoverable by the Master Servicer out of Insurance Proceeds,
               Liquidation Proceeds or otherwise.

     (j) Access to Certain Documentation and Information Regarding the Mortgage
Loans.

     The Master Servicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation regarding the Mortgage Loans and all
accounts, insurance information and other matters relating to this Agreement,
such access being afforded without charge, but only upon reasonable request and
during normal business hours at the office designated by the Master Servicer.

     Upon reasonable advance notice in writing, the Master Servicer will provide
to each Securityholder which is a savings and loan association, bank or
insurance company certain reports and reasonable access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Securityholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Securityholder for actual expenses incurred by the Master Servicer in providing
such reports and access.

     (k) Permitted Withdrawals from the Note Account.

         (i)  The Master Servicer may from time to time make withdrawals from
              the Collection Account for the following purposes:

              (A) to pay to the Master Servicer (to the extent not previously
                  retained by the Master Servicer) the servicing compensation to
                  which it is entitled pursuant to Section 5, and to pay to the
                  Master Servicer, as additional servicing compensation,
                  earnings on or investment income with respect to funds in or
                  credited to the Collection Account;

              (B) to reimburse the Master Servicer for unreimbursed Advances
                  made by it, such right of reimbursement pursuant to this
                  subclause (ii) being limited to amounts received on the
                  Mortgage Loan(s) in respect of which any such Advance was
                  made;

              (C) to reimburse the Master Servicer for any Nonrecoverable
                  Advance previously made;

              (D) to reimburse the Master Servicer for Insured Expenses from the
                  related Insurance Proceeds;

                                      -39-
<PAGE>

              (E) to reimburse the Master Servicer for (a) unreimbursed
                  Servicing Advances, the Master Servicer's right to
                  reimbursement pursuant to this clause (a) with respect to any
                  Mortgage Loan being limited to amounts received on such
                  Mortgage Loan(s) which represent late recoveries of the
                  payments for which such advances were made pursuant to Section
                  3(a) or Section 3(i) and (b) for unpaid Master Servicing Fees
                  as provided in Section 3(n) hereof;

              (F) to pay to the purchaser, with respect to each Mortgage Loan or
                  property acquired in respect thereof that has been purchased
                  pursuant to Section 2(c)(ii), 2(d) or 3(n), all amounts
                  received thereon after the date of such purchase;

              (G) to reimburse the Seller, the Master Servicer or the Depositor
                  for expenses incurred by any of them and reimbursable pursuant
                  to Section 6(c) hereof;

              (H) to withdraw any amount deposited in the Collection Account and
                  not required to be deposited therein;

              (I) on or prior to the Payment Account Deposit Date, to withdraw
                  an amount equal to the related Available Funds and the
                  Trustees Fees for such Distribution Date and remit such amount
                  to the Trustee for deposit in the Payment Account; and

              (J) to clear and terminate the Collection Account upon termination
                  of this Agreement pursuant to Section 8 (a) hereof.

     The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to such subclauses (i), (ii),
(iv), (v) and (vi). Prior to making any withdrawal from the Collection Account
pursuant to subclause (iii), the Master Servicer shall deliver to the Trustee an
Officer's Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.

          (ii)  The Trustee shall withdraw funds from the Payment Account for
                distributions to Securityholders in the manner specified in this
                Agreement (and to withhold from the amounts so withdrawn, the
                amount of any taxes that it is authorized to withhold pursuant
                to the last paragraph of [Section 8.11/trustee]). In addition,
                the Trustee may from time to time make withdrawals from the
                Payment Account for the following purposes:

                                      -40-
<PAGE>

               (A)  to pay to itself the Trustee Fee for the related
                    Distribution Date;

               (B)  to pay to the Master Servicer as additional servicing
                    compensation earnings on or investment income with respect
                    to funds in the Payment Account;

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

               (D)  to clear and terminate the Payment Account upon termination
                    of the Agreement pursuant to 8(a) hereof.

     (l)  Maintenance of Hazard Insurance; Maintenance of Primary Insurance
Policies.

          (i)  The Master Servicer shall cause to be maintained, for each
               Mortgage Loan, hazard insurance with extended coverage in an
               amount that is at least equal to the lesser of (i) the maximum
               insurable value of the improvements securing such Mortgage Loan
               or (ii) the greater of (y) the outstanding principal balance of
               the Mortgage Loan and (z) an amount such that the proceeds of
               such policy shall be sufficient to prevent the Mortgagor and/or
               the mortgagee from becoming a co-insurer. Each such policy of
               standard hazard insurance shall contain, or have an accompanying
               endorsement that contains, a standard mortgagee clause. Any
               amounts collected by the Master Servicer under any such policies
               (other than the amounts to be applied to the restoration or
               repair of the related Mortgaged Property or amounts released to
               the Mortgagor in accordance with the Master Servicer's normal
               servicing procedures) shall be deposited in the Collection
               Account. Any cost incurred by the Master Servicer in maintaining
               any such insurance shall not, for the purpose of calculating
               monthly distributions to the Securityholders or remittances to
               the Trustee for their benefit, be added to the principal balance
               of the Mortgage Loan, notwithstanding that the terms of the
               Mortgage Loan so permit. Such costs shall be recoverable by the
               Master Servicer out of late payments by the related Mortgagor or
               out of Liquidation Proceeds to the extent permitted by Section
               3(k) hereof. It is understood and agreed that no earthquake or
               other additional insurance is to be required of any Mortgagor or
               maintained on property acquired in respect of a Mortgage other
               than pursuant to such applicable laws and regulations as shall at
               any time be in force and as shall require such additional
               insurance. If the Mortgaged Property is located at the time of
               origination of the Mortgage Loan in a federally designated
               special flood hazard area and such area is participating in the
               national flood insurance program, the Master Servicer shall cause
               flood insurance to be maintained with respect to such Mortgage
               Loan. Such flood insurance shall be in an amount equal to the
               least of (i) the original principal

                                      -41-
<PAGE>

                 balance of the related Mortgage Loan, (ii) the replacement
                 value of the improvements which are part of such Mortgaged
                 Property, and (iii) the maximum amount of such insurance
                 available for the related Mortgaged Property under the national
                 flood insurance program.

          (ii)   In the event that the Master Servicer shall obtain and maintain
                 a blanket policy insuring against hazard losses on all of the
                 Mortgage Loans, it shall conclusively be deemed to have
                 satisfied its obligations as set forth in the first sentence of
                 this Section, it being understood and agreed that such policy
                 may contain a deductible clause on terms substantially
                 equivalent to those commercially available and maintained by
                 comparable servicers. If such policy contains a deductible
                 clause, the Master Servicer shall, in the event that there
                 shall not have been maintained on the related Mortgaged
                 Property a policy complying with the first sentence of this
                 Section, and there shall have been a loss that would have been
                 covered by such policy, deposit in the Collection Account the
                 amount not otherwise payable under the blanket policy because
                 of such deductible clause. In connection with its activities as
                 Master Servicer of the Mortgage Loans, the Master Servicer
                 agrees to present, on behalf of itself, the Depositor, and the
                 Trustee for the benefit of the Securityholders, claims under
                 any such blanket policy.

          (iii)  The Master Servicer shall not take any action which would
                 result in non-coverage under any applicable Primary Insurance
                 Policy of any loss which, but for the actions of the Master
                 Servicer, would have been covered thereunder. The Master
                 Servicer shall not cancel or refuse to renew any such Primary
                 Insurance Policy that is in effect at the date of the initial
                 issuance of the Notes [and the Certificates] and is required to
                 be kept in force hereunder unless the replacement Primary
                 Insurance Policy for such canceled or non-renewed policy is
                 maintained with a Qualified Insurer. The Master Servicer shall
                 not be required to maintain any Primary Insurance Policy with
                 respect to any Mortgage Loan with a Loan-to-Value Ratio less
                 than or equal to 80% as of any date of determination or, based
                 on a new appraisal, the principal balance of such Mortgage Loan
                 represents 80% or less of the new appraised value. The Master
                 Servicer agrees to effect the timely payment of the premiums on
                 each Primary Insurance Policy, and such costs not otherwise
                 recoverable shall be recoverable by the Master Servicer from
                 the related liquidation proceeds.

          (iv)   In connection with its activities as Master Servicer of the
                 Mortgage Loans, the Master Servicer agrees to present on behalf
                 of itself, the Trustee and Securityholders, claims to the
                 insurer under any Primary Insurance Policies and, in this
                 regard, to take such reasonable action as shall be necessary to
                 permit recovery under any Primary Insurance Policies respecting
                 defaulted

                                      -42-
<PAGE>

                 Mortgage Loans. Any amounts collected by the Master Servicer
                 under any Primary Insurance Policies shall be deposited in the
                 Collection Account.

     (m)  Enforcement of Due-On-Sale Clauses; Assumption Agreements.

          (i)    Except as otherwise provided in this Section, when any property
                 subject to a Mortgage has been conveyed by the Mortgagor, the
                 Master Servicer shall to the extent that it has knowledge of
                 such conveyance, enforce any due-on-sale clause contained in
                 any Mortgage Note or Mortgage, to the extent permitted under
                 applicable law and governmental regulations, but only to the
                 extent that such enforcement will not adversely affect or
                 jeopardize coverage under any Required Insurance Policy.
                 Notwithstanding the foregoing, the Master Servicer is not
                 required to exercise such rights with respect to a Mortgage
                 Loan if the Person to whom the related Mortgaged Property has
                 been conveyed or is proposed to be conveyed satisfies the terms
                 and conditions contained in the Mortgage Note and Mortgage
                 related thereto and the consent of the mortgagee under such
                 Mortgage Note or Mortgage is not otherwise so required under
                 such Mortgage Note or Mortgage as a condition to such transfer.
                 In the event that the Master Servicer is prohibited by law from
                 enforcing any such due-on-sale clause, or if coverage under any
                 Required Insurance Policy would be adversely affected, or if
                 nonenforcement is otherwise permitted hereunder, the Master
                 Servicer is authorized, subject to Section 3(m)(ii), to take or
                 enter into an assumption and modification agreement from or
                 with the person to whom such property has been or is about to
                 be conveyed, pursuant to which such person becomes liable under
                 the Mortgage Note and, unless prohibited by applicable state
                 law, the Mortgagor remains liable thereon, provided that the
                 Mortgage Loan shall continue to be covered (if-so covered
                 before the Master Servicer enters such agreement) by the
                 applicable Required Insurance Policies. The Master Servicer,
                 subject to Section 3(m)(ii), is also authorized with the prior
                 approval of the insurers under any Required Insurance Policies
                 to enter into a substitution of liability agreement with such
                 Person, pursuant to which the original Mortgagor is released
                 from liability and such Person is substituted as Mortgagor and
                 becomes liable under the Mortgage Note. Notwithstanding the
                 foregoing, the Master Servicer shall not be deemed to be in
                 default under this Section by reason of any transfer or
                 assumption which the Master Servicer reasonably believes it is
                 restricted by law from preventing, for any reason whatsoever.

          (ii)   Subject to the Master Servicer's duty to enforce any due-on-
                 sale clause to the extent set forth in Section 3(m)(i) hereof,
                 in any case in which a Mortgaged Property has been conveyed to
                 a Person by a Mortgagor, and such Person is to enter into an
                 assumption agreement or modification agreement or

                                      -43-
<PAGE>

                 supplement to the Mortgage Note or Mortgage that requires the
                 signature of the Trustee, or if an instrument of release signed
                 by the Trustee is required releasing the Mortgagor from
                 liability on the Mortgage Loan, the Master Servicer shall
                 prepare and deliver or cause to be prepared and delivered to
                 the Trustee for signature and shall direct, in writing, the
                 Trustee to execute the assumption agreement with the Person to
                 whom the Mortgaged Property is to be conveyed and such
                 modification agreement or supplement to the Mortgage Note or
                 Mortgage or other instruments as are reasonable or necessary to
                 carry out the terms of the Mortgage Note or Mortgage or
                 otherwise to comply with any applicable laws regarding
                 assumptions or the transfer of the Mortgaged Property to such
                 Person. In connection with any such assumption, no material
                 term of the Mortgage Note may be changed. In addition, the
                 substitute Mortgagor and the Mortgaged Property must be
                 acceptable to the Master Servicer in accordance with its
                 underwriting standards as then in effect. Together with each
                 such substitution, assumption or other agreement or instrument
                 delivered to the Trustee for execution by it, the Master
                 Servicer shall deliver an Officer's Certificate signed by a
                 Servicing Officer stating that the requirements of this
                 subsection have been met in connection therewith. The Master
                 Servicer shall notify the Trustee that any such substitution or
                 assumption agreement has been completed by forwarding to the
                 Trustee the original of such substitution or assumption
                 agreement, which in the case of the original shall be added to
                 the related Mortgage File and shall, for all purposes, be
                 considered a part of such Mortgage File to the same extent as
                 all other documents and instruments constituting a part
                 thereof. Any fee collected by the Master Servicer for entering
                 into an assumption or substitution of liability agreement will
                 be retained by the Master Servicer as additional servicing
                 compensation.

     (n)  Realization Upon Defaulted Mortgage Loans; Repurchase of Certain
Mortgage Loans.

     The Master Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
meet the requirements of the insurer under any Required Insurance Policy;
provided, however, that the Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; provided,

                                      -44-
<PAGE>

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

     With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Securityholders, or its
nominee, on behalf of the Securityholders. The Trustee's name shall be placed on
the title to such REO Property solely as the Trustee under the Indenture and not
in its individual capacity. The Master Servicer shall ensure that the title to
such REO Property references the Indenture and the Trustee's capacity
thereunder. Pursuant to its efforts to sell such REO Property, the Master
Servicer shall either itself or through an agent selected by the Master Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the
Securityholders, rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Securityholders for the period prior to
the sale of such REO Property. The Master Servicer shall prepare for and deliver
to the Trustee a statement with respect to each REO Property that has been
rented showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later
than the close of business on each Determination Date. [The Master Servicer
shall perform the tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals and any tax reporting required by Section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing such tax and information returns as may be
required, in the form required, and delivering the same to the Trustee for
filing.]

     In the event that the Issuer acquires any Mortgaged Property as aforesaid
or otherwise in connection with a default or imminent default on a Mortgage
Loan, the Master Servicer shall dispose of such Mortgaged Property prior to two
years after its acquisition by the Issuer unless the Trustee shall have been
supplied with an Opinion of Counsel to the effect that the holding by the Issuer
of such Mortgaged Property subsequent to such two-year period will not result in
the imposition of taxes on "prohibited transactions" of the REMIC defined in
Section 860F of the Code or cause the REMIC to fail to qualify as a REMIC at any
time that any Notes [or Certificates] are outstanding, in which case the Issuer
may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel). Notwithstanding any other provision of
this Agreement, no Mortgaged Property acquired by the Issuer shall be rented (or
allowed to continue to be rented) or otherwise used for the production of income
by or on behalf of the Issuer in such a manner or

                                      -45-
<PAGE>

pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (ii) subject the REMIC to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged Property under
Section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
to indemnify and hold harmless the Issuer with respect to the imposition of any
such taxes.

     The decision of the Master Servicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Master Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. The income earned from the management of any REO Properties,
net of reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Advances and Servicing Advances, shall be
applied to the payment of principal of and interest on the related defaulted
Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in this
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the Collection Account. To the extent
the net income received during any calendar month is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a partial prepayment of principal of the related
Mortgage Loan.

     The proceeds from any liquidation of a Mortgage Loan, as well as any income
from an REO Property, will be applied in the following order of priority: first,
to reimburse the Master Servicer for any related unreimbursed Servicing Advances
and Master Servicing Fees; second, to reimburse the Master Servicer for any
unreimbursed Advances; third, to reimburse the Collection Account for any
Nonrecoverable Advances (or portions thereof) that were previously withdrawn by
the Master Servicer pursuant to Section 3(k)(i)(C) that related to such Mortgage
Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been
made for such amount or any such Advance has been reimbursed) on the Mortgage
Loan or related REO Property, at the Adjusted Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fifth, as a recovery of principal of the Mortgage Loan. Excess Proceeds, if any,
from the liquidation of a Liquidated Mortgage Loan will be retained by the
Master Servicer as additional servicing compensation pursuant to Section 5.

     The Master Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Issuer any Mortgage Loan which is 91 days
or more delinquent at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account and the Trustee, upon receipt of a certificate from the Master Servicer
in the form of Exhibit D hereto, shall release or cause to be released to the
purchaser of such Mortgage Loan the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the purchaser of
such Mortgage Loan, in each case without recourse, as shall be necessary to vest
in the purchaser of such Mortgage Loan any Mortgage Loan released pursuant
hereto and the purchaser of such Mortgage Loan shall succeed to all the
Trustee's right, title and interest in and to such Mortgage Loan and all
security and documents related thereto. Such

                                      -46-
<PAGE>

assignment shall be an assignment outright and not for security. The purchaser
of such Mortgage Loan shall thereupon own such Mortgage Loan, and all security
and documents, free of any further obligation to the Trustee or the
Securityholders with respect thereto.

     (o)  Access to Certain Documentation.

     The Master Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of subordinated Notes [or
Certificates] and the examiners and supervisory agents of the OTS, the FDIC and
such other authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices designated by the Master Servicer.
Nothing in this Section shall limit the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section.

     (p)  Annual Statement as to Compliance.

     The Master Servicer shall deliver to the Depositor and the Trustees on or
before 120 days after the end of the Master Servicer's fiscal year, commencing
with its 200[ ] fiscal year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of the Master Servicer during the
preceding calendar year and of the performance of the Master Servicer under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.

     (q)  Annual Independent Public Accountants' Servicing Statement; Financial
Statements.

     On or before 120 days after the end of the Master Servicer's fiscal year,
commencing with its 200[ ] fiscal year, the Master Servicer at its expense shall
cause a nationally or regionally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Trustees and the
Depositor to the effect that-such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
of mortgage loans under pooling and servicing agreements substantially similar
to this Agreement (such statement to have attached thereto a schedule setting
forth the pooling and servicing agreements covered thereby) and that, on the
basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and FHLMC, such servicing has been conducted in
compliance with such pooling and servicing agreements except for such

                                      -47-
<PAGE>

significant exceptions or errors in records that, in the opinion of such firm,
the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FNMA and FHLMC requires it to report. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC
(rendered within one year of such statement) of independent public accountants
with respect to the related Subservicer. Copies of such statement shall be
provided by the Trustee to any Securityholder upon request at the Master
Servicer's expense, provided such statement is delivered by the Master Servicer
to the Trustee.

     (r)  Errors and Omissions Insurance; Fidelity Bonds.

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

     (s)  Master Servicer Monthly Data.

     On or before noon California time on the Determination Date, the Master
Servicer shall provide by modem to the Trustee with respect to the Mortgage
Loans, an electronic data file (accompanied by a hardcopy report) in a format
which is mutually agreed upon by the Master Servicer and the Trustee. The
Trustee shall be under no duty to recalculate, verify or recompute the
information provided to it by the Master Servicer hereunder.

     Section 4.  Advances.

     The Master Servicer shall determine on or before each Master Servicer
Advance Date whether it is required to make an Advance pursuant to the
definition thereof. If the Master Servicer determines it is required to make an
Advance, it shall, on or before the Master Servicer Advance Date, deposit into
the Collection Account an amount equal to the Advance. The Master Servicer shall
be entitled to be reimbursed from the Collection Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3(k). The
obligation to make Advances with respect to any Mortgage Loan shall continue if
such Mortgage Loan has been foreclosed or otherwise terminated and the related
Mortgaged Property has not been liquidated.

                                      -48-
<PAGE>

     Section 5.  Servicing Compensation.

     As compensation for its activities hereunder, the Master Servicer shall be
entitled to retain or withdraw from the Collection Account an amount equal to
the Master Servicing Fee for each Mortgage Loan, provided that the aggregate
Master Servicing Fee with respect to any Distribution Date shall be reduced (i)
by an amount equal to the aggregate of the Prepayment Interest Shortfalls, if
any, with respect to such Distribution Date, but not below an amount equal to
one-half of the aggregate Master Servicing Fee for such Distribution Date before
reduction thereof in respect of such Prepayment Interest Shortfalls, and (ii)
with respect to the first Distribution Date, an amount equal to any amount to be
deposited into the Payment Account by the Depositor pursuant to Section 2(a)(i)
and not so deposited.

     Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments shall be retained by the Master Servicer to the extent not required
to be deposited in the Collection Account pursuant to Section 3(h) hereof. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its master servicing activities hereunder (including payment of
any premiums for hazard insurance and any Primary Insurance Policy and
maintenance of the other forms of insurance coverage required by this Agreement)
and shall not be entitled to reimbursement therefor except as specifically
provided in this Agreement.

     Section 6.  The Master Servicer.

     (a)  Respective Liabilities of the Depositor and the Master Servicer.

     The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it herein.

     (b)  Merger or Consolidation of the Depositor or the Master Servicer.

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

     Any Person into which the Depositor or the Master Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Master Servicer shall be a party, or any person succeeding
to the business of the Depositor or the Master Servicer, shall be the successor
of the Depositor or the Master Servicer, as the case may be, hereunder, without
the execution or filing of any paper or any further act on the part of any of
the

                                      -49-
<PAGE>

parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Master Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
FNMA or FHLMC.

     (c)  Limitation on Liability of the Depositor, the Seller, Master Servicer
and Others.

     None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Securityholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Seller, the Master Servicer
or any such Person against any breach of representations or warranties made by
it herein or protect the Depositor, the Seller, the Master Servicer or any such
Person from any liability which would otherwise be imposed by reasons of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Depositor,
the Seller, the Master Servicer and any director, officer, employee or agent of
the Depositor, the Seller or the Master Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer shall be indemnified by the Issuer and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement, the Notes [or the
Certificates], other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the Seller
or the Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor, the Seller or the Master Servicer
may in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and interests of the Trustees and the Securityholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Issuer, and the
Depositor, the Seller and the Master Servicer shall be entitled to be reimbursed
therefor out of the Collection Account.

     (d)  Limitation on Resignation of the Master Servicer.

     The Master Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor servicer and receipt by
the Trustee of a letter from each Rating Agency that such a resignation and
appointment will not result in a downgrading of the rating of any of the
Certificates, or (b) upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination under clause (b)
permitting the resignation

                                      -50-
<PAGE>

of the Master Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor master servicer shall have assumed the Master
Servicer's responsibilities, duties, liabilities and obligations hereunder.

     Section7.   Default.

     (a)  Events of Default.

     "Event of Default," wherever used herein, means any one of the following
events:

          (i)    any failure by the Master Servicer to deposit in the Collection
                 Account or remit to the Trustee any payment (other than a
                 payment required to be made under Section 4 hereof) required to
                 be made with respect to any Class of Certificates under the
                 terms of this Agreement, which failure shall continue
                 unremedied for five days after the date upon which written
                 notice of such failure shall have been given to the Master
                 Servicer by the Trustee or the Depositor or to the Master
                 Servicer, the Depositor and the Trustee by the Holders of Notes
                 [or Certificates] of such Class evidencing not less than 25% of
                 the total distributions allocated to such Class; or

          (ii)   any failure by the Master Servicer duly to observe or perform
                 in any material respect any other of the covenants or
                 agreements on the part of the Master Servicer contained in this
                 Agreement, which failure shall continue unremedied for a period
                 of thirty days after the date on which written notice of such
                 failure shall have been given to the Master Servicer by the
                 Trustee or the Depositor, or to the Master Servicer, the
                 Depositor and the Trustee by the Holders of Notes [or
                 Certificates] of any Class evidencing not less than 25% of the
                 total distributions allocated to such Class; or

          (iii)  a decree or order of a court or agency or supervisory authority
                 having jurisdiction in the premises for the appointment of a
                 receiver or liquidator in any insolvency, readjustment of debt,
                 marshalling of assets and liabilities or similar proceeding, or
                 for the winding-up or liquidation of its affairs, shall have
                 been entered against the Master Servicer and such decree or
                 order shall have remained in force undischarged or unstayed for
                 a period of 60 consecutive days; or

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

                                      -51-
<PAGE>

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

          (vi)   so long as the Master Servicer is the Seller, any failure by
                 the Seller to observe or perform in any material respect any
                 other of the covenants or agreements on the part of the Seller
                 contained in this Agreement, which failure shall continue
                 unremedied for a period of 60 days after the date on which
                 written notice of such failure shall have been given to the
                 Seller by the Trustee or the Depositor, or to the Seller and
                 the Trustee by the Holders of Notes [or Certificates] of any
                 Class evidencing not less than 25% of the total distributions
                 allocated to such Class; or]

          (vii)  any failure of the Master Servicer to make any Advance in the
                 manner and at the time required to be made pursuant to Section
                 4 which continues unremedied for a period of one Business Day
                 after the date of such failure.

     If an Event of Default described in clauses (i) to (vi) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, or at the direction of
the Holders of Notes [or Certificates] of any Class evidencing not less than 25%
of the total distributions allocated to such Class, the Trustee shall by notice
in writing to the Master Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Master Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof, other than its rights
as a Securityholder. If an Event of Default described in clause (vii) hereof
shall occur, the Trustee shall, by notice in writing to the Master Servicer and
the Depositor, terminate all of the rights and obligations of the Master
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than its rights as a Securityholder. On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee. [The Trustee shall
thereupon make any Advance described in clause (vii) hereof subject to Section
3(g) hereof.] The Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of the Master Servicer to pay amounts owed pursuant to Article VIII. The Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Collection Account, or thereafter be received with
respect to the Mortgage Loans.

                                      -52-
<PAGE>

     Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan which was due prior to the
notice terminating such Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
such Master Servicer would have been entitled pursuant to Sections 3(k)(i)(A)
through (H),and any other amounts payable to such Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.

     (b)  Trustee to Act; Appointment of Successor.

     On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7(a) hereof, the Trustee shall, subject to and to the extent
provided in Section 3(g), be the successor to the Master Servicer in its
capacity as master servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including the obligation to make Advances
pursuant to Section 4. As compensation therefor, the Trustee shall be entitled
to all funds relating to the Mortgage Loans that the Master Servicer would have
been entitled to charge to the Collection Account or Payment Account if the
Master Servicer had continued to act hereunder. Notwithstanding the foregoing,
if the Trustee has become the successor to the Master Servicer in accordance
with Section 7(a) hereof, the Trustee may, if it shall be unwilling to so act,
or shall, if it is prohibited by applicable law from making Advances pursuant to
Section 4 hereof or if it is otherwise unable to so act, appoint, or petition a
court of competent jurisdiction to appoint, any established mortgage loan
servicing institution the appointment of which does not adversely affect the
then current rating of the Securities by each Rating Agency as the successor to
the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $10,000,000, and which is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustees an agreement accepting
such delegation and assignment, which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than liabilities of the Master Servicer under Section
6(c) hereof incurred prior to termination of the Master Servicer under Section
7(a)), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Securities in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation.
Pending appointment of a successor to the Master Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3(g) hereof, act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of the Master Servicing Fee permitted the Master
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor master servicer shall be
deemed

                                      -53-
<PAGE>

to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Master Servicer to deliver or
provide, or any delay in delivering or providing, any cash, information,
documents or records to it.

     Any successor to the Master Servicer as master servicer shall give notice
to the Mortgagors of such change of servicer and shall, during the term of its
service as master servicer maintain in force the policy or policies that the
Master Servicer is required to maintain pursuant to 3(r).

     (c)  Notification to Securityholders.

          (i)    Upon any termination of or appointment of a successor to the
                 Master Servicer, the Trustee shall give prompt written notice
                 thereof to Securityholders and to each Rating Agency.

          (ii)   Within 60 days after the occurrence of any Event of Default,
                 the Trustee shall transmit by mail to all Securityholders
                 notice of each such Event of Default hereunder known to the
                 Trustee, unless such Event of Default shall have been cured or
                 waived.

     Section 8.  Miscellaneous.

     (a)  Term of Sale and Servicing Agreement.

     The obligations to be performed by the Master Servicer under this Agreement
shall commence on and as of the date on which the Issuer issues the Securities
and shall terminate as to each Mortgage Loan upon (i) the payment in full of all
principal and interest due under such Mortgage Loan or other liquidation of such
Mortgage Loan as contemplated by this Agreement, (ii) the termination of the
Master Servicer's rights and powers under this Agreement by the Trustee as
provided in Section 7(a) of this Agreement, or (iii) the release by the Trustee
of its security interest in any Mortgage Loan.

     (b)  Assignment.

     Notwithstanding anything to the contrary contained herein, except as
provided in Section 6(b), this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Trustee and Depositor.

     (c)  Notices.

          (i)    The Trustee shall use its best efforts to promptly provide
                 notice to each Rating Agency with respect to each of the
                 following of which it has actual knowledge:

                                      -54-
<PAGE>

                 (A)  Any material change or amendment to this Agreement;

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

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

                 (D)  The repurchase or substitution of Mortgage Loans pursuant
                      to Section 2(d); and

                 (E)  The final payment to Securityholders.

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

                 (A)  Each report to Securityholders described in the Indenture;

                 (B)  Each annual statement as to compliance described in
                      Section 3(p);

                 (C)  Each annual independent public accountants' servicing
                      report described in Section 3(q); and

                 (D)  Any notice of a purchase of a Mortgage Loan pursuant to
                      Section 2(c)(ii), 2(d) or 3(n).

          (ii)   All directions, demands and notices hereunder shall be in
                 writing and shall be deemed to have been duly given when
                 delivered to (a) in the case of the Depositor, First Horizon
                 Asset Securities Inc., 4000 Horizon Way, Irving, Texas 75063,
                 Attention: _______________, (b) in the case of the Master
                 Servicer, 4000 Horizon Way, Irving, Texas 75063, Attention:
                 _________________ or such other address as may be hereafter
                 furnished to the Depositor and the Trustees by the Master
                 Servicer in writing, (c) in the case of the Trustees,
                 __________________________________________, Attention:
                 _______________________________, or such other address as the
                 Trustee may hereafter furnish to the Depositor or Master
                 Servicer and (d) in the case of the Rating Agencies, the
                 address specified therefor in the definition corresponding to
                 the name of such Rating Agency. Notices to Securityholders
                 shall be deemed given when mailed, first class postage prepaid,
                 to their respective addresses appearing in the Certificate
                 Register.

     (d)  Inspection and Audit Rights.

                                      -55-
<PAGE>

     The Master Servicer agrees that, on reasonable prior notice, it will permit
and will cause each Subservicer to permit any representative of the Depositor or
the Trustee during the Master Servicer's normal business hours, to examine all
the books of account, records, reports and other papers of the Master Servicer
relating to the Mortgage Loans, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants selected by
the Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees and independent
public accountants (and by this provision the Master Servicer hereby authorizes
said accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the Depositor
or the Trustee of any right under this Section 8(d) shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the Master
Servicer or the related Subservicer.

     (e)  Governing Law.

     THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HERETO AND THE SECURITYHOLDERS SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.

     (f)  Amendment.

     This Agreement may be amended from time to time by the Issuer, the Master
Servicer and the Trustee without the consent of any of the Securityholders to
cure any ambiguity, or to correct or supplement any provisions herein, or to
make such other provisions with respect to matters or questions arising under
this Agreement as shall not be inconsistent with any other provisions herein;
provided that such action shall not, as evidenced by an Opinion of Counsel
(which Opinion of Counsel shall not be an expense of the Trustee or the Issuer),
adversely affect in any material respect the interests of any Securityholder;
provided, however, that the amendment shall not be deemed to adversely affect in
any material respect the interests of the Securityholders if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Securities; it being understood and
agreed that any such letter in and of itself will not represent a determination
as to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating. The Trustee, the
Depositor and the Master Servicer also may at any time and from time to time
amend this Agreement without the consent of the Securityholders to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or helpful to maintain the qualification of the Issuer as a REMIC under the Code
or to avoid or minimize the risk of the imposition of any tax on the REMIC
pursuant to the Code that would be a claim at any time prior to the final
redemption of the Securities, provided that the Trustee has been provided an
Opinion of Counsel, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the
Issuer, to the effect that such action is

                                      -56-
<PAGE>

necessary or helpful to maintain such qualification or to avoid or minimize the
risk of the imposition of such a tax.

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

     [Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Issuer, to the effect that such amendment will not cause the
imposition of any tax on the REMIC or the Securityholders or cause the Issuer to
fail to qualify as a REMIC at any time that any Certificates are outstanding.]

     Promptly after the execution of any amendment to this Agreement requiring
the consent of Securityholders, the Trustee shall furnish written notification
of the substance or a copy of such amendment to each Securityholder and each
Rating Agency.

     It shall not be necessary for the consent of Securityholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Securityholders shall be subject to such reasonable regulations as
the Trustee may prescribe.

     Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Issuer, satisfactory to the Trustee that (i) such
amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Securityholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 8(f).

     (g)  Severability of Provisions.

                                      -57-
<PAGE>

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

     (h)  No Joint Venture.

     The Master Servicer and the Issuer are not partners or joint venturers with
each other and nothing herein shall be construed to make them such partners or
joint venturers or impose any liability as such of either of them.

     (i)  Recordation of Agreement; Counterparts.

     This Agreement is subject to recordation in all appropriate public offices
for real property records in all the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Master Servicer at its expense, but only upon direction by
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Securityholders.

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

     (j)  Limitation of Liability of [owner trustee].

     It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by [owner trustee], not individually or
personally but solely as owner trustee of First Horizon Home Equity Loan Trust
200[ ]-[ ] under the Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by [owner
trustee] but is made and intended for the purpose for binding only the Issuer,
(c) nothing herein contained shall be construed as creating any liability on
[owner trustee], other than any liability arising out of its gross negligence,
bad faith or willful misconduct, and (d) under no circumstances shall [owner
trustee] be personally liable for the payment of any indebtedness or expenses of
the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under this
Agreement or the other Operative Documents.

     (k)  Nonpetition Covenants.

                                      -58-
<PAGE>

     Notwithstanding any prior termination of this Agreement, the Master
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer or the Depositor,
acquiesce, petition or otherwise invoke or cause the Issuer or the Depositor (or
any assignee) to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer or the Depositor
under any federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Issuer
or the Depositor.

                                      -59-
<PAGE>

     IN WITNESS WHEREOF, each party has caused this Sale and Servicing Agreement
to be executed by its duly authorized officer or officers as of the day and year
first above written.

                         FIRST HORIZON HOME EQUITY LOAN TRUST
                         200[ ]-[ ], as Issuer

                         By:  [owner trustee], not in its individual capacity
                              but solely as Owner Trustee

                              By:_________________________________________

                              Its:________________________________________

                         FIRST HORIZON ASSET SECURITIES INC.,
                              as Depositor

                         By:______________________________________________

                         Its:_____________________________________________

                         FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
                              as Seller and Master Servicer

                         By:______________________________________________

                         Its:_____________________________________________

                         [                             ],
                              as Trustee

                         By:______________________________________________

                         Its:_____________________________________________

                                      -60-
<PAGE>

                                  SCHEDULE I

                            Mortgage Loan Schedule

                                     S-I-1
<PAGE>

                                  SCHEDULE II

                First Horizon Home Equity Loan Trust 200[ ]-[ ]
              Asset Backed Notes [and Asset Backed Certificates]

                               Series 200[ ]-[ ]

             Representations and Warranties of the Master Servicer

____________________________ ("Seller-Master Servicer") hereby makes the
representations and warranties set forth in this Schedule II to the Issuer, the
Depositor and the Trustees, as of the Closing Date, or if so specified herein,
as of the Cut-off Date. Capitalized terms used but not otherwise defined in this
Schedule II shall have the meanings ascribed thereto in the Indenture (the
"Indenture") relating to the above-referenced Series, among Seller-Master
Servicer, as seller and master servicer, First Horizon Asset Securities Inc., as
depositor, and _____________________, as trustee.

          (i)    The Master Servicer is a Kansas corporation, validly existing
                 and in good standing under the laws of the State of Kansas, and
                 has the corporate power to own its assets and to transact the
                 business in which it is currently engaged. The Master Servicer
                 is duly qualified to do business as a foreign corporation and
                 is in good standing in each jurisdiction in which the character
                 of the business transacted by it or any properties owned or
                 leased by it requires such qualification and in which the
                 failure so to qualify would have a material adverse effect on
                 the business, properties, assets, or condition (financial or
                 other) of the Master Servicer;

          (ii)   The Master Servicer has the power and authority to make,
                 execute, deliver and perform this Agreement and all of the
                 transactions contemplated under the Agreement, and has taken
                 all necessary corporate action to authorize the execution,
                 delivery and performance of this Agreement. When executed and
                 delivered, this Agreement will constitute the legal, valid and
                 binding obligation of the Master Servicer enforceable in
                 accordance with its terms, except as enforcement of such terms
                 may be limited by bankruptcy, insolvency, reorganization,
                 moratorium or other similar laws affecting the enforcement of
                 creditors' rights generally and by the availability of
                 equitable remedies;

          (iii)  The Master Servicer is not required to obtain the consent of
                 any other party or any consent, license, approval or
                 authorization from, or registration or declaration with, any
                 governmental authority, bureau or agency in connection with the
                 execution, delivery, performance, validity or enforceability of
                 this Agreement, except for such consent, license, approval or
                 authorization, or

                                    S-II-1
<PAGE>

                 registration or declaration, as shall have been obtained or
                 filed, as the case may be, prior to the Closing Date;

          (iv)   The execution, delivery and performance of this Agreement by
                 the Master Servicer will not violate any provision of any
                 existing law or regulation or any order or decree of any court
                 applicable to the Master Servicer or any provision of the
                 Certificate of Incorporation or Bylaws of the Master Servicer,
                 or constitute a material breach of any mortgage, indenture,
                 contract or other agreement to which the Master Servicer is a
                 party or by which the Master Servicer may be bound; and

          (v)    No litigation or administrative proceeding of or before any
                 court, tribunal or governmental body is currently pending, or
                 to the knowledge of the Master Servicer threatened, against the
                 Master Servicer or any of its properties or with respect to
                 this Agreement or the Certificates which in the opinion of the
                 Master Servicer has a reasonable likelihood of resulting in a
                 material adverse effect on the transactions contemplated by
                 this Agreement.

                                    S-II-2
<PAGE>

                                 SCHEDULE III

First Horizon Home Equity Loan Trust 200[ ]-[ ]
Asset Backed Notes [and Asset Backed Certificates]
Series 200[ ]-[ ]

            Representations and Warranties as to the Mortgage Loans

     ____________________________ ("Seller") hereby makes the representations
and warranties set forth in this Schedule III to the Depositor and the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date.
Capitalized terms used but not otherwise defined in this Schedule III shall have
the meanings ascribed thereto in the Indenture (the "Indenture") relating to the
above-referenced Series, among Seller, as seller and master servicer, First
Horizon Asset Securities Inc., as depositor, and ________________________, as
trustee.

          (i)    As of the Closing Date, this Agreement constitutes a legal,
     valid and binding obligation of the Seller, enforceable against the Seller
     in accordance with its terms, except as enforcement of such terms may be
     limited by bankruptcy, insolvency, reorganization, moratorium or other
     similar laws now or hereafter in effect affecting the enforcement of
     creditors' rights generally and by the availability of equitable remedies;

          (ii)   As of the Closing Date with respect to the Mortgage Loans and
     as of the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, either (A) the Purchase Agreement constitutes a valid
     transfer and assignment to the Depositor of all right, title and interest
     of the Seller in and to the Cut-off Date Asset Balances with respect to the
     applicable Mortgage Loans, all monies due or to become due with respect
     thereto (excluding payments in respect of accrued interest due prior to the
     Cut-off Date or due in the month of _________), and all proceeds of such
     Cut-off Date Asset Balances with respect to the Mortgage Loans and such
     funds as are from time to time deposited in the Collection Account
     (excluding any investment earnings thereon) and all other property
     specified in the definition of "Asset" as being part of the corpus of the
     Trust conveyed to the Trust by the Seller, and upon payment for the
     Additional Balances, will constitute a valid transfer and assignment to the
     Trustee of all right, title and interest of the Seller in and to the
     Additional Balances, all monies due or to become due with respect thereto,
     and all proceeds of such Additional Balances and all other property
     specified in the definition of "Asset" relating to the Additional Balances
     or (B) the Purchase Agreement or this Agreement, as appropriate,
     constitutes a grant of a security interest (as defined in the UCC as in
     effect in California) in such property to the Trustee on behalf of the
     Trust. If this Agreement constitutes the grant of a security interest to
     the Trust in such property, and if the Trustee obtains and maintains
     possession of the Mortgage File for each Mortgage Loan, the Trust shall
     have a first priority perfected security interest in such property, subject
     to the effect of Section 9-306 of the UCC with respect to collections on
     the Mortgage Loans that are deposited in the Collection Account in
     accordance with the next to last paragraph of Section _______; provided,

                                    S-III-1
<PAGE>

     however, that nothing in this clause (ii) shall be construed to obligate
     the Master Servicer to deliver any Mortgage Files other than as set forth
     in Section 2(a) hereof;

          (iii)  As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan and as of the date any Additional Balance is created, the
     information set forth in the Mortgage Loan Schedule for such Mortgage Loans
     is true and correct in all material respects;

          (iv)   The applicable Cut-off Date Asset Balance has not been assigned
     or pledged, and the Seller is the sole owner and holder of such Cut-off
     Date Asset Balance free and clear of any and all liens, claims,
     encumbrances, participation interests, equities, pledges, charges or
     security interests of any nature, and has full right and authority, under
     all governmental and regulatory bodies having jurisdiction over the
     ownership of the applicable Mortgage Loan, to sell, assign or transfer the
     same pursuant to the Purchase Agreement;

          (v)    As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, the related Mortgage Note and the Mortgage with respect to
     each Mortgage Loan have not been assigned or pledged, and the Seller is the
     sole owner and holder of the Mortgage Loan free and clear of any and all
     liens, claims, encumbrances, participation interests, equities, pledges,
     charges or security interests of any nature, and has full right and
     authority, under all governmental and regulatory bodies having jurisdiction
     over the ownership of the applicable Mortgage Loans, to sell and assign the
     same pursuant to the Purchase Agreement;

          (vi)   As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, the related Mortgage is a valid and subsisting first or
     second lien, as set forth on the Mortgage Loan Schedule with respect to
     each related Mortgage Loan, on the property therein described, and as of
     the applicable Cut-off Date the related Mortgaged Property is free and
     clear of all encumbrances and liens having priority over the first or
     second lien, as applicable, of such Mortgage except for liens for (i) real
     estate taxes and special assessments not yet delinquent; (ii) any first
     mortgage loan secured by such Mortgaged Property and specified on the
     Mortgage Loan Schedule; (iii) covenants, conditions and restrictions,
     rights of way, easements and other matters of public record as of the date
     of recording that are acceptable to mortgage lending institutions
     generally; and (iv) other matters to which like properties are commonly
     subject which do not materially interfere with the benefits of the security
     intended to be provided by such Mortgage;

          (vii)  As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, there is no valid offset, defense or counterclaim of any
     obligor under any Credit Line Agreement or Mortgage;

                                    S-III-2
<PAGE>

          (viii) To the best knowledge of the Seller, as of the Closing Date
     with respect to the Mortgage Loans and the applicable Transfer Date with
     respect to any Eligible Substitute Mortgage Loan, there is no delinquent
     recording or other tax or fee or assessment lien against any related
     Mortgaged Property;

          (ix)   As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, there is no proceeding pending or, to the best knowledge of
     the Seller, threatened for the total or partial condemnation of the related
     Mortgaged Property, and such property is free of material damage;

          (x)    To the best knowledge of the Seller, as of the Closing Date
     with respect to the Mortgage Loans and the applicable Transfer Date with
     respect to any Eligible Substitute Mortgage Loan, there are no mechanics'
     or similar liens or claims which have been filed for work, labor or
     material affecting the related Mortgaged Property which are, or may be,
     liens prior or equal to the lien of the related Mortgage, except liens
     which are fully insured against by the title insurance policy referred to
     in clause (xiv);

          (xi)   No Minimum Monthly Payment is more than 89 days delinquent
     (measured on a contractual basis); and with respect to the Mortgage Loans
     no more than _____% (by Cut-off Date Pool Balance) were 30-59 days
     delinquent (measured on a contractual basis) and no more than _____% (by
     Cut-off Date Pool Balance) were 60-89 days delinquent (measured on a
     contractual basis);

          (xii)  As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, for each Mortgage Loan, the related Mortgage File contains
     each of the documents and instruments specified to be included therein;

          (xiii) The related Mortgage Note and the related Mortgage at
     origination complied in all material respects with applicable state and
     federal laws, including, without limitation, usury, truth-in-lending, real
     estate settlement procedures, consumer credit protection, equal credit
     opportunity or disclosure laws applicable to the Mortgage Loan;

          (xiv)  Either a lender's title insurance policy or binder was issued
     on the date of origination of the Mortgage Loan and each such policy is
     valid and remains in full force and effect, or a title search or guaranty
     of title customary in the relevant jurisdiction was obtained with respect
     to a Mortgage Loan as to which no title insurance policy or binder was
     issued;

          (xv)   As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, none of the Mortgaged Properties is a mobile home or a
     manufactured housing unit that is not considered or classified as part of
     the real estate under the laws of the jurisdiction in which it is located;

                                    S-III-3
<PAGE>

          (xvi)    As of the Cut-off Date for the Mortgage Loans no more than
     _____% of such Mortgage Loans, by aggregate principal balance, are secured
     by Mortgaged Properties located in one United States postal zip code;

          (xvii)   The Combined Loan-to-Value Ratio for each Mortgage Loan was
     not in excess of 100%;

          (xviii)  No selection procedure reasonably believed by the Seller to
     be adverse to the interests of the Securityholders or the Credit Enhancer
     was utilized in selecting the Mortgage Loans;

          (xix)    The Seller has not transferred the Mortgage Loans to the
     Trust with any intent to hinder, delay or defraud any of its creditors;

          (xx)     The Minimum Monthly Payment with respect to any Mortgage Loan
     is not less than the interest accrued at the applicable Loan Rate on the
     average daily Asset Balance during the interest period relating to the date
     on which such Minimum Monthly Payment is due;

          (xxi)    Within 90 days of the Closing Date with respect to the
     Mortgage Loans and, to the extent not already included in such filing with
     respect to the Mortgage Loans, the applicable Transfer Date with respect to
     any Eligible Substitute Mortgage Loan, the Seller will file UCC-1 financing
     statements with respect to the Mortgage Loans;

          (xxii)   As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, each Credit Line Agreement and each Mortgage Loan is an
     enforceable obligation of the related Mortgagor, except as the
     enforceability thereof may be limited by the bankruptcy, insolvency or
     similar laws affecting creditors' rights generally;

          (xxiii)  As of the Closing Date with respect to the Mortgage Loans and
     the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, the Seller has not received a notice of default of any
     senior mortgage loan related to a Mortgaged Property that has not been
     cured by a party other than the Master Servicer;

          (xxiv)   The definition of Prime Rate in each Credit Line Agreement
     relating to a Mortgage Loan does not differ materially from the definition
     in the form of Credit Line Agreement in ____________;

          (xxv)    The weighted average remaining term to maturity of the
     Mortgage Loans on a contractual basis as of the Cutoff Date for the
     Mortgage Loans is approximately ___ months. On each date that the Loan
     Rates have been adjusted, interest rate adjustments on the Mortgage Loans
     were made in compliance with the related Mortgage and Mortgage Note

                                    S-III-4
<PAGE>

     and applicable law. Over the term of each Mortgage Loan, the Loan Rate may
     not exceed the related Loan Rate Cap, if any. The Loan Rate Caps range
     between ____% and ____%. The Margins range between ____% and ____% and the
     weighted average Margin is approximately ____% as of the Cut-off Date for
     the Mortgage Loans. The Loan Rates on such Mortgage Loans range between
     ____% and _____% and the weighted average Loan Rate is approximately
     _____%.

          (xxvi)    As of the Closing Date with respect to the Mortgage Loans
     and the applicable Transfer Date with respect to any Eligible Substitute
     Mortgage Loan, each Mortgaged Property consists of a single parcel of real
     property with a one-to-four unit single family residence erected thereon,
     or an individual condominium unit, planned unit development unit or
     townhouse;

          (xxvii)   No more than _____% (by Cut-off Date Pool Balance) of the
     Mortgage Loans are secured by real property improved by individual
     condominium units, planned development units, townhouses or two-to-four
     family residences erected thereon, and at least _____% (by Cut-off Date
     Pool Balance) of the Mortgage Loans are secured by real property with a
     detached one-family residence erected thereon;

          (xxviii)  The Credit Limits on the Mortgage Loans range between
     $________ and $__________ with an average of $_________. As of the Cut-off
     Date for the Mortgage Loans, no Mortgage Loan had a principal balance in
     excess of approximately $__________ and the average principal balance of
     the Mortgage Loans is equal to approximately $_________; and

          (xxix)    Approximately ____% and _____% of the Mortgage Loans, by
     aggregate principal balance as of the Cut-off Date for the Mortgage Loans,
     are first and second liens, respectively.

                                    S-III-5
<PAGE>

SCHEDULE IV

First Horizon Home Equity Loan Trust 200[ ]-[ ]
Asset Backed Notes and [Asset Backed Certificates]

Series 200[ ]-[ ]

Representations and Warranties of the Issuer.

     First Horizon Home Equity Loan Trust 200[ ]-[ ] (the "Issuer") hereby makes
the representations and warranties set forth in this Schedule IV to the Master
Servicer and the Trustee, as of the Closing Date. Capitalized terms used but not
otherwise defined in this Schedule IV shall have the meanings ascribed thereto
in the Sale and Servicing Agreement (the "Sale and Servicing Agreement")
relating to the above-referenced Series, among First Tennessee Bank National
Association, as Master Servicer, First Horizon Home Equity Loan Trust 200[ ]-[
], as Issuer, and [ ], as Trustee.

     (1)  The Issuer is a statutory business trust duly organized, validly
existing and in good standing under the laws of the State of [state], and
possesses all requisite authority, power, licenses, permits and franchises to
conduct any and all business contemplated by the Sale and Servicing Agreement
and to comply with its obligations under the terms of this Agreement, the
performance of which have been duly authorized by all necessary action.

     (2)  Neither the execution and delivery of the Sale and Servicing Agreement
by the Issuer, nor the performance and compliance with the terms thereof by the
Issuer will (A) result in a material breach of any term or provision of the
instruments creating the Issuer or governing its operations, or (B) materially
conflict with, result in a material breach, violation or acceleration of, or
result in a material default under, the terms of any other material agreement or
instrument to which the Issuer is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation applicable
to the Issuer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Issuer; and the Issuer is not in
breach or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Issuer's ability to
perform or meet any of its obligations under the Sale and Servicing Agreement.

     (3)  This Agreement, and all documents and instruments contemplated hereby,
which are executed and delivered by the Issuer, will, assuming due
authorization, execution by and delivery to the other parties hereto and
thereto, constitute valid, legal and binding obligations of the Issuer,
enforceable in accordance with their respective terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms

                                    S-IV-1
<PAGE>

of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.

     (4)  No litigation is pending or, to the best of the Issuer's knowledge,
threatened against the Issuer that would materially and adversely affect the
execution, delivery or enforceability of the Sale and Servicing Agreement or the
ability of the Issuer to perform its obligations thereunder.

     (5)  Immediately prior to the transfer and assignment of the Mortgage Loans
to the Trustee, the Issuer had good title to, and was the sole owner of, each
Mortgage Loan free and clear of any liens, charges or encumbrances or any
ownership or participation interests in favor of any other Person.

                                    S-IV-2
<PAGE>

                                   EXHIBIT A

                   FORM OF INITIAL CERTIFICATION OF TRUSTEE

[date]

[Master Servicer]

[Issuer]

_____________________
_____________________

Re: Sale and Servicing Agreement among
First Horizon Home Equity Loan Trust 200[ ]-[ ], as
Issuer, First Tennessee Bank National Association, as
Seller and Master Servicer, and [ ], as Trustee,
Asset Backed Notes [and Asset Backed
Certificates], Series 200[ ]-[ ]

Gentlemen:

     In accordance with Section 2(b) of the above-captioned Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan listed in the attached schedule), it has
received:

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

     (ii)   a duly executed assignment of the Mortgage (which may be included in
a blanket assignment or assignments).

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

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

                                      A-1
<PAGE>

Mortgage Loan Schedule, other than the information specified in items (i)
through (iv) and (vi) thereof.

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

                              ___________________________________________
                              as Trustee

                              By:________________________________________
                              Name:______________________________________
                              Title:_____________________________________

                                      A-2
<PAGE>

                                   EXHIBIT B

                    FORM OF FINAL CERTIFICATION OF TRUSTEE

[date]

[Master Servicer]

[Issuer]

_____________________
_____________________

Re:  Sale and Servicing Agreement among First Horizon
     Home Equity Loan Trust 200[ ]-[ ], as Issuer,
     First Tennessee Bank National Association, as Seller and
     Master Servicer, and [ ], as Trustee, Asset Backed
     Notes [and Asset Backed Certificates],
     Series 200[ ]-[ ]

Gentlemen:

     In accordance with Section 2(b) of the above-captioned Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or listed on the attached
Document Exception Report) it has received:

     (i)   The original Mortgage Note, endorsed in the form provided in Section
2(a) of the Sale and Servicing Agreement, with all intervening endorsements
showing a complete chain of endorsement from the originator to the Issuer.

     (ii)  The original recorded Mortgage.

     (iii) A duly executed assignment of the Mortgage in the form provided
in Section 2(a) of the Sale and Servicing Agreement, or, if the Master Servicer
has certified or the Trustee otherwise knows that the related Mortgage has not
been returned from the applicable recording office, a copy of the assignment of
the Mortgage (excluding information to be provided by the recording office).

     (iv)  The original or duplicate original recorded assignment or assignments
of the Mortgage showing a complete chain of assignment from the originator to
the Issuer.

                                      B-1
<PAGE>

     (v)   The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by the
title company.

     Based on its review and examination and only as to the foregoing documents,
(a) such documents appear regular on their face and related to such Mortgage
Loan, and (b) the information set forth in items (i), (ii), (iii), (iv), (vi)
and (xi) of the definition of the "Mortgage Loan Schedule" in Section 1 of the
Sale and Servicing Agreement accurately reflects information set forth in the
Trustee Mortgage File.

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

     Notwithstanding anything herein to the contrary, the Trustee has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.

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

                              _________________________________________,
                              as Trustee

                              By:______________________________________
                              Name:____________________________________
                              Title:___________________________________

                                      B-2
<PAGE>

                                   EXHIBIT C

                              REQUEST FOR RELEASE

                                 (for Trustee)

                First Horizon Home Equity Loan Trust 200[ ]-[ ]
              Asset Backed Notes [and Asset Backed Certificates]

                               Series 200[ ]-[ ]

Loan Information

     Name of Mortgagor:    ___________________________

     Servicer Loan No.:    ___________________________

Trustee

     Name:                 ___________________________

     Address:              ___________________________
                           ___________________________
                           ___________________________

     Trustee
     Mortgage File No.:    ___________________________

     The undersigned Master Servicer hereby acknowledges that it has received
from [ ], as Trustee for the Holders of Notes of the above-referenced Series,
the documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Release shall have the meanings given them
in the Sale and Servicing Agreement (the "Sale and Servicing Agreement")
relating to the above-referenced Series among the Trustee, First Tennessee Bank
National Association, as Master Servicer, and First Horizon Home Equity Loan
Trust 200[ ]-[ ], as Issuer.

(  ) Mortgage Note dated ____________, 200[ ], in the original principal sum of
     $__________, made by __________________, payable to, or endorsed to the
     order of, the Trustee.

(  ) Mortgage recorded on _________________ as instrument no. ________________
     in the County Recorder's Office of the County of ___________________, State
     of _______________ in book/reel/docket ________________ of official records
     at page/image ________________.

                                      C-1
<PAGE>

(  ) Deed of Trust recorded on __________________ as instrument no.
     _________________ in the County Recorder's Office of the County of
     ________________, State of _______________ in book/reel/docket
     _______________ of official records at page/image ________________.

(  ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
     _________________ as instrument no. _________ in the County Recorder's
     Office of the County of __________, State of ________________ in
     book/reel/docket of official records at page/image _______________.

(  ) Other documents, including any amendments, assignments or other assumptions
     of the Mortgage Note or Mortgage.

     (  )  ____________________________________________

     (  )  ____________________________________________

     (  )  ____________________________________________

     (  )  ____________________________________________

     The undersigned Master Servicer hereby acknowledges and agrees as follows:

     (1)  The Master Servicer shall hold and retain possession of the Documents
          in trust for the benefit of the Trustee, solely for the purposes
          provided in the Agreement.

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

     (3)  The Master Servicer shall return each and every Document previously
          requested from the Mortgage File to the Trustee when the need therefor
          no longer exists, unless the Mortgage Loan relating to the Documents
          has been liquidated and the proceeds thereof have been remitted to the
          Note Account and except as expressly provided in the Sale and
          Servicing Agreement.

     (4)  The Documents and any proceeds thereof, including any proceeds of
          proceeds, coming into the possession or control of the Master Servicer
          shall at all times be earmarked for the account of the Trustee, and
          the Master Servicer shall keep the Documents and any proceeds separate
          and distinct from all other property in the Master Servicer's
          possession, custody or control.

                                      C-2
<PAGE>

                                        FIRST TENNESSEE BANK NATIONAL
                                        ASSOCITION

                                        By __________________________________
                                        Its _________________________________

Date: _________________, 200[ ]

                                      C-3
<PAGE>

                                   EXHIBIT D

                       REQUEST FOR RELEASE OF DOCUMENTS

To: [Trustee]                            Attn: Mortgage Custody Services

Re: The Sale and Servicing Agreement dated [ ] among
First Tennessee Bank National Association ("First Tennessee"),
as Seller and Master Servicer, First Horizon Home Equity Loan
Trust 200[ ]-[ ], as Issuer, and [ ], as Trustee

Ladies and Gentlemen:

In connection with the administration of the Mortgage Loans held by you as
Trustee for First Horizon Home Equity Loan Trust 200[ ]-[ ], as Issuer, we
request the release of the Mortgage File for the Mortgage Loan(s) described
below, for the reason indicated.

FT Account#:                             Pool #:

Mortgagor's Name, Address and Zip Code:

Mortgage Loan Number:

Reason for Requesting Documents (check one)

_______1. Mortgage Loan paid in full (First Tennessee hereby certifies that all
          amounts have been received.)

_______2. Mortgage Loan Liquidated (First Tennessee hereby certifies that all
          proceeds of foreclosure, insurance, or other liquidation have been
          finally received.)

_______3. Mortgage Loan in Foreclosure.

_______4. Other (explain): ____________________________________

If item 1 or 2 above is checked, and if all or part of the Trustee Mortgage File
was previously released to us, please release to us our previous receipt on file
with you, as well as an additional documents in your possession relating to the
above-specified Mortgage Loan. If item 3 or 4 is checked, upon return of all of
the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.

                                      D-1
<PAGE>

                                    FIRST TENNESSEE BANK NATIONAL
                                    ASSOCIATION
                                    165 Madison Avenue
                                    Memphis, Tennessee 38103

                                    By:___________________________
                                    Name:_________________________
                                    Title:________________________
                                    Date:_________________________

TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT

By:_________________________
Name:_______________________
Title:______________________
Date:_______________________

                                      D-2

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