Document:

Unassociated Document

    MORTGAGE
      LOAN PURCHASE AGREEMENT

     

    THIS
      MORTGAGE LOAN PURCHASE AGREEMENT dated as of May 30, 2006 by and between FIRST
      HORIZON HOME LOAN CORPORATION, a Kansas corporation (the “Seller”), and FIRST
      HORIZON ASSET SECURITIES INC. (the “Purchaser”). 

     

    WHEREAS,
      the Seller owns certain Mortgage Loans (as hereinafter defined) which Mortgage
      Loans are more particularly listed and described in Schedule
      A
      attached
      hereto and made a part hereof.

     

    WHEREAS,
      the Seller and the Purchaser wish to set forth the terms pursuant to which
      the
      Mortgage Loans, excluding the servicing rights thereto, are to be sold by the
      Seller to the Purchaser.

     

    WHEREAS,
      the Seller will simultaneously transfer the servicing rights for the Mortgage
      Loans to First Tennessee Mortgage Services, Inc. (“FTMSI”) pursuant to the
      Servicing Rights Transfer and Subservicing Agreement (as hereinafter
      defined).

     

    WHEREAS,
      the Purchaser will engage FTMSI to service the Mortgage Loans pursuant to the
      Servicing Agreement (as hereinafter defined).

     

    NOW,
      THEREFORE, in consideration of the foregoing, other good and valuable
      consideration, and the mutual terms and covenants contained herein, the parties
      hereto agree as follows:

     

     

    ARTICLE
      I

    Definitions

     

    Agreement:
      This
      Mortgage Loan Purchase Agreement, as the same may be amended, supplemented
      or
      otherwise modified from time to time in accordance with the terms
      hereof.

     

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

    

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

     

    Closing
      Date:
      May 30,
      2006

     

    Code:
      The
      Internal Revenue Code of 1986, including any successor or amendatory
      provisions.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

     

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

     

    Coop
      Shares:
      Shares
      issued by a Cooperative Corporation.

     

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

     

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

     

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

     

    Custodian:
      First
      Tennessee Bank National Association, and its successors and assigns, as
      custodian under the Custodial Agreement dated as of May 30, 2006 by and among
      The Bank of New York, as trustee, First Horizon Home Loan Corporation, as master
      servicer, and the Custodian.

     

    Cut-Off
      Date:
      May 1,
      2006.

     

    Cut-off
      Date Principal Balance:
      As to
      any Mortgage Loan, the Stated Principal Balance thereof as of the close of
      business on the Cut-off Date.

     

    Debt
      Service Reduction:
      With
      respect to any Mortgage Loan, a reduction by a court of competent jurisdiction
      in a proceeding under the Bankruptcy Code in the Scheduled Payment for such
      Mortgage Loan which became final and non-appealable, except such a reduction
      resulting from a Deficient Valuation or any reduction that results in a
      permanent forgiveness of principal.

     

    Deficient
      Valuation:
      With
      respect to any Mortgage Loan, a valuation by a court of competent jurisdiction
      of the Mortgaged Property in an amount less than the then-outstanding
      indebtedness under the Mortgage Loan, or any reduction in the amount of
      principal to be paid in connection with any Scheduled Payment that results
      in a
      permanent forgiveness of principal, which valuation or reduction results from
      an
      order of such court which is final and non-appealable in a proceeding under
      the
      United States Bankruptcy Reform Act of 1978, as amended.

     

    Delay
      Delivery Mortgage Loans:
      The
      Mortgage Loans for which all or a portion of a related Mortgage File is not
      delivered to the Trustee or to the Custodian on its behalf on the Closing Date.
      The number of Delay Delivery Mortgage Loans shall not exceed 25% of the
      aggregate number of Mortgage Loans as of the Closing Date.

     

    Deleted
      Mortgage Loan:
      As
      defined in Section 4.1(c) hereof.

     

    Determination
      Date:
      The
      earlier of (i) the third Business Day after the 15th day of each month, and
      (ii)
      the second Business Day prior to the 25th
      day of
      each month, or if such 25th
      day is
      not a Business Day, the next succeeding Business Day.

     

    GAAP:
      Generally accepted accounting principles as in effect from time to time in
      the
      United States of America.

     

    
      
         

      

      
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    Insurance
      Proceeds:
      Proceeds paid by an insurer pursuant to any insurance policy, including all
      riders and endorsements thereto in effect, including any replacement policy
      or
      policies, in each case other than any amount included in such Insurance Proceeds
      in respect of expenses covered by such insurance policy.

     

    Liquidation
      Proceeds:
      Amounts, including Insurance Proceeds, received in connection with the partial
      or complete liquidation of defaulted Mortgage Loans, whether through trustee’s
      sale, foreclosure sale or otherwise or amounts received in connection with
      any
      condemnation or partial release of a Mortgaged Property.

     

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

     

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

     

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

     

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

     

    MOM
      Loan:
      Any
      Mortgage Loan as to which MERS is acting as mortgagee, solely as nominee for
      the
      originator of such Mortgage Loan and its successors and assigns.

     

    Mortgage:
      The
      mortgage, deed of trust or other instrument creating a first lien on the
      property securing a Mortgage Note.

     

    Mortgage
      File:
      The
      mortgage documents listed in Section 3.1 pertaining to a particular Mortgage
      Loan and any additional documents required to be added to the Mortgage File
      pursuant to this Agreement.

     

    Mortgage
      Loans:
      The
      mortgage loans transferred, sold and conveyed by the Seller to the Purchaser,
      pursuant to this Agreement.

     

    Mortgage
      Loan Purchase Price:
      With
      respect to any Mortgage Loan required to be purchased by the Seller pursuant
      to
      Section 4.1(c) hereof, 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 from the date through
      which interest was last paid by the Mortgagor to the first day in the month
      in
      which the Mortgage Loan Purchase Price is to be distributed to the Purchaser
      or
      its designees.

     

    Mortgage
      Note:
      The
      original executed note or other evidence of indebtedness evidencing the
      indebtedness of a Mortgagor under a Mortgage Loan.

     

    Mortgage
      Rate:
      The
      annual rate of interest borne by a Mortgage Note from time to time, net of
      any
      insurance premium charged by the mortgagee to obtain or maintain any primary
      insurance policy.

     

    
      
         

      

      
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    Mortgaged
      Property:
      The
      underlying property securing a Mortgage Loan, which, with respect to a
      Cooperative Loan, is the related Coop Shares and Proprietary Lease.

     

    Mortgagor:
      The
      obligor(s) on a Mortgage Note.

     

    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.

     

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

     

    Purchase
      Price:
      $652,041,440.16

     

    Purchaser:
      First
      Horizon Asset Securities Inc., in its capacity as purchaser of the Mortgage
      Loans from the Seller pursuant to this Agreement.

     

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

     

    Scheduled
      Payment:
      The
      scheduled monthly payment on a Mortgage Loan due on the first day of the month
      allocable to principal and/or interest on such Mortgage Loan which, unless
      otherwise specified herein, shall give effect to any related Debt Service
      Reduction and any Deficient Valuation that affects the amount of the monthly
      payment due on such Mortgage Loan.

     

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

     

    Seller:
      First
      Horizon Home Loan Corporation, a Kansas corporation, and its successors and
      assigns, in its capacity as seller of the Mortgage Loans.

     

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

     

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

     

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

     

    
      
         

      

      
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    Substitute
      Mortgage Loan:
      A
      Mortgage Loan substituted by the Seller for a Deleted Mortgage Loan which must,
      on the date of such substitution, (i) have a Stated Principal Balance, after
      deduction of the principal portion of the Scheduled Payment due in the month
      of
      substitution, not in excess of, and not more than 10% less than the Stated
      Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage Rate not
      lower than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have a maximum
      mortgage rate not more than 1% per annum higher or lower than the maximum
      mortgage rate of the Deleted Mortgage Loan; (iv) have a minimum mortgage rate
      specified in its related Mortgage Note not more than 1% per annum higher or
      lower than the minimum mortgage rate of the Deleted Mortgage Loan; (v) have
      the
      same mortgage index, reset period and periodic rate as the Deleted Mortgage
      Loan
      and a gross margin not more than 1% per annum higher or lower than that of
      the
      Deleted Mortgage Loan (vi) be accruing interest at a rate no lower than and
      not
      more than 1% per annum higher than, that of the Deleted Mortgage Loan; (vii)
      have a loan-to-value ratio no higher than that of the Deleted Mortgage Loan;
      (viii) have a remaining term to maturity no greater than (and not more than
      one
      year less than that of) the Deleted Mortgage Loan; (ix) not be a Cooperative
      Loan unless the Deleted Mortgage Loan was a Cooperative Loan and (x) comply
      with
      each representation and warranty set forth in Schedule
      B
      hereto.

     

    Trustee:
      The
      Bank of New York and its successors and, if a successor trustee is appointed
      hereunder, such successor.

     

     

    ARTICLE
      II

    Purchase
      and Sale

     

    Section
      2.1 Purchase
      Price.   In
      consideration for the payment to it of the Purchase Price on the Closing Date,
      pursuant to written instructions delivered by the Seller to the Purchaser on
      the
      Closing Date, the Seller does hereby transfer, sell and convey to the Purchaser
      on the Closing Date, but with effect from the Cut-off Date, (i) all right,
      title
      and interest of the Seller in the Mortgage Loans, excluding the servicing rights
      thereto, and all property securing such Mortgage Loans, including all interest
      and principal received or receivable by the Seller with respect to the Mortgage
      Loans on or after the Cut-off Date and all interest and principal payments
      on
      the Mortgage Loans received on or prior to the Cut-off Date in respect of
      installments of interest and principal due thereafter, but not including
      payments of principal and interest due and payable on the Mortgage Loans on
      or
      before the Cut-off Date, and (ii) all proceeds from the foregoing. Items (i)
      and
      (ii) in the preceding sentence are herein referred to collectively as “Mortgage
      Assets.”

     

    Section
      2.2 Timing.  
      The sale of the Mortgage Assets hereunder shall take place on the Closing
      Date.

     

    
      
         

      

      
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    ARTICLE
      III

    Conveyance
      and Delivery

     

    Section
      3.1 Delivery
      of Mortgage Files.   In
      connection with the transfer and assignment set forth in Section 2.1 above,
      the
      Seller has delivered or caused to be delivered to the Trustee or to the
      Custodian on its behalf (or, in the case of the Delay Delivery Mortgage Loans,
      will deliver or cause to be delivered to the Trustee or to the Custodian on
      its
      behalf within thirty (30) days following the Closing Date) the following
      documents or instruments with respect to each Mortgage Loan so assigned
      (collectively, the “Mortgage Files”):

     

    (a)  1) the
      original Mortgage Note endorsed by manual or facsimile signature in blank in
      the
      following form: “Pay to the order of ________________, without recourse,” with
      all intervening endorsements showing a complete chain of endorsement from the
      originator to the Person endorsing the Mortgage Note (each such endorsement
      being sufficient to transfer all right, title and interest of the party so
      endorsing, as noteholder or assignee thereof, in and to that Mortgage Note);
      or

     

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

     

    
      	 	
              (b)

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

            

    

     

    
      	 	
              (c)

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

            

    

     

    
      	 	
              (d)

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

            

    

     

    
      	 	
              (e)

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

            

    

     

    
      
         

      

      
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              (f)

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

            

    

     

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

     

    (2) The
      executed Security Agreement;

     

    (3) The
      executed Proprietary Lease;

     

    (4) The
      executed Recognition Agreement;

     

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

     

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

     

    In
      the
      event that in connection with any Mortgage Loan that is not a MERS Mortgage
      Loan
      the Seller cannot deliver (i) the original recorded Mortgage or (ii) all interim
      recorded assignments satisfying the requirements of clause (b) or (c) above,
      respectively, concurrently with the execution and delivery hereof because such
      document or documents have not been returned from the applicable public
      recording office, the Seller shall promptly deliver or cause to be delivered
      to
      the Trustee or the Custodian on its behalf such original Mortgage or such
      interim assignment, as the case may be, with evidence of recording indicated
      thereon upon receipt thereof from the public recording office, or a copy
      thereof, certified, if appropriate, by the relevant recording office, but in
      no
      event shall any such delivery of the original Mortgage and each such interim
      assignment or a copy thereof, certified, if appropriate, by the relevant
      recording office, be made later than one year following the Closing Date;
      provided, however, in the event the Seller is unable to deliver or cause to
      be
      delivered by such date each Mortgage and each such interim assignment by reason
      of the fact that any such documents have not been returned by the appropriate
      recording office, or, in the case of each such interim assignment, because
      the
      related Mortgage has not been returned by the appropriate recording office,
      the
      Seller shall deliver or cause to be delivered such documents to the Trustee
      or
      the Custodian on its behalf as promptly as possible upon receipt thereof and,
      in
      any event, within 720 days following the Closing Date; provided, further,
      however, that the Seller shall not be required to provide an original or
      duplicate lender’s title policy (together with all riders thereto) if the Seller
      delivers an Alternative Title Product in lieu thereof. The Seller shall forward
      or cause to be forwarded to the Trustee or the Custodian on its behalf (i)
      from
      time to time additional original documents evidencing an assumption or
      modification of a Mortgage Loan and (ii) any other documents required to be
      delivered by the Seller to the Trustee. In the event that the original Mortgage
      is not delivered and in connection with the payment in full of the related
      Mortgage Loan and the public recording office requires the presentation of
      a
“lost instruments affidavit and indemnity” or any equivalent document, because
      only a copy of the Mortgage can be delivered with the instrument of satisfaction
      or reconveyance, the Seller shall execute and deliver or cause to be executed
      and delivered such a document to the public recording office. In the case where
      a public recording office retains the original recorded Mortgage or in the
      case
      where a Mortgage is lost after recordation in a public recording office, the
      Seller shall deliver or cause to be delivered to the Trustee or the Custodian
      on
      its behalf a copy of such Mortgage certified by such public recording office
      to
      be a true and complete copy of the original recorded Mortgage.

     

    
      
         

      

      
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    In
      addition, in the event that in connection with any Mortgage Loan the Seller
      cannot deliver or cause to be delivered the original or duplicate original
      lender’s title policy (together with all riders thereto), satisfying the
      requirements of clause (v) above, concurrently with the execution and delivery
      hereof because the related Mortgage has not been returned from the applicable
      public recording office, the Seller shall promptly deliver or cause to be
      delivered to the Trustee or the Custodian on its behalf such original or
      duplicate original lender’s title policy (together with all riders thereto) upon
      receipt thereof from the applicable title insurer, but in no event shall any
      such delivery of the original or duplicate original lender’s title policy be
      made later than one year following the Closing Date; provided, however, in
      the
      event the Seller is unable to deliver or cause to be delivered by such date
      the
      original or duplicate original lender’s title policy (together with all riders
      thereto) because the related Mortgage has not been returned by the appropriate
      recording office, the Seller shall deliver or cause to be delivered such
      documents to the Trustee or the Custodian on its behalf as promptly as possible
      upon receipt thereof and, in any event, within 720 days following the Closing
      Date. 

     

    Notwithstanding
      anything to the contrary in this Agreement, within thirty days after the Closing
      Date, the Seller shall either (i) deliver or cause to be delivered to the
      Trustee or the Custodian on its behalf the Mortgage File as required pursuant
      to
      this Section 3.1 for each Delay Delivery Mortgage Loan or (ii) (A) substitute
      or
      cause to be substituted a Substitute Mortgage Loan for the Delay Delivery
      Mortgage Loan or (B) repurchase or cause to be repurchased the Delay Delivery
      Mortgage Loan, which substitution or repurchase shall be accomplished in the
      manner and subject to the conditions set forth in Section 4.1 (treating each
      Delay Delivery Mortgage Loan as a Deleted Mortgage Loan for purposes of such
      Section 4.1), provided, however, that if the Seller fails to deliver a Mortgage
      File for any Delay Delivery Mortgage Loan within the thirty-day period provided
      in the prior sentence, the Seller shall use its best reasonable efforts to
      effect or cause to be effected a substitution, rather than a repurchase of,
      such
      Deleted Mortgage Loan and provided further that the cure period provided for
      in
      Section 4.1 hereof shall not apply to the initial delivery of the Mortgage
      File
      for such Delay Delivery Mortgage Loan, but rather the Seller shall have five
      (5)
      Business Days to cure or cause to be cured such failure to deliver.

     

     

    ARTICLE
      IV

    Representations
      and Warranties

     

    Section
      4.1 Representations
      and Warranties of the Seller.  
      (a) The Seller hereby represents and warrants to the Purchaser, as of the date
      of execution and delivery hereof, that:

     

    
      
         

      

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

     

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

     

    (3) The
      execution and delivery of this Agreement by the Seller, the sale of the Mortgage
      Loans by the Seller under this Agreement, the consummation of any other of
      the
      transactions contemplated by this Agreement, and the fulfillment of or
      compliance with the terms thereof are in the ordinary course of business of
      the
      Seller and will not (a) result in a material breach of any term or provision
      of
      the charter or by-laws of the Seller 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
      Seller 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 Seller of any
      court, regulatory body, administrative agency or governmental body having
      jurisdiction over the Seller; and the Seller 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 Seller’s ability to perform or
      meet any of its obligations under this Agreement.

     

    (4) No
      litigation is pending or, to the best of the Seller’s knowledge, threatened
      against the Seller that would prohibit the execution or delivery of, or
      performance under, this Agreement by the Seller.

     

    
      
         

      

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

     

    
      	 	
              (b)

            	
              The
                Seller hereby makes the representations and warranties set forth
                in
                Schedule
                B
                hereto to the Purchaser, as of the Closing Date, or if so specified
                therein, as of the Cut-off Date.

            

    

     

    (c)   Upon
      discovery by either of the parties hereto of a breach of a representation or
      warranty made pursuant to Schedule
      B
      hereto
      that materially and adversely affects the interests of the Purchaser in any
      Mortgage Loan, the party discovering such breach shall give prompt notice
      thereof to the other party. The Seller hereby covenants that within 90 days
      of
      the earlier of its discovery or its receipt of written notice from the Purchaser
      of a breach of any representation or warranty made pursuant to Schedule
      B
      hereto
      which materially and adversely affects the interests of the Purchaser 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 pool of mortgages listed on Schedule
      B
      hereto
      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 Purchaser at the Mortgage
      Loan
      Purchase Price in the manner set forth below. 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 Seller or the
      Purchaser 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 Purchaser therein, notwithstanding the
      Seller’s lack of knowledge with respect to the substance of such representation
      or warranty, such inaccuracy shall be deemed a breach of the applicable
      representation or warranty.

     

    With
      respect to any Substitute Mortgage Loan or Loans, the Seller shall deliver
      to
      the Trustee or to the Custodian on its behalf the Mortgage Note, the Mortgage,
      the related assignment of the Mortgage, and such other documents and agreements
      as are required by Section 3.1, with the Mortgage Note endorsed and the Mortgage
      assigned as required by Section 3.1. No substitution is permitted to be made
      in
      any calendar month after the Determination Date for such month. Scheduled
      Payments due with respect to Substitute Mortgage Loans in the month of
      substitution will be retained by the Seller. Upon such substitution, the
      Substitute Mortgage Loan or Loans shall be subject to the terms of this
      Agreement in all respects, and the Seller shall be deemed to have made with
      respect to such Substitute Mortgage Loan or Loans, as of the date of
      substitution, the representations and warranties made pursuant to Schedule
      B
      hereto
      with respect to such Mortgage Loan. 

     

    It
      is
      understood and agreed that the obligation under this Agreement of the Seller
      to
      cure, repurchase or replace any Mortgage Loan as to which a breach has occurred
      and is continuing shall constitute the sole remedy against the Seller respecting
      such breach available to the Purchaser on its behalf.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

     

    The
      representations and warranties contained in this Agreement shall not be
      construed as a warranty or guaranty by the Seller as to the future payments
      by
      any Mortgagor.

     

    It
      is
      understood and agreed that the representations and warranties set forth in
      this
      Section 4.1 shall survive the sale of the Mortgage Loans to the Purchaser
      hereunder.

     

     

    ARTICLE
      V

    Miscellaneous

     

    Section
      5.1 Transfer
      Intended as Sale.  
      It is the express intent of the parties hereto that the conveyance of the
      Mortgage Loans by the Seller to the Purchaser be, and be construed as, an
      absolute sale thereof in accordance with GAAP and for regulatory purposes.
      It
      is, further, not the intention of the parties that such conveyances be deemed
      a
      pledge thereof by the Seller to the Purchaser. However, in the event that,
      notwithstanding the intent of the parties, the Mortgage Loans are held to be
      the
      property of the Seller or the Purchaser, respectively, or if for any other
      reason this Agreement is held or deemed to create a security interest in such
      assets, then (i) this Agreement shall be deemed to be a security agreement
      within the meaning of the Uniform Commercial Code of the State of Texas and
      (ii)
      the conveyance of the Mortgage Loans provided for in this Agreement shall be
      deemed to be an assignment and a grant by the Seller to the Purchaser of a
      security interest in all of the Mortgage Loans, whether now owned or hereafter
      acquired.

     

    The
      Seller and the Purchaser shall, to the extent consistent with this Agreement,
      take such actions as may be necessary to ensure that, if this Agreement were
      deemed to create a security interest in the Mortgage Loans, such security
      interest would be deemed to be a perfected security interest of first priority
      under applicable law and will be maintained as such throughout the term of
      the
      Agreement. The Seller and the Purchaser shall arrange for filing any Uniform
      Commercial Code continuation statements in connection with any security interest
      granted hereby.

     

    Section
      5.2 Seller’s
      Consent to Assignment.
      The Seller hereby acknowledges the Purchaser’s right to assign, transfer and
      convey all of the Purchaser’s rights under this Agreement to a third party and
      that the representations and warranties made by the Seller to the Purchaser
      pursuant to this Agreement will, in the case of such assignment, transfer and
      conveyance, be for the benefit of such third party. The Seller hereby consents
      to such assignment, transfer and conveyance.

     

    Section
      5.3 Specific
      Performance.  
      Either party or its assignees may enforce specific performance of this
      Agreement.

    
 

    Section
      5.4 Notices.  
      All notices, demands and requests that may be given or that are required to
      be
      given hereunder shall be sent by United States certified mail, postage prepaid,
      return receipt requested, to the parties at their respective addresses as
      follows:

    

       

        
          	 	
                  If
                    to

                	 
	 	
                  the
                    Purchaser:

                	
                  4000
                    Horizon Way

                
	 	 	
                  Irving,
                    Texas 75063

                
	 	 	
                  Attn:
                    Larry P. Cole

                
	 	 	 
	 	
                  If
                    to the Seller:

                	
                  4000
                    Horizon Way

                
	 	 	
                  Irving,
                    Texas 75063

                
	 	 	
                  Attn:
                    Larry P. Cole

                

        

      

    

    
      

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    Section
      5.5 Choice
      of 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 Texas and the obligations, rights and remedies of
      the
      parties hereto shall be determined in accordance with such laws. 

     

    

    [remainder
      of page intentionally left blank]

    
      
         

      

      
        -12-

        
          

        

      

      
         

        
        

      

    

    IN
      WITNESS WHEREOF, the Purchaser and the Seller have caused their names to be
      signed hereto by their respective officers thereunto duly authorized as of
      the
      30th
      day of
      May, 2006.

     

    
      	 	 	 
	 	FIRST
              HORIZON HOME
              LOAN CORPORATION, as Seller
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Terry
              McCoy
	 	Executive
              Vice
              President

      	 	 	
               

               

               

            
	 	FIRST
              HORIZON
              ASSET SECURITIES INC., as Purchaser
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Alfred
              Chang
	 	Vice
              President

    

     

           

     

     

    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    

    SCHEDULE
      A

     

    [Available
      Upon Request From Trustee]

     

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    

    SCHEDULE
      B

     

    Representations
      and Warranties as to the Mortgage Loans

     

    First
      Horizon Home Loan Corporation (the “Seller”) hereby makes the representations
      and warranties set forth in this Schedule
      B
      on which
      First Horizon Asset Securities Inc. (the “Purchaser”) relies in accepting the
      Mortgage Loans. Such representations and warranties speak as of the execution
      and delivery of the Mortgage Loan Purchase Agreement, dated as of May 30, 2006
      (the “MLPA”), between First Horizon Home Loan Corporation, as seller, and the
      Purchaser and as of the Closing Date, or if so specified herein, as of the
      Cut-off Date or date of origination of the Mortgage Loans, but shall survive
      the
      sale, transfer, and assignment of the Mortgage Loans to the Purchaser and any
      subsequent sale, transfer and assignment by the Purchaser to a third party.
      Capitalized terms used but not otherwise defined in this Schedule
      B
      shall
      have the meanings ascribed thereto in the MLPA or the Pooling and Servicing
      Agreement, dated as of May 1, 2006, between First Horizon Asset Securities
      Inc.,
      as depositor, First Horizon Home Loan Corporation, as master servicer, and
      The
      Bank of New York, as trustee.

     

    
      	 	
              (1)

            	
              The
                information set forth on Schedule
                A
                to
                the MLPA, with respect to each Mortgage Loan is true and correct
                in all
                material respects as of the Closing
                Date.

            

    

     

    
      	 	
              (2)

            	
              Each
                Mortgage is a valid and enforceable first lien on the Mortgaged Property
                subject only to (a) the lien of nondelinquent current real property
                taxes
                and assessments and liens or interests arising under or as a result
                of any
                federal, state or local law, regulation or ordinance relating to
                hazardous
                wastes or hazardous substances and, if the related Mortgaged Property
                is a
                unit in a condominium project or Planned Unit Development, any lien
                for
                common charges permitted by statute or homeowner association fees,
                (b)
                covenants, conditions and restrictions, rights of way, easements
                and other
                matters of public record as of the date of recording of such Mortgage,
                such exceptions appearing of record being generally acceptable to
                mortgage
                lending institutions in the area wherein the related Mortgaged Property
                is
                located or specifically reflected in the appraisal made in connection
                with
                the origination of the related Mortgage Loan, and (c) 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.

            

    

     

    
      	 	
              (3)

            	
              Immediately
                prior to the assignment of the Mortgage Loans to the Purchaser, the
                Seller
                had good title to, and was the sole owner of, each Mortgage Loan
                free and
                clear of any pledge, lien, encumbrance or security interest and had
                full
                right and authority, subject to no interest or participation of,
                or
                agreement with, any other party, to sell and assign the same pursuant
                to
                this Agreement.

            

    

     

    
      	 	
              (4)

            	
              As
                of the date of origination of each Mortgage Loan, there was no delinquent
                tax or assessment lien against the related Mortgaged
                Property.

            

    

     

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    

     

    
      	 	
              (5)

            	
              There
                is no valid offset, defense or counterclaim to any Mortgage Note
                or
                Mortgage, including the obligation of the Mortgagor to pay the unpaid
                principal of or interest on such Mortgage
                Note.

            

    

     

    
      	 	
              (6)

            	
              There
                are no mechanics’ liens or claims for work, labor or material affecting
                any Mortgaged Property which are or may be a lien prior to, or equal
                with,
                the lien of such Mortgage, except those which are insured against
                by the
                title insurance policy referred to in item (11)
                below.

            

    

     

    
      	 	
              (7)

            	
              To
                the best of the Seller’s knowledge, no Mortgaged Property has been
                materially damaged by water, fire, earthquake, windstorm, flood,
                tornado
                or similar casualty (excluding casualty from the presence of hazardous
                wastes or hazardous substances, as to which the Seller makes no
                representation) so as to affect adversely the value of the related
                Mortgaged Property as security for such Mortgage Loan. With respect
                to the
                representations and warranties contained within this item (7) that
                are
                made to the knowledge or the best knowledge of the Seller or as to
                which
                the Seller has no knowledge, if it is discovered that the substance
                of any
                such representation and warranty is inaccurate and the inaccuracy
                materially and adversely affects the value of the related Mortgage
                Loan,
                or the interest therein of the Purchaser, then notwithstanding the
                Seller’s lack of knowledge with respect to the substance of such
                representation and warranty being inaccurate at the time the
                representation and warranty was made, such inaccuracy shall be deemed
                a
                breach of the applicable representation and warranty and the Seller
                shall
                take such action described in Section 4.1(c) of this Agreement in
                respect
                of such Mortgage Loan.

            

    

     

    
      	 	
              (8)

            	
              Each
                Mortgage Loan at origination complied in all material respects with
                applicable local, state and federal laws, including, without limitation,
                usury, equal credit opportunity, real estate settlement procedures,
                truth-in-lending and disclosure laws and specifically applicable
                predatory
                and abusive lending laws, or any noncompliance does not have a material
                adverse effect on the value of the related Mortgage
                Loan.

            

    

     

    
      	 	
              (9)

            	
              No
                Mortgage Loan is a “high cost loan” as defined by the specific applicable
                predatory and abusive lending laws.

            

    

     

    
      	 	
              (10)

            	
              Except
                as reflected in a written document contained in the related Mortgage
                File,
                the Seller has not modified the Mortgage in any material respect;
                satisfied, cancelled or subordinated such Mortgage in whole or in
                part;
                released the related Mortgaged Property in whole or in part from
                the lien
                of such Mortgage; or executed any instrument of release, cancellation,
                modification or satisfaction with respect
                thereto.

            

    

     

    
      	 	
              (11)

            	
              A
                lender’s policy of title insurance together with a condominium endorsement
                and extended coverage endorsement, if applicable, in an amount at
                least
                equal to the Cut-off Date Principal Balance of each such Mortgage
                Loan or
                a commitment (binder) to issue the same was effective on the date
                of the
                origination of each Mortgage Loan, each such policy is valid and
                remains
                in full force and effect, or, in lieu thereof, an Alternative Title
                Product.

            

    

     

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

    

     

    
      	 	
              (12)

            	
              To
                the best of the Seller’s knowledge, all of the improvements which were
                included for the purpose of determining the appraised value of the
                Mortgaged Property lie wholly within the boundaries and building
                restriction lines of such property, and no improvements on adjoining
                properties encroach upon the Mortgaged Property, unless such failure
                to be
                wholly within such boundaries and restriction lines or such encroachment,
                as the case may be, does not have a material effect on the value
                of such
                Mortgaged Property.

            

    

     

    
      	 	
              (13)

            	
              To
                the best of the Seller’s knowledge, as of the date of origination of each
                Mortgage Loan, no improvement located on or being part of the Mortgaged
                Property is in violation of any applicable zoning law or regulation
                unless
                such violation would not have a material adverse effect on the value
                of
                the related Mortgaged Property. To the best of the Seller’s knowledge, all
                inspections, licenses and certificates required to be made or issued
                with
                respect to all occupied portions of the Mortgaged Property and, with
                respect to the use and occupancy of the same, including but not limited
                to
                certificates of occupancy and fire underwriting certificates, have
                been
                made or obtained from the appropriate authorities, unless the lack
                thereof
                would not have a material adverse effect on the value of such Mortgaged
                Property.

            

    

     

    
      	 	
              (14)

            	
              The
                Mortgage Note and the related Mortgage are genuine, and each is the
                legal,
                valid and binding obligation of the maker thereof, enforceable in
                accordance with its terms and under applicable
                law.

            

    

     

    
      	 	
              (15)

            	
              The
                proceeds of the Mortgage Loans have been fully disbursed and there
                is no
                requirement for future advances
                thereunder.

            

    

     

    
      	 	
              (16)

            	
              The
                related Mortgage contains customary and enforceable provisions which
                render the rights and remedies of the holder thereof adequate for
                the
                realization against the Mortgaged Property of the benefits of the
                security, including, (i) in the case of a Mortgage designated as
                a deed of
                trust, by trustee’s sale, and (ii) otherwise by judicial
                foreclosure.

            

    

     

    
      	 	
              (17)

            	
              With
                respect to each Mortgage constituting a deed of trust, a trustee,
                duly
                qualified under applicable law to serve as such, has been properly
                designated and currently so serves and is named in such Mortgage,
                and no
                fees or expenses are or will become payable by the holder of the
                Mortgage
                to the trustee under the deed of trust, except in connection with
                a
                trustee’s sale after default by the
                Mortgagor.

            

    

     

    
      	 	
              (18)

            	
              As
                of the Closing Date, the improvements upon each Mortgaged Property
                are
                covered by a valid and existing hazard insurance policy with a generally
                acceptable carrier that provides for fire and extended coverage and
                coverage for such other hazards as are customarily required by
                institutional single family mortgage lenders in the area where the
                Mortgaged Property is located, and the Seller has received no notice
                that
                any premiums due and payable thereon have not been paid; the Mortgage
                obligates the Mortgagor thereunder to maintain all such insurance
                including flood insurance at the Mortgagor’s cost and expense. Anything to
                the contrary in this item (18) notwithstanding, no breach of this
                item
                (18) shall be deemed to give rise to any obligation of the Seller
                to
                repurchase or substitute for such affected Mortgage Loan or Loans
                so long
                as the Seller maintains a blanket
                policy.

            

    

     

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

    

     

    
      	 	
              (19)

            	
              If
                at the time of origination of each Mortgage Loan, the related Mortgaged
                Property was in an area then identified in the Federal Register by
                the
                Federal Emergency Management Agency as having special flood hazards,
                a
                flood insurance policy in a form meeting the then-current requirements
                of
                the Flood Insurance Administration is in effect with respect to such
                Mortgaged Property with a generally acceptable
                carrier.

            

    

     

    
      	 	
              (20)

            	
              To
                the best of the Seller’s knowledge, there is no proceeding pending or
                threatened for the total or partial condemnation of any Mortgaged
                Property, nor is such a proceeding currently
                occurring.

            

    

     

    
      	 	
              (21)

            	
              To
                best of the Seller’s knowledge, there is no material event which, with the
                passage of time or with notice and the expiration of any grace or
                cure
                period, would constitute a material non-monetary default, breach,
                violation or event of acceleration under the Mortgage or the related
                Mortgage Note; and the Seller has not waived any material non-monetary
                default, breach, violation or event of
                acceleration.

            

    

     

    
      	 	
              (22)

            	
              Any
                leasehold estate securing a Mortgage Loan has a stated term at least
                as
                long as the term of the related Mortgage
                Loan.

            

    

     

    
      	 	
              (23)

            	
              Each
                Mortgage Loan was selected from among the outstanding fixed-rate
                one- to
                four-family mortgage loans in the Seller’s portfolio at the Closing Date
                as to which the representations and warranties made with respect
                to the
                Mortgage Loans set forth in this Schedule
                B
                can be made. No such selection was made in a manner intended to adversely
                affect the interests of the
                Certificateholders.

            

    

     

    
      	 	
              (24)

            	
              The
                Mortgage Loans provide for the full amortization of the amount financed
                over a series of monthly payments.

            

    

     

    
      	 	
              (25)

            	
              At
                origination, substantially all of the Mortgage Loans in the Mortgage
                Pool
                had stated terms to maturity of between 20 and 30
                years.

            

    

     

    
      	 	
              (26)

            	
              Scheduled
                monthly payments made by the Mortgagors on the Mortgage Loans either
                earlier or later than their Due Dates will not affect the amortization
                schedule or the relative application of the payments to principal
                and
                interest.

            

    

     

    
      	 	
              (27)

            	
              Approximately
                2.14% of the Mortgage Loans in the Mortgage Pool contain a prepayment
                penalty pricing option. The Mortgagors may prepay all the other Mortgage
                Loans at any time without penalty.

            

    

     

    
      
         

      

      
        B-4

        
          

        

      

      
         

      

    

    

     

    
      	 	
              (28)

            	
              21.69%
                of the Mortgage Loans are jumbo mortgage loans that have Stated Principal
                Balances at origination that exceed the then applicable limitations
                for
                purchase by Fannie Mae and Freddie
                Mac.

            

    

     

    
      	 	
              (29)

            	
              Each
                Mortgage Loan in the Mortgage Pool was originated on or after August
                31,
                2005.

            

    

     

    
      	 	
              (30)

            	
              The
                latest stated maturity date of any Mortgage Loan in the Mortgage
                Pool is
                June 1, 2036, and the earliest is April 1, 2026.
                

            

    

     

    
      	 	
              (31)

            	
              No
                Mortgage Loan was delinquent more than 30 days as of the Cut-off
                Date.

            

    

     

    
      	 	
              (32)

            	
              No
                Mortgage Loan had a Loan-to-Value Ratio at origination of more than
                95%.
                Generally, each Mortgage Loan with a Loan-to-Value Ratio at origination
                of
                greater than 80% is covered by a Primary Insurance Policy issued
                by a
                mortgage insurance company that is acceptable to Fannie Mae or Freddie
                Mac.

            

    

     

    
      	 	
              (33)

            	
              Each
                Mortgage Loan constitutes a “qualified mortgage” within the meaning of
                Section 860G(a)(3) of the Code.

            

    

     

    
      	 	
              (34)

            	
              No
                Mortgage Loan is a “high cost loan” as defined by the specific applicable
                local, state or federal predatory and abusive lending laws. In addition,
                no Mortgage Loan is a “High Cost Loan” or a “Covered Loan”, as applicable
                (as such terms are defined in the then current Standard & Poor’s
                LEVELSâ
                Glossary which is now Version 5.6c Revised, Appendix E) and no Mortgage
                Loan originated on or after October 1, 2002 through March 6, 2003
                is
                governed by the Georgia Fair Lending
                Act.

            

    

     

    
      	 	
              (35)

            	
              Appraisal
                form 1004 or form 2055 with an interior inspection for first lien
                mortgage
                loans has been obtained for all related mortgaged properties, other
                than
                condominiums, investment properties, two to four unit properties
                and
                exempt properties, for which appraisal form 1004 or form 2055 has
                not been
                obtained.

            

    

     

    Appraisal
      form 704, 2065 or 2055 with an exterior only inspection for junior lien
      mortgages combined with first lien mortgages (including home equity lines of
      credit) has been obtained for all related mortgaged properties, other than
      condominiums, investment properties, two to four unit properties and exempt
      properties, for which appraisal form 1004 or form 2055 has not been obtained.
      Appraisal form 704, 2065 or 2055 with an exterior only inspection for all other
      junior lien mortgages has been obtained for all related mortgaged properties,
      other than those related mortgaged properties that qualify for an Automated
      Valuation Model.

     

    
      
         

      

      
        B-5FIRST
      HORIZON ASSET SECURITIES INC.

     

    Depositor

     

    FIRST
      HORIZON HOME LOAN CORPORATION

     

    Master
      Servicer

     

    and

     

    THE
      BANK
      OF NEW YORK,

     

    Trustee

     

    _____________________________________________________

     

    POOLING
      AND SERVICING AGREEMENT

     

    Dated
      as
      of May 1, 2006

     

    _____________________________________________________

     

    FIRST
      HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2006-AA3

     

    MORTGAGE
      PASS-THROUGH CERTIFICATES, SERIES 2006-AA3

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

     

    
      	
              ARTICLE
                I DEFINITIONS

            	
              4

            
	
              ARTICLE
                II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
                WARRANTIES

            	
              33

            
	
              SECTION
                2.1

            	
              Conveyance
                of Mortgage Loans.

            	
              33

            
	
              SECTION
                2.2

            	
              Acceptance
                by Trustee of the Mortgage Loans.

            	
              37

            
	
              SECTION
                2.3

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

            	
              39

            
	
              SECTION
                2.4

            	
              Representations
                and Warranties of the Depositor as to the Mortgage Loans.

            	
              41

            
	
              SECTION
                2.5

            	
              Delivery
                of Opinion of Counsel in Connection with Substitutions.

            	
              42

            
	
              SECTION
                2.6

            	
              Execution
                and Delivery of Certificates.

            	
              42

            
	
              SECTION
                2.7

            	
              REMIC
                Matters.

            	
              43

            
	
              SECTION
                2.8

            	
              Covenants
                of the Master Servicer.

            	
              43

            
	
              ARTICLE
                III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

            	
              43

            
	
              SECTION
                3.1

            	
              Master
                Servicer to Service Mortgage Loans.

            	
              43

            
	
              SECTION
                3.2

            	
              Subservicing;
                Enforcement of the Obligations of Servicers.

            	
              44

            
	
              SECTION
                3.3

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

            	
              45

            
	
              SECTION
                3.4

            	
              Trustee
                to Act as Master Servicer.

            	
              45

            
	
              SECTION
                3.5

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

            	
              46

            
	
              SECTION
                3.6

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

            	
              49

            
	
              SECTION
                3.7

            	
              Access
                to Certain Documentation and Information Regarding the Mortgage
                Loans.

            	
              49

            
	
              SECTION
                3.8

            	
              Permitted
                Withdrawals from the Certificate Account and Distribution
                Account.

            	
              50

            
	
              SECTION
                3.9

            	
              Maintenance
                of Hazard Insurance; Maintenance of Primary Insurance
                Policies.

            	
              51

            
	
              SECTION
                3.10

            	
              Enforcement
                of Due-on-Sale Clauses; Assumption Agreements.

            	
              53

            
	
              SECTION
                3.11

            	
              Realization
                Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
                Loans.

            	
              54

            
	
              SECTION
                3.12

            	
              Trustee
                to Cooperate; Release of Mortgage Files.

            	
              57

            
	
              SECTION
                3.13

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

            	
              57

            
	
              SECTION
                3.14

            	
              Master
                Servicing Compensation.

            	
              58

            
	
              SECTION
                3.15

            	
              Access
                to Certain Documentation.

            	
              58

            
	
              SECTION
                3.16

            	
              Annual
                Statement as to Compliance.

            	
              59

            
	
              SECTION
                3.17

            	
              Errors
                and Omissions Insurance; Fidelity Bonds.

            	
              59

            
	
              SECTION
                3.18

            	
              Notification
                of Adjustments.

            	
              59

            
	
              ARTICLE
                IV DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER

            	
              60

            
	
              SECTION
                4.1

            	
              Advances.

            	
              60

            
	
              SECTION
                4.2

            	
              Priorities
                of Distribution.

            	
              60

            
	
              SECTION
                4.3

            	
              Method
                of Distribution.

            	
              63

            
	
              SECTION
                4.4

            	
              Allocation
                of Losses.

            	
              64

            
	
              SECTION
                4.5

            	
              [RESERVED]

            	
              65

            
	
              SECTION
                4.6

            	
              Monthly
                Statements to Certificateholders.

            	
              65

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    
      	
              ARTICLE
                V THE CERTIFICATES

            	
              67

            
	
              SECTION
                5.1

            	
              The
                Certificates.

            	
              67

            
	
              SECTION
                5.2

            	
              Certificate
                Register; Registration of Transfer and Exchange of
                Certificates.

            	
              68

            
	
              SECTION
                5.3

            	
              Mutilated,
                Destroyed, Lost or Stolen Certificates.

            	
              74

            
	
              SECTION
                5.4

            	
              Persons
                Deemed Owners.

            	
              74

            
	
              SECTION
                5.5

            	
              Access
                to List of Certificateholders’ Names and Addresses.

            	
              75

            
	
              SECTION
                5.6

            	
              Maintenance
                of Office or Agency.

            	
              75

            
	
              ARTICLE
                VI THE DEPOSITOR AND THE MASTER SERVICER

            	
              75

            
	
              SECTION
                6.1

            	
              Respective
                Liabilities of the Depositor and the Master Servicer.

            	
              75

            
	
              SECTION
                6.2

            	
              Merger
                or Consolidation of the Depositor or the Master Servicer.

            	
              75

            
	
              SECTION
                6.3

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

            	
              76

            
	
              SECTION
                6.4

            	
              Limitation
                on Resignation of Master Servicer.

            	
              76

            
	
              ARTICLE
                VII DEFAULT

            	
              77

            
	
              SECTION
                7.1

            	
              Events
                of Default.

            	
              77

            
	
              SECTION
                7.2

            	
              Trustee
                to Act; Appointment of Successor.

            	
              79

            
	
              SECTION
                7.3

            	
              Notification
                to Certificateholders.

            	
              80

            
	
              ARTICLE
                VIII CONCERNING THE TRUSTEE

            	
              81

            
	
              SECTION
                8.1

            	
              Duties
                of Trustee.

            	
              81

            
	
              SECTION
                8.2

            	
              Certain
                Matters Affecting the Trustee.

            	
              82

            
	
              SECTION
                8.3

            	
              Trustee
                Not Liable for Certificates or Mortgage Loans.

            	
              84

            
	
              SECTION
                8.4

            	
              Trustee
                May Own Certificates.

            	
              84

            
	
              SECTION
                8.5

            	
              Trustee’s
                Fees and Expenses.

            	
              84

            
	
              SECTION
                8.6

            	
              Eligibility
                Requirements for Trustee.

            	
              85

            
	
              SECTION
                8.7

            	
              Resignation
                and Removal of Trustee.

            	
              85

            
	
              SECTION
                8.8

            	
              Successor
                Trustee.

            	
              86

            
	
              SECTION
                8.9

            	
              Merger
                or Consolidation of Trustee.

            	
              87

            
	
              SECTION
                8.10

            	
              Appointment
                of Co-Trustee or Separate Trustee.

            	
              87

            
	
              SECTION
                8.11

            	
              Tax
                Matters.

            	
              89

            
	
              ARTICLE
                IX TERMINATION

            	
              91

            
	
              SECTION
                9.1

            	
              Termination
                upon Liquidation or Purchase of all Mortgage Loans.

            	
              91

            
	
              SECTION
                9.2

            	
              Final
                Distribution on the Certificates.

            	
              91

            
	
              SECTION
                9.3

            	
              Additional
                Termination Requirements.

            	
              92

            
	
              ARTICLE
                X EXCHANGE ACT REPORTING

            	
              93

            
	
              SECTION
                10.1

            	
              Filing
                Obligations.

            	
              93

            
	
              SECTION
                10.2

            	
              Form
                10-D Filings.

            	
              93

            
	
              SECTION
                10.3

            	
              Form
                8-K Filings.

            	
              94

            
	
              SECTION
                10.4

            	
              Form
                10-K Filings.

            	
              95

            
	
              SECTION
                10.5

            	
              Sarbanes-Oxley
                Certification.

            	
              95

            
	
              SECTION
                10.6

            	
              Form
                15 Filing.

            	
              96

            
	
              SECTION
                10.7

            	
              Report
                on Assessment of Compliance and Attestation.

            	
              96

            
	
              SECTION
                10.8

            	
              Use
                of Subservicers and Subcontractors.

            	
              97

            
	
              SECTION
                10.9

            	
              Amendments.

            	
              98

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    
      	
              ARTICLE
                XI MISCELLANEOUS PROVISIONS

            	
              99

            
	
              SECTION
                11.1

            	
              Amendment.

            	
              99

            
	
              SECTION
                11.2

            	
              Recordation
                of Agreement; Counterparts.

            	
              100

            
	
              SECTION
                11.3

            	
              Governing
                Law.

            	
              100

            
	
              SECTION
                11.4

            	
              Intention
                of Parties.

            	
              101

            
	
              SECTION
                11.5

            	
              Notices.

            	
              101

            
	
              SECTION
                11.6

            	
              Severability
                of Provisions.

            	
              102

            
	
              SECTION
                11.7

            	
              Assignment.

            	
              102

            
	
              SECTION
                11.8

            	
              Limitation
                on Rights of Certificateholders.

            	
              102

            
	
              SECTION
                11.9

            	
              Inspection
                and Audit Rights.

            	
              103

            
	
              SECTION
                11.10

            	
              Certificates
                Nonassessable and Fully Paid.

            	
              104

            
	
              SECTION
                11.11

            	
              Limitations
                on Actions; No Proceedings.

            	
              104

            
	
              SECTION
                11.12

            	
              Acknowledgment
                of Seller.

            	
              104

            

    

    

    SCHEDULES

     

    
      	
              Schedule
                I:

            	
              Mortgage
                Loan Schedule

            	
              S-I-1

            
	
              Schedule
                II:

            	
              Representations
                and Warranties of the Master Servicer

            	
              S-II-1

            
	
              Schedule
                III:

            	
              Form
                of Monthly Master Servicer Report

            	
              S-III-1

            

    

    

    EXHIBITS

     

    
      	
              Exhibit
                A:

            	
              Form
                of Senior Certificate

            	
              A-1

            
	
              Exhibit
                B:

            	
              Form
                of Subordinated Certificate

            	
              B-1

            
	
              Exhibit
                C:

            	
              Form
                of Residual Certificate

            	
              C-1

            
	
              Exhibit
                D:

            	
              Form
                of Reverse of Certificates

            	
              D-1

            
	
              Exhibit
                E:

            	
              Form
                of Initial Certification

            	
              E-1

            
	
              Exhibit
                F:

            	
              Form
                of Delay Delivery Certification

            	
              F-1

            
	
              Exhibit
                G:

            	
              Form
                of Subsequent Certification of Custodian

            	
              G-1

            
	
              Exhibit
                H:

            	
              Transfer
                Affidavit

            	
              H-1

            
	
              Exhibit
                I:

            	
              Form
                of Transferor Certificate

            	
              I-1

            
	
              Exhibit
                J:

            	
              Form
                of Investment Letter [Non-Rule 144A]

            	
              J-1

            
	
              Exhibit
                K:

            	
              Form
                of Rule 144A Letter

            	
              K-1

            
	
              Exhibit
                L:

            	
              Request
                for Release (for Trustee)

            	
              L-1

            
	
              Exhibit
                M:

            	
              Request
                for Release (Mortgage Loan)

            	
              M-1

            
	
              Exhibit
                N-1:

            	
              Form
                of Annual Certification (Subservicer)

            	
              N-1-1

            
	
              Exhibit
                N-2:

            	
              Form
                of Annual Certification (Trustee)

            	
              N-2-1

            
	
              Exhibit
                O:

            	
              Form
                of Servicing Criteria to be Addressed in Assessment of
                Compliance

            	
              O-1

            
	
              Exhibit
                P:

            	
              List
                of Item 1119 Parties

            	
              P-1

            
	
              Exhibit
                Q:

            	
              Form
                of Sarbanes-Oxley Certification

            	
              Q-1

            

    

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    THIS
      POOLING AND SERVICING AGREEMENT, dated as of May 1, 2006, among FIRST HORIZON
      ASSET SECURITIES INC., a Delaware corporation, as depositor (the “Depositor”),
      FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation, as master servicer
      (the “Master Servicer”), and THE BANK OF NEW YORK, a banking corporation
      organized under the laws of the State of New York, as trustee (the
“Trustee”).

     

    WITNESSETH
      THAT

     

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

     

    PRELIMINARY
      STATEMENT

     

    The
      Depositor is the owner of the Trust Fund that is hereby conveyed to the Trustee
      in return for the Certificates. The Trust Fund for federal income tax purposes
      will consist of a single REMIC. The Certificates will represent the entire
      beneficial ownership interest in the Trust Fund. The Regular Certificates will
      represent “regular interests” in the 2006-AA3 REMIC. The Class A-R Certificates
      will represent the residual interests in the 2006-AA3 REMIC, as described in
      Section 2.7. The “latest possible maturity date” for federal income tax purposes
      of the 2006-AA3 REMIC regular interests created hereby will be the Latest
      Possible Maturity Date.

     

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

     

    

    

    

    [Remainder
      of Page Intentionally Left Blank]

     

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
              Class
                Designation

            	 	
              Initial
                Class Certificate Balance

            	 	
              Initial

              Pass
                Through Rate

            	 	
              Minimum
                Denomination

            	 	
              Integral
                Multiples in Excess Minimum

            	 
	
              Class
                A-1

            	 	
              $

            	
              356,489,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              25,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                A-2

            	 	
              $

            	
              21,148,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              25,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                A-R

            	 	
              $

            	
              100.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100

            	 	
              $

            	
              N/A

            	 
	
              Class
                B-1

            	 	
              $

            	
              11,001,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                B-2

            	 	
              $

            	
              3,801,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                B-3

            	 	
              $

            	
              2,800,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                B-4

            	 	
              $

            	
              2,000,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                B-5

            	 	
              $

            	
              1,600,000.00

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100,000

            	 	
              $

            	
              1,000

            	 
	
              Class
                B-6

            	 	
              $

            	
              1,200,863.07

            	 	 	
              6.4378%(1

            	
              )

            	
              $

            	
              100,000

            	 	
              $

            	
              1,000

            	 

    

    

     

    (1)
      The
      Pass-Through Rates for the Certificates for each subsequent Distribution Date
      will equal the Weighted Average Adjusted Net Mortgage Rate, as of the first
      day
      of the month immediately prior to the month in which the relevant Distribution
      Date occurs, after taking into account scheduled payments of principal on that
      date and any Principal Prepayments received on or after such date and
      distributed to Certificateholders on the prior Distribution Date.

     

    
      	
              Accretion
                Directed Certificates

            	
              None.

            
	
              Accrual
                Certificates

            	
              None.

            
	
              Accrual
                Components

            	
              None.

            
	
              Book-Entry
                Certificates

            	
              All
                Classes of Certificates other than the Physical
                Certificates.

            
	
              COFI
                Certificates

            	
              None.

            
	
              Component
                Certificates

            	
              None.

            
	
              Components

            	
              None.

            
	
              Delay
                Certificates

            	
              All
                interest-bearing Classes of Certificates other than the Non-Delay
                Certificates, if any.

            
	
              ERISA-Restricted
                Certificates

            	
              The
                Residual Certificates, Private Certificates and Certificates of any
                Class
                that no longer satisfy the applicable rating requirement of the
                Underwriters’ Exemption.

            
	
              Floating
                Rate Certificates

            	
              None.

            
	
              Insured
                Retail Certificates

            	
              None.

            
	
              Inverse
                Floating Rate Certificates

            	
              None.

            
	
              LIBOR
                Certificates

            	
              None.

            
	
              Non-Delay
                Certificates

            	
              None.

            
	
              Notional
                Amount Components

            	
              None.

            
	
              Notional
                Amount Certificates

            	
              None.

            
	
              Offered
                Certificates

            	
              All
                Classes of the Certificates other than the Private
                Certificates.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              Physical
                Certificates

            	
              The
                Residual Certificates and the Private Certificates.

            
	
              Planned
                Principal Classes

            	
              None.

            
	
              Principal
                Only Certificates

            	
              None.

            
	
              Private
                Certificates

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

            
	
              Rating
                Agencies

            	
              Fitch
                and Moody’s; except that, for the purposes of the Class B-1, Class B-2,
                Class B-3, Class B-4 and Class B-5 Certificates, Fitch shall be the
                sole
                Rating Agency. The Class B-6 Certificates will not be
                rated.

            
	
              Regular
                Certificates

            	
              All
                Classes of Certificates, other than the Residual
                Certificates.

            
	
              Residual
                Certificates

            	
              The
                Class A-R Certificates.

            
	
              Scheduled
                Principal Classes

            	
              None.

            
	
              Senior
                Certificates

            	
              The
                Class A-1, Class A-2 and Class A-R Certificates,
                collectively.

            
	
              Senior
                Mezzanine Certificates

            	
              The
                Class A-2 Certificates.

            
	
              Subordinated
                Certificates

            	
              The
                Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
                Certificates.

            
	
              Super
                Senior Certificates

            	
              The
                Class A-1 Certificates.

            
	
              Support
                Classes

            	
              None.

            
	
              Targeted
                Principal Classes

            	
              None.

            
	
              Underwriter

            	
              Credit
                Suisse Securities (USA) LLC

            

    

    

     

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

     

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    ARTICLE
      I

    DEFINITIONS

     

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

     

    2006-AA3
      REMIC: The segregated pool of assets consisting of the Trust Fund.

     

    Accrued
      Certificate Interest: For any Class of Certificates for any Distribution Date,
      the interest accrued during the related Interest Accrual Period at the
      applicable Pass-Through Rate on the Class Certificate Balance of such Class
      of
      Certificates immediately prior to such Distribution Date, less such Class’ share
      of any Net Interest Shortfall.

     

    Additional
      Designated Information: As defined in Section 10.2.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Amount
      Held for Future Distribution: As to any Distribution Date, the aggregate amount
      held in the Certificate Account at the close of business on the related
      Determination Date on account of (i) Principal Prepayments received after the
      related Prepayment Period and Liquidation Proceeds received in the month of
      such
      Distribution Date and (ii) all Scheduled Payments due after the Due
      Date.

     

    Appraised
      Value: With respect to any Mortgage Loan, the Appraised Value of the related
      Mortgaged Property shall be: (i) with respect to a Mortgage Loan other than
      a
      Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged Property
      based upon the appraisal made at the time of the origination of such Mortgage
      Loan and (b) the sales price of the Mortgaged Property at the time of the
      origination of such Mortgage Loan; (ii) with respect to a Refinancing Mortgage
      Loan other than a Streamlined Documentation Mortgage Loan, the value of the
      Mortgaged Property based upon the appraisal made at the time of the origination
      of such Refinancing Mortgage Loan; and (iii) with respect to a Streamlined
      Documentation Mortgage Loan, (a) if the loan-to-value ratio with respect to
      the
      Original Mortgage Loan at the time of the origination thereof was 90% or less,
      the value of the Mortgaged Property based upon the appraisal made at the time
      of
      the origination of the Original Mortgage Loan and (b) if the loan-to-value
      ratio
      with respect to the Original Mortgage Loan at the time of the origination
      thereof was greater than 90%, the value of the Mortgaged Property based upon
      the
      appraisal (which may be a drive-by appraisal) made at the time of the
      origination of such Streamlined Documentation Mortgage Loan.

     

    Available
      Funds: With respect to any Distribution Date, an amount equal to the sum
      of:

     

    
      	 	
              ·

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

            

    

     

    
      	 	
              ·

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

            

    

     

    
      	 	
              ·

            	
              all
                Principal Prepayments received in respect of the Mortgage Loans during
                the
                related Prepayment Period, plus interest received thereon, net of
                any
                Prepayment Interest Excess;

            

    

     

    
      	 	
              ·

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

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      	 	
              ·

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

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    Certificate
      Account: The separate Eligible Account or Accounts created and maintained by
      the
      Master Servicer pursuant to Section 3.5 with a depository institution in the
      name of the Trustee for the benefit of the Trustee on behalf of
      Certificateholders and designated “First Horizon Home Loan Corporation in trust
      for the registered holders of First Horizon Asset Securities Inc. Mortgage
      Pass-Through Certificates, Series 2006-AA3.”

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    Certification
      Party: As defined in Section 10.5.

     

    Certifying
      Person: As defined in Section 10.5.

     

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

     

    Class
      Certificate Balance: With respect to any Class of Certificates and as of any
      Distribution Date the aggregate of the Certificate Principal Balances of all
      Certificates of such Class as of such date, plus the amount of any Unanticipated
      Recoveries added to the Class Certificate Balance of such Class of Certificate
      pursuant to Section 4.2(f).

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    Closing
      Date: May 30, 2006.

     

    Code:
      The
      Internal Revenue Code of 1986, including any successor or amendatory
      provisions.

     

    COFI:
      Not
      applicable.

     

    COFI
      Certificates: Not applicable.

     

    Compensating
      Interest: As to any Distribution Date and any Principal Prepayment in respect
      of
      a Mortgage Loan that is received during the period from the sixteenth day of
      the
      month (or, in the case of the first Distribution Date, from the Cut-off Date)
      prior to the month of such Distribution Date through the last day of such month,
      an additional payment made by the Master Servicer, to the extent funds are
      available from the Master Servicing Fee, equal to the amount of interest at
      the
      Adjusted Net Mortgage Rate for that Mortgage Loan from the date of the
      prepayment to the related Due Date; provided that the aggregate of all such
      payments as to the Mortgage Loans shall not exceed 0.0083% of the Pool Principal
      Balance as of the related Determination Date, and provided further that if
      a
      partial Principal Prepayment is applied on or after the first day of the month
      following the month of receipt, no additional payment is required for such
      Principal Prepayment.

     

    Component:
      Not applicable.

     

    Component
      Balance: Not applicable.

     

    Component
      Certificates: Not applicable.

     

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

     

    Coop
      Shares: Shares issued by a Cooperative Corporation.

     

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

     

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

     

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

     

    Corporate
      Trust Office: The designated office of the Trustee in the State of New York
      at
      which at any particular time its corporate trust business with respect to this
      Agreement shall be administered, which office at the date of the execution
      of
      this Agreement is located at The Bank of New York, 101 Barclay Street, 8W,
      New
      York, New York 10286 (Attn: Corporate Trust Administration—First Horizon Asset
      Securities Inc. Series 2006-AA3), facsimile no. (212) 815-3986, and which is
      the
      address to which notices to and correspondence with the Trustee should be
      directed.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

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

     

    Custodial
      Agreement: The Custodial Agreement dated as of May 30, 2006 by and among the
      Trustee, the Master Servicer and the Custodian.

     

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

     

    Cut-off
      Date: May 1, 2006.

     

    Cut-off
      Date Pool Principal Balance: $400,039,963.07.

     

    Cut-off
      Date Principal Balance: As to any Mortgage Loan, the Stated Principal Balance
      thereof as of the close of business on the Cut-off Date.

     

    Debt
      Service Reduction: With respect to any Mortgage Loan, a reduction by a court
      of
      competent jurisdiction in a proceeding under the Bankruptcy Code in the
      Scheduled Payment for such Mortgage Loan which became final and non-appealable,
      except such a reduction resulting from a Deficient Valuation or any reduction
      that results in a permanent forgiveness of principal.

     

    Defective
      Mortgage Loan: Any Mortgage Loan which is required to be repurchased pursuant
      to
      Section 2.2 or 2.3.

     

    Deficient
      Valuation: With respect to any Mortgage Loan, a valuation by a court of
      competent jurisdiction of the Mortgaged Property in an amount less than the
      then-outstanding indebtedness under the Mortgage Loan, or any reduction in
      the
      amount of principal to be paid in connection with any Scheduled Payment that
      results in a permanent forgiveness of principal, which valuation or reduction
      results from an order of such court which is final and non-appealable in a
      proceeding under the Bankruptcy Code.

     

    Definitive
      Certificates: Any Certificate evidenced by a Physical Certificate and any
      Certificate issued in lieu of a Book-Entry Certificate pursuant to Section
      5.2(e).

     

    Delay
      Certificates: As specified in the Preliminary Statement.

     

    Delay
      Delivery Mortgage Loans: The Mortgage Loans for which all or a portion of a
      related Mortgage File is not delivered to the Trustee on the Closing Date.
      The
      number of Delay Delivery Mortgage Loans shall not exceed 25% of the aggregate
      number of Mortgage Loans as of the Closing Date.

     

    Deleted
      Mortgage Loan: As defined in Section 2.3(b) hereof.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Denomination:
      With respect to each Certificate, the amount set forth on the face thereof
      as
      the “Initial Certificate Balance of this Certificate” or the Percentage Interest
      appearing on the face thereof.

     

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

     

    Depository:
      The initial Depository shall be The Depository Trust Company, the nominee of
      which is CEDE & Co., as the registered Holder of the Book-Entry
      Certificates. The Depository shall at all times be a “clearing corporation” as
      defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State
      of
      New York.

     

    Depository
      Participant: A broker, dealer, bank or other financial institution or other
      Person for whom from time to time a Depository effects book-entry transfers
      and
      pledges of securities deposited with the Depository.

     

    Determination
      Date: As to any Distribution Date, the earlier of (i) the third Business Day
      after the 15th day of each month, and (ii) the second Business Day prior to
      the
      related Distribution Date.

     

    Distribution
      Account: The separate Eligible Account created and maintained by the Trustee
      pursuant to Section 3.5 in the name of the Trustee for the benefit of the
      Certificateholders and designated “The Bank of New York, in trust for registered
      Holders of First Horizon Asset Securities Inc. Mortgage Pass-Through
      Certificates, Series 2006-AA3.” Funds in the Distribution Account shall be held
      in trust for the Certificateholders for the uses and purposes set forth in
      this
      Agreement.

     

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

     

    Distribution
      Date: The 25th day of each calendar month after the initial issuance of the
      Certificates, or if such 25th day is not a Business Day, the next succeeding
      Business Day, commencing in June 2006.

     

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

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    Event
      of
      Default: As defined in Section 7.1 hereof.

     

    Excess
      Loss: The amount of any (i) Fraud Loss realized after the Fraud Loss Coverage
      Termination Date, (ii) Special Hazard Loss realized after the Special Hazard
      Coverage Termination Date or (iii) Deficient Valuation realized after the
      Bankruptcy Coverage Termination Date.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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.

     

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

     

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

     

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

     

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

     

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

     

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

     

    Fraud
      Loss Coverage Amount: As of the Closing Date, $8,000,799. As of any Distribution
      Date from the first anniversary of the Cut-off Date and prior to the fifth
      anniversary of the Cut-off Date, the Fraud Loss Coverage Amount shall equal
      $4,000,400 minus the aggregate amount of Fraud Losses that would have been
      allocated to the Subordinated Certificates in the absence of the Loss Allocation
      Limitation since the Cut-off Date. As of any Distribution Date on or after
      the
      earlier of the Cross-over Date or the fifth anniversary
      of the Cut-off Date, the Fraud Loss Coverage Amount shall be zero.

     

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

     

    Fraud
      Losses: Realized Losses on Mortgage Loans as to which a loss is sustained by
      reason of a default arising from fraud, dishonesty or misrepresentation in
      connection with the related Mortgage Loan, including a loss by reason of the
      denial of coverage under any related Primary Insurance Policy because of such
      fraud, dishonesty or misrepresentation.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Index:
      Not applicable.

     

    Indirect
      Participant: A broker, dealer, bank or other financial institution or other
      Person that clears through or maintains a custodial relationship with a
      Depository Participant.

     

    Initial
      Bankruptcy Coverage Amount: $150,000.

     

    Initial
      Component Balance: Not applicable.

     

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

     

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

     

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

     

    Insured
      Retail Certificates: Not applicable.

     

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

     

    Interest
      Determination Date: Not applicable.

     

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

     

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

     

    Lender
      PMI Mortgage Loan: Not applicable.

     

    LIBOR:
      Not applicable.

     

    LIBOR
      Certificates: Not applicable.

     

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

     

    
      
        
        

      

      
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    Liquidated
      Mortgage Loan: With respect to any Distribution Date, a defaulted Mortgage
      Loan
      (including any REO Property) which was liquidated in the calendar month
      preceding the month of such Distribution Date and as to which the Master
      Servicer has determined (in accordance with this Agreement) that it has received
      all amounts it expects to receive in connection with the liquidation of such
      Mortgage Loan, including the final disposition of an REO Property.

     

    Liquidation
      Proceeds: All cash amounts, other than Insurance Proceeds and Unanticipated
      Recoveries, received in connection with the partial or complete liquidation
      of
      defaulted Mortgage Loans, whether through trustee’s sale, foreclosure sale or
      otherwise or amounts received in connection with any condemnation or partial
      release of a Mortgaged Property and any other proceeds received in connection
      with an REO Property, less the sum of related unreimbursed Master Servicing
      Fees, Servicing Advances and Advances.

     

    Loan-to-Value
      Ratio: With respect to any Mortgage Loan and as to any date of determination,
      the fraction (expressed as a percentage) the numerator of which is the principal
      balance of the related Mortgage Loan at such date of determination and the
      denominator of which is the Appraised Value of the related Mortgaged
      Property.

     

    Loss
      Allocation Limitation: As defined in Section 4.4(g).

     

    Lost
      Mortgage Note: Any Mortgage Note the original of which was permanently lost
      or
      destroyed and has not been replaced.

     

    Maintenance:
      With respect to any Cooperative Unit, the rent paid by the Mortgagor to the
      Cooperative Corporation pursuant to the Proprietary Lease.

     

    Majority
      in Interest: As to any Class of Regular Certificates, the Holders of
      Certificates of such Class evidencing, in the aggregate, at least 51% of the
      Percentage Interests evidenced by all Certificates of such Class.

     

    Master
      Servicer: First Horizon Home Loan Corporation, a Kansas corporation, and its
      successors and assigns, in its capacity as master servicer
      hereunder.

     

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

     

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

     

    Master
      Servicing Fee Rate: A per annum rate equal to 0.369%. 

     

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

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    MLPA:
      The
      Mortgage Loan Purchase Agreement dated as of May 30, 2006, by and between First
      Horizon Home Loan Corporation, as seller, and First Horizon Asset Securities
      Inc., as purchaser, as related to the transfer, sale and conveyance of the
      Mortgage Loans.

     

    MOM
      Loan:
      Any Mortgage Loan as to which MERS is acting as mortgagee, solely as nominee
      for
      the originator of such Mortgage Loan and its successors and
      assigns.

     

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

     

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

     

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

     

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

     

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

     

    (1) the
      loan
      number;

     

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

     

    (3) the
      maturity date;

     

    (4) the
      original principal balance;

     

    (5) the
      Cut-off Date Principal Balance;

     

    
      
        
        

      

      
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    (6) the
      first
      payment date of the Mortgage Loan;

     

    (7) the
      Scheduled Payment in effect as of the Cut-off Date;

     

    (8) the
      Loan-to-Value Ratio at origination;

     

    (9) a
      code
      indicating whether the residential dwelling at the time of origination was
      represented to be owner-occupied;

     

    (10) a
      code
      indicating whether the residential dwelling is either (a) a detached single
      family dwelling (b) a dwelling in a de minimis PUD, (c) a condominium unit
      or
      PUD (other than a de minimis PUD), (d) a two-to-four unit residential property
      or (e) a Cooperative Unit;

     

    (11) the
      Mortgage Rate;

     

    (12) the
      purpose for the Mortgage Loan; 

     

    (13) the
      type
      of documentation program pursuant to which the Mortgage Loan was originated;
      

     

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

     

    (15) a
      code
      indicating whether the Mortgage Loan is a MERS Mortgage Loan.

     

    Such
      schedule shall also set forth the total of the amounts described under (4)
      and
      (5) above for all of the Mortgage Loans.

     

    Mortgage
      Loans: Such of the mortgage loans transferred and assigned to the Trustee
      pursuant to the provisions hereof as from time to time are held as a part of
      the
      Trust Fund (including any REO Property), the mortgage loans so held being
      identified in the Mortgage Loan Schedule, notwithstanding foreclosure or other
      acquisition of title of the related Mortgaged Property.

     

    Mortgage
      Note: The original executed note or other evidence of indebtedness evidencing
      the indebtedness of a Mortgagor under a Mortgage Loan.

     

    Mortgage
      Pool: The aggregate of the Mortgage Loans identified in the Mortgage Loan
      Schedule.

     

    Mortgage
      Rate: The annual rate of interest borne by a Mortgage Note from time to time,
      net of any insurance premium charged by the mortgagee to obtain or maintain
      any
      Primary Insurance Policy.

     

    Mortgaged
      Property: The underlying property securing a Mortgage Loan, which, with respect
      to a Cooperative Loan, is the related Coop Shares and Proprietary
      Lease.

     

    Mortgagor:
      The obligor(s) on a Mortgage Note.

     

    
      
        
        

      

      
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    National
      Cost of Funds Index: The National Monthly Median Cost of Funds Ratio to
      SAIF-Insured Institutions published by the Office of Thrift
      Supervision.

     

    Net
      Interest Shortfall: For any Distribution Date, the sum of (a) the amount of
      interest which would otherwise have been received for any Mortgage Loan that
      was
      the subject of (x) a Relief Act Reduction or (y) a Special Hazard Loss, Fraud
      Loss, or Deficient Valuation, after the exhaustion of the respective amounts
      of
      coverage for those types of losses provided by the Subordinated Certificates;
      and (b) any Net Prepayment Interest Shortfalls.

     

    Net
      Prepayment Interest Shortfalls: As to any Distribution Date, the amount by
      which
      the aggregate of Prepayment Interest Shortfalls in respect of the Mortgage
      Loans
      during the related Prepayment Period exceeds an amount equal to the Compensating
      Interest paid in respect of such Mortgage Loans, if any, for such Distribution
      Date.

     

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

     

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

     

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

     

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

     

    Notional
      Amount: Not applicable.

     

    Notional
      Amount Component: Not applicable.

     

    Notional
      Amount Certificates: Not applicable.

     

    Offered
      Certificates: As specified in the Preliminary Statement.

     

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

     

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

     

    
      
        
        

      

      
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    Optional
      Termination: The termination of the trust created hereunder in connection with
      the purchase of the Mortgage Loans pursuant to Section 9.1(a)
      hereof.

     

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

     

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

     

    OTS:
      The
      Office of Thrift Supervision.

     

    Outside
      Reference Date: Not applicable.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    Performance
      Certification: As defined in Section 10.5.

     

    Permitted
      Investments: At any time, any one or more of the following obligations and
      securities:

     

    
      
        
        

      

      
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    (i) obligations
      of the United States or any agency thereof, provided such obligations are backed
      by the full faith and credit of the United States;

     

    (ii) general
      obligations of or obligations guaranteed by any state of the United States
      or
      the District of Columbia receiving the highest long-term debt rating of each
      Rating Agency;

     

    (iii) commercial
      or finance company paper which is then receiving the highest commercial or
      finance company paper rating of each Rating Agency;

     

    (iv) certificates
      of deposit, demand or time deposits, or bankers’ acceptances issued by any
      depository institution or trust company incorporated under the laws of the
      United States or of any state thereof and subject to supervision and examination
      by federal and/or state banking authorities, provided that the commercial paper
      and/or long term unsecured debt obligations of such depository institution
      or
      trust company (or in the case of the principal depository institution in a
      holding company system, the commercial paper or long-term unsecured debt
      obligations of such holding company, but only if Moody’s is not a Rating Agency)
      are then rated one of the two highest long-term and/or the highest short-term
      ratings of each Rating Agency for such securities;

     

    (v) demand
      or
      time deposits or certificates of deposit issued by any bank or trust company
      or
      savings institution to the extent that such deposits are fully insured by the
      FDIC and receiving the highest short-term debt rating of each Rating
      Agency;

     

    (vi) guaranteed
      reinvestment agreements issued by any bank, insurance company or other
      corporation and receiving the highest short-term debt rating of each Rating
      Agency and containing, at the time of the issuance of such agreements, such
      terms and conditions as will not result in the downgrading or withdrawal of
      the
      rating then assigned to the Certificates by either Rating Agency;

     

    (vii) repurchase
      obligations with respect to any security described in clauses (i) and (ii)
      above, in either case entered into with a depository institution or trust
      company (acting as principal) described in clause (iv) above;

     

    (viii) securities
      (other than stripped bonds, stripped coupons or instruments sold at a purchase
      price in excess of 115% of the face amount thereof) bearing interest or sold
      at
      a discount issued by any corporation incorporated under the laws of the United
      States or any state thereof which, at the time of such investment, have one
      of
      the two highest ratings of each Rating Agency (except if the Rating Agency
      is
      Moody’s or S&P, such rating shall be the highest commercial paper rating of
      Moody’s or S&P, as applicable, for any such securities);

     

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

     

    
      
        
        

      

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

     

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

    

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

     

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

     

    
      
        
        

      

      
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    Physical
      Certificate: As specified in the Preliminary Statement.

     

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

     

    Planned
      Balance: Not applicable.

     

    Planned
      Principal Classes: Not applicable.

     

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

     

    Prepayment
      Interest Excess: As to any Principal Prepayment received by the Master Servicer
      from the first day through the fifteenth day of any calendar month (other than
      the calendar month in which the Cut-off Date occurs), all amounts paid by the
      related Mortgagor in respect of interest on such Principal Prepayment. All
      Prepayment Interest Excess shall be paid to the Master Servicer as additional
      master servicing compensation.

     

    Prepayment
      Interest Shortfall: As to any Distribution Date, Mortgage Loan and Principal
      Prepayment received (a) during the period from the sixteenth day of the month
      preceding the month of such Distribution Date (or, in the case of the first
      Distribution Date, from the Cut-off Date) through the last day of such month,
      in
      the case of a Principal Prepayment in Full, or (b) during the month preceding
      the month of such Distribution Date, in the case of a partial Principal
      Prepayment, the amount, if any, by which one month’s interest at the related
      Adjusted Mortgage Rate on such Principal Prepayment exceeds the amount of
      interest actually paid by the Mortgagor in connection with such Principal
      Prepayment.

     

    Prepayment
      Period: (a) With respect to any Principal Prepayments in Full and any
      Distribution Date, the period from the sixteenth day of the month preceding
      the
      month of such Distribution Date (or, in the case of the first Distribution
      Date,
      from the Cut-off Date) through the fifteenth day of the month of such
      Distribution Date, and (b) with respect to any other Principal Prepayments
      and
      any Distribution Date, the month preceding the month of such Distribution
      Date.

     

    Primary
      Insurance Policy: Each policy of primary mortgage guaranty insurance or any
      replacement policy therefor with respect to any Mortgage Loan.

     

    Principal
      Balance Schedules: Not applicable.

     

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

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

     

    Private
      Certificate: As specified in the Preliminary Statement.

     

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

     

    Prospectus:
      The Prospectus dated April 20, 2006 generally relating to mortgage pass-through
      certificates to be sold by the Depositor.

     

    Prospectus
      Supplement: The Prospectus Supplement, dated May 25, 2006, relating to the
      Offered Certificates.

     

    PUD:
      Planned Unit Development.

     

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

     

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

     

    Rating
      Agency: Each of the Rating Agencies specified in the Preliminary Statement.
      If
      any such organization or a successor is no longer in existence, “Rating Agency”
shall be such nationally recognized statistical rating organization, or other
      comparable Person, as is designated by the Depositor, notice of which
      designation shall be given to the Trustee. References herein to a given rating
      category of a Rating Agency shall mean such rating category without giving
      effect to any modifiers.

     

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

     

    
      
        
        

      

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

     

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

     

    Reference
      Bank: Not applicable.

     

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

     

    Regular
      Certificates: As specified in the Preliminary Statement.

     

    Regulation
      AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to
      such clarification and interpretation as have been provided by the SEC in the
      adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518,
      70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as
      may
      be provided by the SEC or its staff from time to time.

     

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

     

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

     

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

     

    REMIC
      Change of Law: Any proposed, temporary or final regulation, revenue ruling,
      revenue procedure or other official announcement or interpretation relating
      to
      REMICs and the REMIC Provisions issued after the Closing Date.

     

    
      
        
        

      

      
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    REMIC
      Pool: The 2006-AA3 REMIC.

     

    REMIC
      Provisions: Provisions of the federal income tax law relating to real estate
      mortgage investment conduits, which appear at sections 860A through 860G of
      Subchapter M of Chapter 1 of the Code, and related provisions, and regulations
      promulgated thereunder, as the foregoing may be in effect from time to time
      as
      well as provisions of applicable state laws.

     

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

     

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

     

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

     

    (b) termination
      of this Agreement or any other document entered into in connection with the
      Trust Fund, the Certificates or the Mortgage Loans (other than by expiration
      of
      the applicable agreement on its stated termination date or as a result of all
      parties completing their obligations under such agreement), even if the
      Depositor is not a party to such agreement (e.g., a servicing agreement with
      a
      servicer contemplated by Item 1108(a)(3) of Regulation AB);

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    Required
      Recordation States: The states of Florida, Maryland and
      Mississippi.

     

    Residual
      Certificates: As specified in the Preliminary Statement.

     

    Responsible
      Officer: When used with respect to the Trustee, any Vice President, any
      Assistant Vice President, the Secretary, any Assistant Secretary, any Trust
      Officer or any other officer of the Trustee customarily performing functions
      similar to those performed by any of the above designated officers and having
      direct responsibility for the administration of this Agreement and also to
      whom,
      with respect to a particular matter, such matter is referred because of such
      officer’s knowledge of and familiarity with the particular subject.

     

    Sarbanes-Oxley
      Certification: As defined in Section 10.5.

     

    Scheduled
      Balances: Not applicable.

     

    Scheduled
      Certificates: Not applicable.

     

    Scheduled
      Payment: The scheduled monthly payment on a Mortgage Loan due on any Due Date
      allocable to principal and/or interest on such Mortgage Loan which, unless
      otherwise specified herein, shall give effect to any related Debt Service
      Reduction and any Deficient Valuation that affects the amount of the monthly
      payment due on such Mortgage Loan.

     

    Scheduled
      Principal Classes: Not applicable.

     

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

     

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

     

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

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    Seller:
      First Horizon Home Loan Corporation, a Kansas corporation, and its successors
      and assigns, in its capacity as seller of the Mortgage Loans pursuant to the
      MLPA.

     

    Senior
      Certificates: As specified in the Preliminary Statement.

     

    Senior
      Final Distribution Date: The Distribution Date on which the Class Certificate
      Balance of each Class of related Senior Certificates has been reduced to
      zero.

     

    Senior
      Mezzanine Certificates: As specified in the Preliminary Statement.

     

    Senior
      Optimal Principal Amount: With respect to each Distribution Date, an amount
      equal to the sum of:

     

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

     

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

     

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

     

    (4) the
      lesser of:

     

    (a)
      the
      Senior Prepayment Percentage of the sum of (x) the Liquidation Proceeds
      allocable to principal on each Mortgage Loan which became a Liquidated Mortgage
      Loan during the related Prepayment Period, other than Mortgage Loans described
      in clause (y), and (y) the principal balance of each Mortgage Loan that was
      purchased by a private mortgage insurer during the related Prepayment Period
      as
      an alternative to paying a claim under the related Insurance Policy;
      and

     

    (b)(i)
      the Senior Percentage of the sum of (x) the Stated Principal Balance of each
      Mortgage Loan which became a Liquidated Mortgage Loan during the related
      Prepayment Period, other than Mortgage Loans described in clause (y), and (y)
      the Stated Principal Balance of each Mortgage Loan that was purchased by a
      private mortgage insurer during the related Prepayment Period as an alternative
      to paying a claim under the related Insurance Policy minus (ii) the related
      Senior Percentage of the principal portion of Excess Losses (other than Debt
      Service Reductions) during the related Prepayment Period; and

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

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

     

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

     

    Senior
      Prepayment Percentage: On any Distribution Date occurring during the periods
      set
      forth below, the Senior Prepayment Percentages, described below:

     

    
      	
              Period
                (Dates Inclusive)

            	
              Senior
                Prepayment Percentage

            
	
              June
                2006 - May 2011

            	
              100%

            
	
              June
                2011 - May 2012

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

            
	
              June
                2012 - May 2013

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

            
	
              June
                2013- May 2014

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

            
	
              June
                2014 - May 2015

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

            
	
              June
                2015 and thereafter

            	
              The
                Senior Percentage.

            

    

    

     

    provided
      however,
      (i) if
      on any Distribution Date, the Senior Percentage exceeds such percentage
      calculated as of the Closing Date, then the Senior Prepayment Percentage for
      such Distribution Date will equal 100%, (ii) if on any Distribution Date prior
      to the June 2009 Distribution Date, the Subordinated Percentage is greater
      than
      or equal to twice such percentage calculated as of the Closing Date, then the
      Senior Prepayment Percentage for such Distribution Date will equal the Senior
      Percentage plus 50% of the Subordinated Percentage and (iii) if on or after
      the
      June 2009 Distribution Date, the Subordinated Percentage is greater than or
      equal to twice such percentage calculated as of the Closing Date, then the
      Senior Prepayment Percentage for such Distribution Date will equal the Senior
      Percentage.

     

    The
      reductions in the Senior Prepayment Percentage described above will not occur,
      and the Senior Prepayment Percentage for such prior period will be calculated
      without regard to clause (ii) or (iii) of the paragraph above, unless both
      of
      the following step-down conditions are satisfied as of the last day of the
      month
      preceding the Distribution Date: 

     

    
      	 	
              (1)

            	
              the
                aggregate Stated Principal Balance of Mortgage Loans delinquent 60
                days or
                more (including for this purpose any Mortgage Loans in foreclosure
                or
                subject to bankruptcy proceedings and Mortgage Loans with respect
                to which
                the related Mortgaged Property, including REO Property, has been
                acquired
                by the Trust Fund) does not exceed 50% of the aggregate Class Certificate
                Balances of the Subordinated Certificates as of that date; and
                

            

    

     

    
      	 	
              (2)

            	
              cumulative
                Realized Losses on the Mortgage Loans do not
                exceed:

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (a) 20%
      of
      the Original Subordinated Principal Balance if such Distribution Date occurs
      between and including June 2006 and May 2009; and 

     

    (b) 30%
      of
      the Original Subordinated Principal Balance if such Distribution Date occurs
      on
      or after June 2009. 

     

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

     

    Servicing
      Agreement: The servicing agreement, dated as of November 26, 2002 by and
      between First Horizon Asset Securities Inc. and its assigns, as owner, and
      First
      Tennessee Mortgage Services, Inc., as servicer, as the same may be amended
      from
      time to time in accordance with its terms.

     

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

     

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

     

    Servicing
      Rights Transfer and Subservicing Agreement: The servicing rights transfer and
      subservicing agreement, dated as of November 26, 2002, by and between First
      Horizon Home Loan Corporation, as transferor and subservicer, and First
      Tennessee Mortgage Services, Inc., as transferee and servicer, as the same
      may
      be amended from time to time in accordance with its terms.

     

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

     

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

     

    (1) normal
      wear and tear;

     

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

     

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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    (iii) by
      an
      agent of any such government, power, authority or forces; 

     

    (6) any
      weapon of war employing nuclear fission, fusion or other radioactive force,
      whether in time of peace or war; or

     

    (7) insurrection,
      rebellion, revolution, civil war, usurped power or action taken by governmental
      authority in hindering, combating or defending against such an occurrence,
      seizure or destruction under quarantine or customs regulations, confiscation
      by
      order of any government or public authority or risks of contraband or illegal
      transportation or trade.

     

    Special
      Hazard Loss Coverage Amount: Upon the initial issuance of the Certificates,
      $4,000,400. As of any Distribution Date, the Special Hazard Loss Coverage Amount
      shall equal the greater of

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    Startup
      Day: The Closing Date.

     

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

     

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

     

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

     

    Subordinated
      Certificates: As specified in the Preliminary Statement.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    (3) the
      Subordinated Prepayment Percentage of the sum of (a) all partial Principal
      Prepayments received in respect of each Mortgage Loan during the related
      Prepayment Period, (b) all Unanticipated Recoveries received in respect of
      each
      Mortgage Loan during the calendar month prior to such Distribution Date, and
      (c)
      on the Senior Final Distribution Date, 100% of any related Senior Optimal
      Principal Amount remaining undistributed on such date;

     

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

     

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

     

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

     

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

     

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

     

    Substitute
      Mortgage Loan: A Mortgage Loan substituted by the Seller for a Deleted Mortgage
      Loan which must, on the date of such substitution, as confirmed in a Request
      for
      Release, substantially in the form of Exhibit L, (i) have a Stated Principal
      Balance, after deduction of the principal portion of the Scheduled Payment
      due
      in the month of substitution, not in excess of, and not more than 10% less
      than
      the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have an Adjusted
      Net Mortgage Rate not lower than the Adjusted Net Mortgage Rate of the Deleted
      Mortgage Loan, provided that the Master Servicing Fee for the Substitute
      Mortgage Loan shall be equal to or greater than that of the Deleted Mortgage
      Loan; (iii) have a maximum mortgage rate not more than 1% per annum higher
      or
      lower than the maximum mortgage rate of the Deleted Mortgage Loan; (iv) have
      a
      minimum mortgage rate specified in its related Mortgage Note not more than
      1%
      per annum higher or lower than the minimum mortgage rate of the Deleted Mortgage
      Loan; (v) have the same mortgage index, reset period and periodic rate as the
      Deleted Mortgage Loan and a gross margin not more than 1% per annum higher
      or
      lower than that of the Deleted Mortgage Loan (vi) be accruing interest at a
      rate
      no lower than and not more than 1% per annum higher than, that of the Deleted
      Mortgage Loan; (iv) have a Loan-to-Value Ratio no higher than that of the
      Deleted Mortgage Loan; (vii) have a remaining term to maturity no greater than
      (and not more than one year less than that of) the Deleted Mortgage Loan; (viii)
      not be a Cooperative Loan unless the Deleted Mortgage Loan was a Cooperative
      Loan and (ix) comply with each representation and warranty set forth in Section
      2.3 hereof.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    Substitution
      Adjustment Amount: The meaning ascribed to such term pursuant to Section
      2.3.

     

    Super
      Senior Certificates: As specified in the Preliminary Statement.

     

    Super
      Senior Support Certificates: Not applicable.

     

    Support
      Classes: Not applicable.

     

    Targeted
      Balances: Not applicable.

     

    Targeted
      Principal Classes: Not applicable.

     

    Tax
      Matters Person: The person designated as “tax matters person” in the manner
      provided under Treasury regulation § 1.860F-4(d) and Treasury regulation §
301.6231(a)(7)-1. Initially, the Tax Matters Person shall be the
      Trustee.

     

    Tax
      Matters Person Certificate: The Class A-R Certificates with a Denomination
      of
      $0.01.

     

    Transfer:
      Any direct or indirect transfer or sale of any Ownership Interest in a Residual
      Certificate.

     

    Trust
      Fund: The corpus of the trust created hereunder consisting of (i) the Mortgage
      Loans and all interest and principal received on or with respect thereto after
      the Cut-off Date to the extent not applied in computing the Cut-off Date
      Principal Balance thereof; (ii) all of the Depositor’s rights as purchaser under
      the MLPA; (iii) the Certificate Account and the Distribution Account and all
      amounts deposited therein pursuant to the applicable provisions of this
      Agreement; (iv) property that secured a Mortgage Loan and has been acquired
      by
      foreclosure, deed-in-lieu of foreclosure or otherwise; and (v) all proceeds
      of
      the conversion, voluntary or involuntary, of any of the foregoing.

     

    Trustee:
      The Bank of New York and its successors and, if a successor trustee is appointed
      hereunder, such successor.

     

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

     

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

     

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

     

    Underwriter:
      As specified in the Preliminary Statement.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    Underwriters’
      Exemption: An individual administrative exemption granted by the U.S. Department
      of Labor to the Underwriter providing exceptions from some of the prohibited
      transaction rules of ERISA with respect to the initial purchase, the holding
      and
      the subsequent resale by employee benefit plans in certificates in pass-through
      trusts having assets and meeting conditions described therein, as amended by
      Prohibited Transaction Exemption 2000-58 (65 Fed. Reg. 67765, November 13,
      2000), as amended, and Prohibited Transaction Exemption 2002-41 (67 Fed. Reg.
      54487, August 22, 2002), as amended (or any successor thereto), or any
      substantially similar administrative exemption granted by the U.S. Department
      of
      Labor.

     

    Voting
      Rights: The portion of the voting rights of all of the Certificates which is
      allocated to any Certificate. As of any date of determination, (a) 99.0% of
      all
      Voting Rights will be allocated among all Holders of the Certificates, other
      than the Class A-R Certificates, in proportion to their then outstanding Class
      Certificate Balance; and (b) 1.0% of all Voting Rights will be allocated to
      the
      Holders of the Class A-R Certificates (such Voting Rights to be allocated among
      the Holders of Certificates of each such Class in accordance with their
      respective Percentage Interests).

     

    Weighted
      Average Adjusted Net Mortgage Rate: The average of the Adjusted Net Mortgage
      Rates of the Mortgage Loans, weighted on the basis of the Stated Principal
      Balances thereof.

     

    ARTICLE
      II

    CONVEYANCE
      OF MORTGAGE LOANS; 

    REPRESENTATIONS
      AND WARRANTIES

     

    SECTION
      2.1  Conveyance
      of Mortgage Loans.

     

    (a) The
      Depositor, concurrently with the execution and delivery hereof, hereby sells,
      transfers, assigns, sets over and otherwise conveys to the Trustee for the
      benefit of the Certificateholders, without recourse, all the right, title and
      interest of the Depositor in and to the Trust Fund together with (i) the
      Depositor’s right to (A) require the Seller to cure any breach of a
      representation or warranty made by the Seller pursuant to the MLPA, or (B)
      repurchase or substitute for any affected Mortgage Loan in accordance herewith,
      and (ii) all right, title and interest of the Depositor in, to and under
      the Servicing Agreement, which right has been assigned to the Depositor pursuant
      to the MLPA.

     

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

     

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

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

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

     

    
      	 	
              (A)

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

            

    

     

    
      	 	
              (B)

            	
              The
                executed Security Agreement;

            

    

     

    
      	 	
              (C)

            	
              The
                executed Proprietary Lease;

            

    

     

    
      	 	
              (D)

            	
              The
                executed Recognition Agreement;

            

    

     

    
      	 	
              (E)

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

            

    

     

    
      	 	
              (F)

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

            

    

     

    In
      the
      event that in connection with any Mortgage Loan that is not a MERS Mortgage
      Loan
      the Depositor cannot deliver (a) the original recorded Mortgage or (b) all
      interim recorded assignments satisfying the requirements of clause (ii) or
      (iii)
      above, respectively, concurrently with the execution and delivery hereof because
      such document or documents have not been returned from the applicable public
      recording office, the Depositor shall promptly deliver or cause to be delivered
      to the Trustee or the Custodian on its behalf such original Mortgage or such
      interim assignment, as the case may be, with evidence of recording indicated
      thereon upon receipt thereof from the public recording office, or a copy
      thereof, certified, if appropriate, by the relevant recording office, but in
      no
      event shall any such delivery of the original Mortgage and each such interim
      assignment or a copy thereof, certified, if appropriate, by the relevant
      recording office, be made later than one year following the Closing Date;
      provided, however, in the event the Depositor is unable to deliver or cause
      to
      be delivered by such date each Mortgage and each such interim assignment by
      reason of the fact that any such documents have not been returned by the
      appropriate recording office, or, in the case of each such interim assignment,
      because the related Mortgage has not been returned by the appropriate recording
      office, the Depositor shall deliver or cause to be delivered such documents
      to
      the Trustee or the Custodian on its behalf as promptly as possible upon receipt
      thereof and, in any event, within 720 days following the Closing Date. The
      Depositor shall forward or cause to be forwarded to the Trustee or the Custodian
      on its behalf (a) from time to time additional original documents evidencing
      an
      assumption or modification of a Mortgage Loan and (b) any other documents
      required to be delivered by the Depositor or the Master Servicer to the Trustee.
      In the event that the original Mortgage is not delivered and in connection
      with
      the payment in full of the related Mortgage Loan and the public recording office
      requires the presentation of a “lost instruments affidavit and indemnity” or any
      equivalent document, because only a copy of the Mortgage can be delivered with
      the instrument of satisfaction or reconveyance, the Master Servicer shall
      execute and deliver or cause to be executed and delivered such a document to
      the
      public recording office. In the case where a public recording office retains
      the
      original recorded Mortgage or in the case where a Mortgage is lost after
      recordation in a public recording office, the Depositor shall deliver or cause
      to be delivered to the Trustee or the Custodian on its behalf a copy of such
      Mortgage certified by such public recording office to be a true and complete
      copy of the original recorded Mortgage.

     

    
      
        
        

      

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

     

    Subject
      to the immediately following sentence, as promptly as practicable subsequent
      to
      such transfer and assignment, and in any event, within thirty (30) days
      thereafter, the Master Servicer shall (i) complete each assignment of Mortgage,
      as follows: “First Horizon Mortgage Pass-Through Certificates, Series 2006-AA3,
      The Bank of New York, as trustee for the holders of the Certificates”, (ii)
      cause such assignment to be in proper form for recording in the appropriate
      public office for real property records and (iii) cause to be delivered for
      recording in the appropriate public office for real property records the
      assignments of the Mortgages to the Trustee, except that, with respect to any
      assignments of Mortgage as to which the Master Servicer has not received the
      information required to prepare such assignment in recordable form, the Master
      Servicer’s obligation to do so and to deliver the same for such recording shall
      be as soon as practicable after receipt of such information and in any event
      within thirty (30) days after receipt thereof. Notwithstanding the foregoing,
      the Master Servicer need not cause to be recorded any assignment which relates
      to a Mortgage Loan in any state other than the Required Recordation
      States.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

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

     

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

     

    SECTION
      2.2  Acceptance
      by Trustee of the Mortgage Loans.

     

    The
      Trustee or the Custodian, on behalf of the Trustee, acknowledges receipt of
      the
      documents identified in the Initial Certification in the form annexed hereto
      as
      Exhibit E and declares that it or the Custodian holds and will hold such
      documents and the other documents delivered to it or the Custodian, as
      applicable, constituting the Mortgage Files, and that it or the Custodian,
      as
      applicable, holds or will hold such other assets as are included in the Trust
      Fund, in trust for the exclusive use and benefit of all present and future
      Certificateholders. The Trustee acknowledges that the Custodian will maintain
      possession of the Mortgage Notes in the State of Texas, unless otherwise
      permitted by the Rating Agencies.

     

    The
      Trustee agrees to execute and deliver or to cause the Custodian to execute
      and
      deliver on the Closing Date to the Depositor and the Master Servicer an Initial
      Certification in the form annexed hereto as Exhibit E. Based on its or the
      Custodian’s review and examination, and only as to the documents identified in
      such Initial Certification, the Custodian, on behalf of the Trustee,
      acknowledges that such documents appear regular on their face and relate to
      such
      Mortgage Loan. Neither the Trustee nor the Custodian shall be under any duty
      or
      obligation to inspect, review or examine said documents, instruments,
      certificates or other papers to determine that the same are genuine, enforceable
      or appropriate for the represented purpose or that they have actually been
      recorded in the real estate records or that they are other than what they
      purport to be on their face.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    On
      or
      about the thirtieth (30th) day after the Closing Date, the Trustee shall deliver
      or shall cause the Custodian to deliver to the Depositor and the Master Servicer
      a Delay Delivery Certification in the form annexed hereto as Exhibit F, with
      any
      applicable exceptions noted thereon. Notwithstanding anything to the contrary
      contained in this Agreement, none of the Mortgage Loans in the Trust Fund is
      or
      will be Delay Delivery Mortgage Loans.

     

    Not
      later
      than 90 days after the Closing Date, the Trustee shall deliver or shall cause
      the Custodian to deliver to the Depositor and the Master Servicer a Subsequent
      Certification in the form annexed hereto as Exhibit G, with any applicable
      exceptions noted thereon.

     

    If,
      in
      the course of such review, the Trustee or the Custodian, on behalf of the
      Trustee, finds any document constituting a part of a Mortgage File which does
      not meet the requirements of Section 2.1, the Trustee shall list or shall cause
      the Custodian to list such as an exception in the Subsequent Certification;
      provided, however that neither the Trustee nor the Custodian shall make any
      determination as to whether (i) any endorsement is sufficient to transfer all
      right, title and interest of the party so endorsing, as noteholder or assignee
      thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
      form or is sufficient to effect the assignment of and transfer to the assignee
      thereof under the mortgage to which the assignment relates. The Seller shall
      promptly correct or cure such defect within 90 days from the date it was so
      notified of such defect and, if the Seller does not correct or cure such defect
      within such period, the Seller shall either (a) substitute for the related
      Mortgage Loan a Substitute Mortgage Loan, which substitution shall be
      accomplished in the manner and subject to the conditions set forth in Section
      2.3, or (b) purchase such Mortgage Loan from the Trustee within 90 days from
      the
      date the Seller was notified of such defect in writing at the Purchase Price
      of
      such Mortgage Loan; provided, however, that in no event shall such substitution
      or purchase occur more than 540 days from the Closing Date, except that if
      the
      substitution or purchase of a Mortgage Loan pursuant to this provision is
      required by reason of a delay in delivery of any documents by the appropriate
      recording office, and there is a dispute between either the Master Servicer
      or
      the Seller and the Trustee over the location or status of the recorded document,
      then such substitution or purchase shall occur within 720 days from the Closing
      Date. The Trustee shall deliver or shall cause the Custodian to deliver written
      notice to each Rating Agency within 270 days from the Closing Date indicating
      each Mortgage Loan (a) which has not been returned by the appropriate recording
      office or (b) as to which there is a dispute as to location or status of such
      Mortgage Loan. Such notice shall be delivered every 90 days thereafter until
      the
      related Mortgage Loan is returned to the Trustee or the Custodian on its behalf.
      Any such substitution pursuant to (a) above or purchase pursuant to (b) above
      shall not be effected prior to the delivery to the Trustee of the Opinion of
      Counsel required by Section 2.5 hereof, if any, and any substitution pursuant
      to
      (a) above shall not be effected prior to the additional delivery to the Trustee
      of a Request for Release substantially in the form of Exhibit L. No substitution
      is permitted to be made in any calendar month after the Determination Date
      for
      such month. The Purchase Price for any such Mortgage Loan shall be deposited
      by
      the Seller in the Certificate Account on or prior to the Distribution Account
      Deposit Date for the Distribution Date in the month following the month of
      repurchase and, upon receipt of such deposit and certification with respect
      thereto in the form of Exhibit M hereto (delivery of which will be by electronic
      data transmission or email), the Trustee shall cause the Custodian to release
      the related Mortgage File to the Seller and shall execute and deliver at the
      Seller’s request such instruments of transfer or assignment prepared by the
      Seller, in each case without recourse, as shall be necessary to vest in the
      Seller, or a designee, the Trustee’s interest in any Mortgage Loan released
      pursuant hereto. If pursuant to the foregoing provisions the Seller repurchases
      a Mortgage Loan that is a MERS Mortgage Loan, the Master Servicer shall either
      (i) cause MERS to execute and deliver an assignment of the Mortgage in
      recordable form to transfer the Mortgage from MERS to the Seller and shall
      cause
      such Mortgage to be removed from registration on the MERS® System in accordance
      with MERS’ rules and regulations or (ii) cause MERS to designate on the MERS®
System the Seller as the beneficial holder of such Mortgage Loan.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    The
      Trustee shall retain or shall cause the Custodian to retain possession and
      custody of each Mortgage File in accordance with and subject to the terms and
      conditions set forth herein. The Master Servicer shall promptly deliver to
      the
      Trustee or the Custodian on its behalf, upon the execution or receipt thereof,
      the originals of such other documents or instruments constituting the Mortgage
      File as come into the possession of the Master Servicer from time to
      time.

     

    It
      is
      understood and agreed that the obligation of the Seller to substitute for or
      to
      purchase any Mortgage Loan which does not meet the requirements of Section
      2.1
      above shall constitute the sole remedy respecting such defect available to
      the
      Trustee, the Depositor and any Certificateholder against the
      Seller.

     

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

     

    SECTION
      2.3  Representations
      and Warranties of the Master Servicer; Covenants of the Seller.

     

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

     

    (b) Upon
      discovery by any of the parties hereto of a breach of a representation or
      warranty made pursuant to Schedule B to the MLPA that materially and adversely
      affects the interests of the Certificateholders in any Mortgage Loan, the party
      discovering such breach shall give prompt notice thereof to the other parties.
      The Seller hereby covenants that within 90 days of the earlier of its discovery
      or its receipt of written notice from any party of a breach of any
      representation or warranty made pursuant to Schedule B to the MLPA which
      materially and adversely affects the interests of the Certificateholders in
      any
      Mortgage Loan, it shall cure such breach in all material respects, and if such
      breach is not so cured, shall, (i) if such 90-day period expires prior to the
      second anniversary of the Closing Date, remove such Mortgage Loan (a “Deleted
      Mortgage Loan”) from the Trust Fund and substitute in its place a Substitute
      Mortgage Loan, in the manner and subject to the conditions set forth in this
      Section; or (ii) repurchase the affected Mortgage Loan or Mortgage Loans from
      the Trustee at the Purchase Price in the manner set forth below; provided,
      however, that any such substitution pursuant to (i) above shall not be effected
      prior to the delivery to the Trustee of the Opinion of Counsel required by
      Section 2.5 hereof, if any, and any such substitution pursuant to (i) above
      shall not be effected prior to the additional delivery to the Trustee or the
      Custodian on its behalf of a Request for Release substantially in the form
      of
      Exhibit M (delivery of which to the Custodian will be by electronic data
      transmission or email) and the Mortgage File for any such Substitute Mortgage
      Loan. The Seller shall promptly reimburse the Master Servicer and the Trustee
      for any expenses reasonably incurred by the Master Servicer or the Trustee
      in
      respect of enforcing the remedies for such breach. With respect to the
      representations and warranties described in this Section which are made to
      the
      best of the Seller’s knowledge, if it is discovered by either the Depositor, the
      Seller or the Trustee that the substance of such representation and warranty
      is
      inaccurate and such inaccuracy materially and adversely affects the value of
      the
      related Mortgage Loan or the interests of the Certificateholders therein,
      notwithstanding the Seller’s lack of knowledge with respect to the substance of
      such representation or warranty, such inaccuracy shall be deemed a breach of
      the
      applicable representation or warranty.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    With
      respect to any Substitute Mortgage Loan or Loans, the Seller shall deliver
      to
      the Trustee or the Custodian on its behalf for the benefit of the
      Certificateholders the Mortgage Note, the Mortgage, the related assignment
      of
      the Mortgage, and such other documents and agreements as are required by Section
      2.1, with the Mortgage Note endorsed and the Mortgage assigned as required
      by
      Section 2.1. No substitution is permitted to be made in any calendar month
      after
      the Determination Date for such month. Scheduled Payments due with respect
      to
      Substitute Mortgage Loans in the month of substitution shall not be part of
      the
      Trust Fund and will be retained by the Seller on the next succeeding
      Distribution Date. For the month of substitution, distributions to
      Certificateholders will include the monthly payment due on any Deleted Mortgage
      Loan for such month and thereafter the Seller shall be entitled to retain all
      amounts received in respect of such Deleted Mortgage Loan. The Master Servicer
      shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders
      to reflect the removal of such Deleted Mortgage Loan and the substitution of
      the
      Substitute Mortgage Loan or Loans and the Master Servicer shall deliver the
      amended Mortgage Loan Schedule to the Trustee. Upon such substitution, the
      Substitute Mortgage Loan or Loans shall be subject to the terms of this
      Agreement in all respects, and the Seller shall be deemed to have made with
      respect to such Substitute Mortgage Loan or Loans, as of the date of
      substitution, the representations and warranties made pursuant to Schedule
      B to
      the MLPA with respect to such Mortgage Loan. Upon any such substitution and
      the
      deposit to the Certificate Account of the amount required to be deposited
      therein in connection with such substitution as described in the following
      paragraph, the Trustee shall, upon the delivery to the Trustee of a Request
      for
      Release in the form of Exhibit L, release or shall cause the Custodian to
      release the Mortgage File held for the benefit of the Certificateholders
      relating to such Deleted Mortgage Loan to the Seller and shall execute and
      deliver at the Seller’s direction such instruments of transfer or assignment
      prepared by the Seller, in each case without recourse, as shall be necessary
      to
      vest title in the Seller, or its designee, the Trustee’s interest in any Deleted
      Mortgage Loan substituted for pursuant to this Section 2.3.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

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

     

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

     

    After
      giving effect to the sale of the Certificates by the Depositor to the
      Underwriter, and thereafter, so long as any Certificates remain outstanding,
      the
      Seller, its affiliates and agents, collectively, shall not beneficially own
      Certificates the aggregate fair value of which would represent 90% or more
      of
      the beneficial interests in the Trust Fund.

     

    The
      representations and warranties made pursuant to this Section 2.3 shall survive
      delivery of the respective Mortgage Files to the Trustee or the Custodian for
      the benefit of the Certificateholders.

     

    SECTION
      2.4  Representations
      and Warranties of the Depositor as to the Mortgage Loans.

     

    The
      Depositor hereby represents and warrants to the Trustee with respect to each
      Mortgage Loan as of the date hereof or such other date set forth herein that
      as
      of the Closing Date, and following the transfer of the Mortgage Loans to it
      pursuant to the MLPA and immediately prior to the conveyance of the Mortgage
      Loans by it to the Trustee pursuant to Section 2.1(a) hereof, the Depositor
      had
      good title to the Mortgage Loans and the Mortgage Notes were subject to no
      offsets, defenses or counterclaims.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    It
      is
      understood and agreed that the representations and warranties set forth in
      this
      Section 2.4 shall survive delivery of the Mortgage Files to the Trustee. Upon
      discovery by the Depositor or the Trustee of a breach of any of the foregoing
      representations and warranties set forth in this Section 2.4 (referred to herein
      as a “breach”), which breach materially and adversely affects the interest of
      the Certificateholders, the party discovering such breach shall give prompt
      written notice to the others and to each Rating Agency.

     

    SECTION
      2.5  Delivery
      of Opinion of Counsel in Connection with Substitutions.

     

    (a) Notwithstanding
      any contrary provision of this Agreement, no substitution pursuant to Section
      2.2 or Section 2.3 shall be made more than 90 days after the Closing Date unless
      the Depositor delivers to the Trustee an Opinion of Counsel, which Opinion
      of
      Counsel shall not be at the expense of either the Trustee or the Trust Fund,
      addressed to the Trustee, to the effect that such substitution will not (i)
      result in the imposition of the tax on “prohibited transactions” on the Trust
      Fund or contributions after the Startup Date, as defined in Sections 860F(a)(2)
      and 860G(d) of the Code, respectively, or (ii) cause the REMIC created hereunder
      to fail to qualify as a REMIC at any time that any Certificates are
      outstanding.

     

    (b) Upon
      discovery by the Depositor, the Master Servicer or the Trustee that any Mortgage
      Loan does not constitute a “qualified mortgage” within the meaning of Section
      860G(a)(3) of the Code, the party discovering such fact shall promptly (and
      in
      any event within five (5) Business Days of discovery) give written notice
      thereof to the other parties. In connection therewith, the Trustee shall require
      the Depositor to cause the Seller, pursuant to the MLPA and at the Seller’s
      option, to either (i) substitute, if the conditions in Section 2.3(b) with
      respect to substitutions are satisfied, a Substitute Mortgage Loan for the
      affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within
      90
      days of such discovery in the same manner as it would a Mortgage Loan for a
      breach of representation or warranty made pursuant to Section 2.3. The Trustee
      shall reconvey or shall cause the Custodian to reconvey to the Seller the
      Mortgage Loan to be released pursuant hereto in the same manner, and on the
      same
      terms and conditions, as it would a Mortgage Loan repurchased for breach of
      a
      representation or warranty contained in Section 2.3.

     

    SECTION
      2.6  Execution
      and Delivery of Certificates.

     

    The
      Trustee acknowledges the transfer and assignment to it of the Trust Fund and,
      concurrently with such transfer and assignment, has executed and delivered
      to or
      upon the order of the Depositor, the Certificates in authorized denominations
      evidencing directly or indirectly the entire ownership of the Trust Fund. The
      Trustee agrees to hold the Trust Fund and exercise the rights referred to above
      for the benefit of all present and future Holders of the Certificates and to
      perform the duties set forth in this Agreement to the best of its ability,
      to
      the end that the interests of the Holders of the Certificates may be adequately
      and effectively protected.

     

     

    
      
        
        

      

      
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    SECTION
      2.7  REMIC
      Matters.

     

    The
      Preliminary Statement sets forth the “latest possible maturity date” for federal
      income tax purposes of all REMIC regular interests created hereby. 

     

    The
      assets of the 2006-AA3 REMIC shall be as set forth in the definition thereof.
      

     

    The
      “Startup Day” for purposes of the REMIC Provisions for the 2006-AA3 REMIC shall
      be the Closing Date. The Tax Matters Person with respect to the 2006-AA3 REMIC
      shall be the Trustee and the Trustee shall hold the Tax Matters Person
      Certificate. The 2006-AA3 REMIC’s taxable year shall be the calendar year and
      its accounts shall be maintained using the accrual method.

     

    SECTION
      2.8  Covenants
      of the Master Servicer.

     

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

     

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

     

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

     

    ARTICLE
      III

    ADMINISTRATION
      AND SERVICING OF MORTGAGE LOANS

     

    SECTION
      3.1  Master
      Servicer to Service Mortgage Loans.

     

    For
      and
      on behalf of the Certificateholders, the Master Servicer shall service and
      administer the Mortgage Loans in accordance with the terms of (i) the
      Servicing Rights Transfer and Subservicing Agreement, pursuant to which First
      Tennessee Mortgage Services, Inc. engaged the Master Servicer to subservice
      the
      Mortgage Loans, (ii) this Agreement and (iii) the customary and usual standards
      of practice of prudent mortgage loan servicers;
      provided that if there is a conflict between the terms of the Servicing
      Agreement and the Servicing Rights Transfer and Subservicing Agreement, on
      the
      one hand, and this Agreement, on the other hand, the terms of this Agreement
      shall prevail.
      In
      connection with such servicing and administration, the Master Servicer shall
      have full power and authority, acting alone and/or through Subservicers as
      provided in Section 3.2 hereof, to do or cause to be done any and all things
      that it may deem necessary or desirable in connection with such servicing and
      administration, including but not limited to, the power and authority, subject
      to the terms hereof (i) to execute and deliver, on behalf of the
      Certificateholders and the Trustee, customary consents or waivers and other
      instruments and documents, (ii) to consent to transfers of any Mortgaged
      Property and assumptions of the Mortgage Notes and related Mortgages (but only
      in the manner provided in this Agreement), (iii) to collect any Insurance
      Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure
      or
      other conversion of the ownership of the Mortgaged Property securing any
      Mortgage Loan; provided that the Master Servicer shall not take any action
      that
      is inconsistent with or prejudices the interests of the Trust Fund or the
      Certificateholders in any Mortgage Loan or the rights and interests of the
      Depositor, the Trustee and the Certificateholders under this Agreement. The
      Master Servicer shall represent and protect the interests of the Trust Fund
      in
      the same manner as it protects its own interests in mortgage loans in its own
      portfolio in any claim, proceeding or litigation regarding a Mortgage Loan,
      and
      shall not make or permit any modification, waiver or amendment of any Mortgage
      Loan which would cause the REMIC created hereunder to fail to qualify as a
      REMIC
      or result in the imposition of any tax under Section 860F(a) or Section 860G(d)
      of the Code. Without limiting the generality of the foregoing, the Master
      Servicer, in its own name or in the name of the Depositor and the Trustee,
      is
      hereby authorized and empowered by the Depositor and the Trustee, when the
      Master Servicer believes it appropriate in its reasonable judgment, to execute
      and deliver, on behalf of the Trustee, the Depositor, the Certificateholders
      or
      any of them, any and all instruments of satisfaction or cancellation, or of
      partial or full release or discharge and all other comparable instruments,
      with
      respect to the Mortgage Loans, and with respect to the Mortgaged Properties
      held
      for the benefit of the Certificateholders. The Master Servicer shall prepare
      and
      deliver to the Depositor and/or the Trustee such documents requiring execution
      and delivery by either or both of them as are necessary or appropriate to enable
      the Master Servicer to service and administer the Mortgage Loans to the extent
      that the Master Servicer is not permitted to execute and deliver such documents
      pursuant to the preceding sentence. Upon receipt of such documents, the
      Depositor and/or the Trustee shall execute such documents and deliver them
      to
      the Master Servicer. The Master Servicer further is authorized and empowered
      by
      the Trustee, on behalf of the Certificateholders and the Trustee, in its own
      name or in the name of the Subservicer, when the Master Servicer or the
      Subservicer as the case may be, believes it appropriate in its best judgment
      to
      register any Mortgage Loan on the MERS® System, or cause the removal from the
      registration of any Mortgage Loan on the MERS® System, to execute and deliver,
      on behalf of the Trustee and the Certificateholders or any of them, any and
      all
      instruments of assignment and other comparable instruments with respect to
      such
      assignment or re-recording of a Mortgage in the name of MERS, solely as nominee
      for the Trustee and its successors and assigns.

     

    
      
        
        

      

      
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    In
      accordance with the standards of the preceding paragraph, the Master Servicer
      shall advance or cause to be advanced funds as necessary for the purpose of
      effecting the payment of taxes and assessments on the Mortgaged Properties,
      which advances shall be reimbursable in the first instance from related
      collections from the Mortgagors pursuant to Section 3.6, and further as provided
      in Section 3.8. The costs incurred by the Master Servicer, if any, in effecting
      the timely payments of taxes and assessments on the Mortgaged Properties and
      related insurance premiums shall not, for the purpose of calculating monthly
      distributions to the Certificateholders, be added to the Stated Principal
      Balances of the related Mortgage Loans, notwithstanding that the terms of such
      Mortgage Loans so permit.

     

    SECTION
      3.2  Subservicing;
      Enforcement of the Obligations of Servicers.

     

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

     

    
      
        
        

      

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

     

    SECTION
      3.3  Rights
      of
      the Depositor and the Trustee in Respect of the Master Servicer.

     

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

     

    SECTION
      3.4  Trustee
      to Act as Master Servicer.

     

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

     

    
      
        
        

      

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

     

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

     

    (a) The
      Master Servicer shall make reasonable efforts in accordance with the customary
      and usual standards of practice of prudent mortgage servicers to collect all
      payments called for under the terms and provisions of the Mortgage Loans to
      the
      extent such procedures shall be consistent with this Agreement and the terms
      and
      provisions of any related Required Insurance Policy. Consistent with the
      foregoing, the Master Servicer may in its discretion (i) waive any late payment
      charge or any prepayment charge or penalty interest in connection with the
      prepayment of a Mortgage Loan and (ii) extend the due dates for payments due
      on
      a Mortgage Note for a period not greater than 180 days; provided, however,
      that
      the Master Servicer cannot extend the maturity of any such Mortgage Loan past
      the date on which the final payment is due on the latest maturing Mortgage
      Loan
      as of the Cut-off Date. In the event of any such arrangement, the Master
      Servicer shall make Advances on the related Mortgage Loan in accordance with
      the
      provisions of Section 4.1 during the scheduled period in accordance with the
      amortization schedule of such Mortgage Loan without modification thereof by
      reason of such arrangements. The Master Servicer shall not be required to
      institute or join in litigation with respect to collection of any payment
      (whether under a Mortgage, Mortgage Note or otherwise or against any public
      or
      governmental authority with respect to a taking or condemnation) if it
      reasonably believes that enforcing the provision of the Mortgage or other
      instrument pursuant to which such payment is required is prohibited by
      applicable law.

     

    (b) The
      Master Servicer shall establish and maintain the Certificate Account into which
      the Master Servicer shall deposit or cause to be deposited no later than two
      (2)
      Business Days after receipt, except as otherwise specifically provided herein,
      the following payments and collections remitted by Subservicers or received
      by
      it in respect of the Mortgage Loans subsequent to the Cut-off Date (other than
      in respect of principal and interest due on the Mortgage Loans on or before
      the
      Cut-off Date) and the following amounts required to be deposited
      hereunder:

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (v) any
      amounts required to be deposited by the Master Servicer pursuant to Sections
      3.9(b) and 3.9(d);

     

    (vi) all
      Substitution Adjustment Amounts;

     

    (vii) all
      Advances made by the Master Servicer pursuant to Section 4.1; and

     

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

     

    In
      addition, with respect to any Mortgage Loan that is subject to a buydown
      agreement, on each Due Date for such Mortgage Loan, in addition to the monthly
      payment remitted by the Mortgagor, the Master Servicer shall cause funds to
      be
      deposited into the Certificate Account in an amount required to cause an amount
      of interest to be paid with respect to such Mortgage Loan equal to the amount
      of
      interest that has accrued on such Mortgage Loan from the preceding Due Date
      at
      the related Adjusted Mortgage Rate on such date.

     

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

     

    (c) The
      Trustee shall establish and maintain, on behalf of the Certificateholders,
      the
      Distribution Account, into which the Trustee shall, promptly upon receipt,
      deposit in the Distribution Account and retain therein the
      following:

     

    
      
        
        

      

      
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    (i) the
      aggregate amount remitted by the Master Servicer to the Trustee pursuant to
      Section 3.8(a)(ix);

     

    (ii) any
      amount deposited by the Master Servicer pursuant to this Section 3.5(c) in
      connection with any losses on Permitted Investments; and

     

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

     

    In
      the
      event that the Master Servicer shall remit any amount not required to be
      remitted, it may at any time direct the Trustee to withdraw such amount from
      the
      Distribution Account, any provision herein to the contrary notwithstanding.
      Such
      direction may be accomplished by delivering an Officer’s Certificate to the
      Trustee which describes the amounts deposited in error in the Distribution
      Account. All funds deposited in the Distribution Account shall be held by the
      Trustee in trust for the Certificateholders until disbursed in accordance with
      this Agreement or withdrawn in accordance with Section 3.8. In no event shall
      the Trustee incur liability for withdrawals from the Distribution Account at
      the
      direction of the Master Servicer.

     

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

     

    
      
        
        

      

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

     

    SECTION
      3.6  Collection
      of Taxes, Assessments and Similar Items; Escrow Accounts.

     

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

     

    (b) Withdrawals
      of amounts so collected from the Escrow Accounts may be made only to effect
      timely payment of taxes, assessments, hazard insurance premiums, condominium
      or
      PUD association dues, or comparable items, to reimburse the Master Servicer
      out
      of related collections for any payments made pursuant to Sections 3.1 hereof
      (with respect to taxes and assessments and insurance premiums) and 3.9 hereof
      (with respect to hazard insurance), to refund to any Mortgagors any sums
      determined to be overages, to pay interest, if required by law or the terms
      of
      the related Mortgage or Mortgage Note, to Mortgagors on balances in the Escrow
      Account or to clear and terminate the Escrow Account at the termination of
      this
      Agreement in accordance with Section 9.1 hereof. The Escrow Accounts shall
      not
      be a part of the Trust Fund.

     

    (c) The
      Master Servicer shall advance any payments referred to in Section 3.6(a) that
      are not timely paid by the Mortgagors on the date when the tax, premium or
      other
      cost for which such payment is intended is due, but the Master Servicer shall
      be
      required so to advance only to the extent that such advances, in the good faith
      judgment of the Master Servicer, will be recoverable by the Master Servicer
      out
      of Insurance Proceeds, Liquidation Proceeds or otherwise.

     

    SECTION
      3.7  Access
      to
      Certain Documentation and Information Regarding the Mortgage Loans.

     

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

     

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

     

     

    
      
        
        

      

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

     

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

     

    (i) to
      the
      extent not previously retained by the Master Servicer, to pay to the Master
      Servicer the master servicing compensation to which it is entitled pursuant
      to
      Section 3.14, and earnings on or investment income with respect to funds in
      or
      credited to the Certificate Account as additional master servicing
      compensation;

     

    (ii) to
      the
      extent not previously retained by the Master Servicer, to reimburse the Master
      Servicer for unreimbursed Advances made by it, such right of reimbursement
      pursuant to this subclause (ii) being limited to amounts received on the
      Mortgage Loan(s) in respect of which any such Advance was made;

     

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

     

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

     

    (v) 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 3.1 or Section 3.6 and (b) for unpaid Master
      Servicing Fees as provided in Section 3.11 hereof;

     

    (vi) to
      pay to
      the Seller or Master Servicer, as applicable, with respect to each Mortgage
      Loan
      or property acquired in respect thereof that has been purchased pursuant to
      Section 2.2, 2.3 or 3.11, all amounts received thereon after the date of such
      purchase;

     

    (vii) to
      reimburse the Seller, the Master Servicer or the Depositor for expenses incurred
      by any of them and reimbursable pursuant to Section 6.3 hereof;

     

    

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

     

    
      
        
        

      

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

     

    (x) to
      clear
      and terminate the Certificate Account upon termination of this Agreement
      pursuant to Section 9.1 hereof.

     

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

     

    (b) The
      Trustee shall withdraw funds from the Distribution Account for distributions
      to
      the Certificateholders in the manner specified in this Agreement (and to
      withhold from the amounts so withdrawn, the amount of any taxes that it is
      authorized to withhold pursuant to the last paragraph of Section 8.11). In
      addition, the Trustee may (and with respect to clauses (i) and (ii) below,
      shall), prior to making the distribution pursuant to Section 4.2 from time
      to
      time make withdrawals from the Distribution Account for the following
      purposes:

     

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

     

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

     

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

     

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

     

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

     

    (a) The
      Master Servicer shall cause to be maintained, for each Mortgage Loan, hazard
      insurance with extended coverage in an amount that is at least equal to the
      lesser of (i) the maximum insurable value of the improvements securing such
      Mortgage Loan or (ii) the greater of (y) the outstanding principal balance
      of
      the Mortgage Loan and (z) an amount such that the proceeds of such policy shall
      be sufficient to prevent the Mortgagor and/or the mortgagee from becoming a
      co-insurer. Each such policy of standard hazard insurance shall contain, or
      have
      an accompanying endorsement that contains, a standard mortgagee clause. Any
      amounts collected by the Master Servicer under any such policies (other than
      the
      amounts to be applied to the restoration or repair of the related Mortgaged
      Property or amounts released to the Mortgagor in accordance with the Master
      Servicer’s normal servicing procedures) shall be deposited in the Certificate
      Account. Any cost incurred by the Master Servicer in maintaining any such
      insurance shall not, for the purpose of calculating monthly distributions to
      the
      Certificateholders or remittances to the Trustee for their benefit, be added
      to
      the principal balance of the Mortgage Loan, notwithstanding that the terms
      of
      the Mortgage Loan so permit. Such costs shall be recoverable by the Master
      Servicer out of late payments by the related Mortgagor or out of Liquidation
      Proceeds to the extent permitted by Section 3.8 hereof. It is understood and
      agreed that no earthquake or other additional insurance is to be required of
      any
      Mortgagor or maintained on property acquired in respect of a Mortgage other
      than
      pursuant to such applicable laws and regulations as shall at any time be in
      force and as shall require such additional insurance. If the Mortgaged Property
      is located at the time of origination of the Mortgage Loan in a federally
      designated special flood hazard area and such area is participating in the
      national flood insurance program, the Master Servicer shall cause flood
      insurance to be maintained with respect to such Mortgage Loan. Such flood
      insurance shall be in an amount equal to the least of (i) the original principal
      balance of the related Mortgage Loan, (ii) the replacement value of the
      improvements which are part of such Mortgaged Property, and (iii) the maximum
      amount of such insurance available for the related Mortgaged Property under
      the
      national flood insurance program.

     

    
      
        
        

      

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

     

    (c) The
      Master Servicer shall not take any action which would result in non-coverage
      under any applicable Primary Insurance Policy of any loss which, but for the
      actions of the Master Servicer, would have been covered thereunder. The Master
      Servicer shall not cancel or refuse to renew any such Primary Insurance Policy
      that is in effect at the date of the initial issuance of the Certificates and
      is
      required to be kept in force hereunder unless the replacement Primary Insurance
      Policy for such canceled or non-renewed policy is maintained with a Qualified
      Insurer.

     

    The
      Master Servicer shall not be required to maintain any Primary Insurance Policy
      (i) with respect to any Mortgage Loan with a Loan-to-Value Ratio less than
      or
      equal to 80% as of any date of determination or, based on a new appraisal,
      the
      principal balance of such Mortgage Loan represents 80% or less of the new
      appraised value or (ii) if maintaining such Primary Insurance Policy is
      prohibited by applicable law.

     

    
      
        
        

      

      
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    The
      Master Servicer agrees to effect the timely payment of the premiums on each
      Primary Insurance Policy, and such costs not otherwise recoverable shall be
      recoverable by the Master Servicer from the related liquidation
      proceeds.

     

    (d) In
      connection with its activities as Master Servicer of the Mortgage Loans, the
      Master Servicer agrees to present on behalf of itself, the Trustee and
      Certificateholders, claims to the insurer under any Primary Insurance Policies
      and, in this regard, to take such reasonable action as shall be necessary to
      permit recovery under any Primary Insurance Policies respecting defaulted
      Mortgage Loans. Any amounts collected by the Master Servicer under any Primary
      Insurance Policies shall be deposited in the Certificate Account.

     

    SECTION
      3.10  Enforcement
      of Due-on-Sale Clauses; Assumption Agreements.

     

    (a) Except
      as
      otherwise provided in this Section, when any property subject to a Mortgage
      has
      been conveyed by the Mortgagor, the Master Servicer shall to the extent that
      it
      has knowledge of such conveyance, enforce any due-on-sale clause contained
      in
      any Mortgage Note or Mortgage, to the extent permitted under applicable law
      and
      governmental regulations, but only to the extent that such enforcement will
      not
      adversely affect or jeopardize coverage under any Required Insurance Policy.
      Notwithstanding the foregoing, the Master Servicer is not required to exercise
      such rights with respect to a Mortgage Loan if the Person to whom the related
      Mortgaged Property has been conveyed or is proposed to be conveyed satisfies
      the
      terms and conditions contained in the Mortgage Note and Mortgage related thereto
      and the consent of the mortgagee under such Mortgage Note or Mortgage is not
      otherwise so required under such Mortgage Note or Mortgage as a condition to
      such transfer. In the event that the Master Servicer is prohibited by law from
      enforcing any such due-on-sale clause, or if coverage under any Required
      Insurance Policy would be adversely affected, or if nonenforcement is otherwise
      permitted hereunder, the Master Servicer is authorized, subject to Section
      3.10(b), to take or enter into an assumption and modification agreement from
      or
      with the person to whom such property has been or is about to be conveyed,
      pursuant to which such person becomes liable under the Mortgage Note and, unless
      prohibited by applicable state law, the Mortgagor remains liable thereon,
      provided that the Mortgage Loan shall continue to be covered (if so covered
      before the Master Servicer enters such agreement) by the applicable Required
      Insurance Policies. The Master Servicer, subject to Section 3.10(b), is also
      authorized with the prior approval of the insurers under any Required Insurance
      Policies to enter into a substitution of liability agreement with such Person,
      pursuant to which the original Mortgagor is released from liability and such
      Person is substituted as Mortgagor and becomes liable under the Mortgage Note.
      Notwithstanding the foregoing, the Master Servicer shall not be deemed to be
      in
      default under this Section by reason of any transfer or assumption which the
      Master Servicer reasonably believes it is restricted by law from preventing,
      for
      any reason whatsoever.

     

    
      
        
        

      

      
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    (b) Subject
      to the Master Servicer’s duty to enforce any due-on-sale clause to the extent
      set forth in Section 3.10(a) hereof, in any case in which a Mortgaged Property
      has been conveyed to a Person by a Mortgagor, and such Person is to enter into
      an assumption agreement or modification agreement or supplement to the Mortgage
      Note or Mortgage that requires the signature of the Trustee, or if an instrument
      of release signed by the Trustee is required releasing the Mortgagor from
      liability on the Mortgage Loan, the Master Servicer shall prepare and deliver
      or
      cause to be prepared and delivered to the Trustee for signature and shall
      direct, in writing, the Trustee to execute the assumption agreement with the
      Person to whom the Mortgaged Property is to be conveyed and such modification
      agreement or supplement to the Mortgage Note or Mortgage or other instruments
      as
      are reasonable or necessary to carry out the terms of the Mortgage Note or
      Mortgage or otherwise to comply with any applicable laws regarding assumptions
      or the transfer of the Mortgaged Property to such Person. In connection with
      any
      such assumption, no material term of the Mortgage Note may be changed. In
      addition, the substitute Mortgagor and the Mortgaged Property must be acceptable
      to the Master Servicer in accordance with its underwriting standards as then
      in
      effect. Together with each such substitution, assumption or other agreement
      or
      instrument delivered to the Trustee for execution by it, the Master Servicer
      shall deliver an Officer’s Certificate signed by a Servicing Officer stating
      that the requirements of this subsection have been met in connection therewith.
      The Master Servicer shall notify the Trustee that any such substitution or
      assumption agreement has been completed by forwarding to the Trustee the
      original of such substitution or assumption agreement, which in the case of
      the
      original shall be added to the related Mortgage File and shall, for all
      purposes, be considered a part of such Mortgage File to the same extent as
      all
      other documents and instruments constituting a part thereof. Any fee collected
      by the Master Servicer for entering into an assumption or substitution of
      liability agreement will be retained by the Master Servicer as additional
      servicing compensation.

     

    SECTION
      3.11  Realization
      Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
      Loans.

     

    The
      Master Servicer shall use reasonable efforts to foreclose upon or otherwise
      comparably convert the ownership of properties securing such of the Mortgage
      Loans as come into and continue in default and as to which no satisfactory
      arrangements can be made for collection of delinquent payments. In connection
      with such foreclosure or other conversion, the Master Servicer shall follow
      such
      practices and procedures as it shall deem necessary or advisable and as shall
      be
      normal and usual in its general mortgage servicing activities and meet the
      requirements of the insurer under any Required Insurance Policy; provided,
      however, that the Master Servicer shall not be required to expend its own funds
      in connection with any foreclosure or towards the restoration of any property
      unless it shall determine (i) that such restoration and/or foreclosure will
      increase the proceeds of liquidation of the Mortgage Loan after reimbursement
      to
      itself of such expenses and (ii) that such expenses will be recoverable to
      it
      through Liquidation Proceeds (respecting which it shall have priority for
      purposes of withdrawals from the Certificate Account). The Master Servicer
      shall
      be responsible for all other costs and expenses incurred by it in any such
      proceedings; provided, however, that it shall be entitled to reimbursement
      thereof from the liquidation proceeds with respect to the related Mortgaged
      Property, as provided in the definition of Liquidation Proceeds. If the Master
      Servicer has knowledge that a Mortgaged Property which the Master Servicer
      is
      contemplating acquiring in foreclosure or by deed in lieu of foreclosure is
      located within a 1 mile radius of any site listed in the Expenditure Plan for
      the Hazardous Substance Clean Up Bond Act of 1984 or other site with
      environmental or hazardous waste risks known to the Master Servicer, the Master
      Servicer will, prior to acquiring the Mortgaged Property, consider such risks
      and only take action in accordance with its established environmental review
      procedures.

     

    
      
        
        

      

      
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    With
      respect to any REO Property, the deed or certificate of sale shall be taken
      in
      the name of the Trust Fund for the benefit of the Certificateholders, or its
      nominee, on behalf of the Certificateholders. The Master Servicer shall ensure
      that the title to such REO Property references the Pooling and Servicing
      Agreement and the Trust Fund’s capacity thereunder. Pursuant to its efforts to
      sell such REO Property, the Master Servicer shall either itself or through
      an
      agent selected by the Master Servicer protect and conserve such REO Property
      in
      the same manner and to such extent as is customary in the locality where such
      REO Property is located. The Master Servicer shall perform the tax reporting
      and
      withholding required by Sections 1445 and 6050J of the Code with respect to
      foreclosures and abandonments, the tax reporting required by Section 6050H
      of
      the Code with respect to the receipt of mortgage interest from individuals
      and
      any tax reporting required by Section 6050P of the Code with respect to the
      cancellation of indebtedness by certain financial entities, by preparing such
      tax and information returns as may be required, in the form required, and
      delivering the same to the Trustee for filing.

     

    In
      the
      event that the Trust Fund acquires any Mortgaged Property as aforesaid or
      otherwise in connection with a default or imminent default on a Mortgage Loan,
      the Master Servicer shall dispose of such Mortgaged Property prior to the close
      of the third taxable year after the taxable year of its acquisition by the
      Trust
      Fund unless the Trustee shall have been supplied with an Opinion of Counsel
      to
      the effect that the holding by the Trust Fund of such Mortgaged Property
      subsequent to such three-year period will not result in the imposition of taxes
      on “prohibited transactions” of the REMIC hereunder as defined in Section 860F
      of the Code or cause the REMIC created hereunder to fail to qualify as a REMIC
      at any time that any Certificates are outstanding, in which case the Trust
      Fund
      may continue to hold such Mortgaged Property (subject to any conditions
      contained in such Opinion of Counsel). Notwithstanding any other provision
      of
      this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented
      (or allowed to continue to be rented) or otherwise used for the production
      of
      income by or on behalf of the Trust Fund in such a manner or pursuant to any
      terms that would (i) cause such Mortgaged Property to fail to qualify as
“foreclosure property” within the meaning of Section 860G(a)(8) of the Code or
      (ii) subject the REMIC hereunder to the imposition of any federal, state or
      local income taxes on the income earned from such Mortgaged Property under
      Section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
      to indemnify and hold harmless the Trust Fund with respect to the imposition
      of
      any such taxes.

     

    In
      the
      event of a default on a Mortgage Loan one or more of whose obligor is not a
      United States Person, as that term is defined in Section 7701(a)(30) of the
      Code, in connection with any foreclosure or acquisition of a deed in lieu of
      foreclosure (together, “foreclosure”) in respect of such Mortgage Loan, the
      Master Servicer will cause compliance with the provisions of Treasury Regulation
      Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that
      no
      withholding tax obligation arises with respect to the proceeds of such
      foreclosure except to the extent, if any, that proceeds of such foreclosure
      are
      required to be remitted to the obligors on such Mortgage Loan.

     

    
      
        
        

      

      
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    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 Certificate Account. To the
      extent the net income received during any calendar month is in excess of the
      amount attributable to amortizing principal and accrued interest at the related
      Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
      shall be considered to be a partial prepayment of principal of the related
      Mortgage Loan.

     

    The
      proceeds from any liquidation of a Mortgage Loan, as well as any income from
      an
      REO Property, will be applied in the following order of priority: first, to
      reimburse the Master Servicer for any related unreimbursed Servicing Advances
      and Master Servicing Fees; second, to reimburse the Master Servicer for any
      unreimbursed Advances; third, to reimburse the Certificate Account for any
      Nonrecoverable Advances (or portions thereof) that were previously withdrawn
      by
      the Master Servicer pursuant to Section 3.8(a)(iii) that related to such
      Mortgage Loan; fourth, to accrued and unpaid interest (to the extent no Advance
      has been made for such amount or any such Advance has been reimbursed) on the
      Mortgage Loan or related REO Property, at the Adjusted Net Mortgage Rate to
      the
      Due Date occurring in the month in which such amounts are required to be
      distributed; and fifth, as a recovery of principal of the Mortgage Loan. Excess
      Proceeds, if any, from the liquidation of a Liquidated Mortgage Loan will be
      retained by the Master Servicer as additional servicing compensation pursuant
      to
      Section 3.14.

     

    The
      Master Servicer, with the consent of the Trustee, shall have the right to
      purchase for its own account from the Trust Fund any Mortgage Loan which is
      91
      days or more delinquent at a price equal to the Purchase Price. The Purchase
      Price for any Mortgage Loan purchased hereunder shall be deposited in the
      Certificate Account and the Trustee, upon receipt of a certificate from the
      Master Servicer in the form of Exhibit M hereto, shall release or cause to
      be
      released to the purchaser of such Mortgage Loan the related Mortgage File and
      shall execute and deliver such instruments of transfer or assignment prepared
      by
      the purchaser of such Mortgage Loan, in each case without recourse, as shall
      be
      necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
      released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
      to all the Trustee’s right, title and interest in and to such Mortgage Loan and
      all security and documents related thereto. Such assignment shall be an
      assignment outright and not for security. The purchaser of such Mortgage Loan
      shall thereupon own such Mortgage Loan, and all security and documents, free
      of
      any further obligation to the Trustee or the Certificateholders with respect
      thereto.

     

     

    
      
        
        

      

      
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    SECTION
      3.12  Trustee
      to Cooperate; Release of Mortgage Files.

     

    Upon
      the
      payment in full of any Mortgage Loan, or the receipt by the Master Servicer
      of a
      notification that payment in full will be escrowed in a manner customary for
      such purposes, the Master Servicer will immediately notify the Trustee by
      delivering, or causing to be delivered a “Request for Release” substantially in
      the form of Exhibit M. Upon receipt of such request, the Trustee shall or shall
      cause the Custodian to promptly release the related Mortgage File to the Master
      Servicer, and the Trustee shall at the Master Servicer’s direction execute and
      deliver to the Master Servicer the request for reconveyance, deed of
      reconveyance or release or satisfaction of mortgage or such instrument releasing
      the lien of the Mortgage in each case provided by the Master Servicer, together
      with the Mortgage Note with written evidence of cancellation thereon. Expenses
      incurred in connection with any instrument of satisfaction or deed of
      reconveyance shall be chargeable to the related Mortgagor. From time to time
      and
      as shall be appropriate for the servicing or foreclosure of any Mortgage Loan,
      including for such purpose, collection under any policy of flood insurance,
      any
      fidelity bond or errors or omissions policy, or for the purposes of effecting
      a
      partial release of any Mortgaged Property from the lien of the Mortgage or
      the
      making of any corrections to the Mortgage Note or the Mortgage or any of the
      other documents included in the Mortgage File, the Trustee shall, upon delivery
      to the Trustee of a Request for Release in the form of Exhibit L signed by
      a
      Servicing Officer, release the Mortgage File to the Master Servicer. Subject
      to
      the further limitations set forth below, the Master Servicer shall cause the
      Mortgage File or documents so released to be returned to the Trustee or its
      Custodian when the need therefor by the Master Servicer no longer exists, unless
      the Mortgage Loan is liquidated and the proceeds thereof are deposited in the
      Certificate Account, in which case the Master Servicer shall deliver to the
      Trustee a Request for Release in the form of Exhibit M, signed by a Servicing
      Officer.

     

    If
      the
      Master Servicer at any time seeks to initiate a foreclosure proceeding in
      respect of any Mortgaged Property as authorized by this Agreement, the Master
      Servicer shall deliver or cause to be delivered to the Trustee, for signature,
      as appropriate, any court pleadings, requests for trustee’s sale or other
      documents necessary to effectuate such foreclosure or any legal action brought
      to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage
      or
      to obtain a deficiency judgment or to enforce any other remedies or rights
      provided by the Mortgage Note or the Mortgage or otherwise available at law
      or
      in equity.

     

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

     

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

     

     

    
      
        
        

      

      
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    SECTION
      3.14  Master
      Servicing Compensation.

     

    As
      compensation for its activities as Master Servicer hereunder and as a
      subservicer pursuant to the Servicing Rights Transfer and Subservicing
      Agreement, the Master Servicer shall be entitled to retain or withdraw from
      the
      Certificate Account an amount equal to the Master Servicing Fee for each
      Mortgage Loan, provided that the aggregate Master Servicing Fee with respect
      to
      any Distribution Date shall be reduced (i) by the amount of any Compensating
      Interest paid by the Master Servicer with respect to such Distribution Date,
      and
      (ii) with respect to the first Distribution Date, an amount equal to any amount
      to be deposited into the Distribution Account by the Depositor pursuant to
      Section 2.1(a) and not so deposited.

     

    Additional
      servicing compensation in the form of (i) Excess Proceeds, Prepayment Interest
      Excess and all income and gain net of any losses realized from Permitted
      Investments and (ii) prepayment penalties, assumption fees and late payment
      charges in each case under the circumstances and in the manner set forth in
      the
      applicable Mortgage Note or Mortgage shall be retained by the Master Servicer
      to
      the extent not required to be deposited in the Certificate Account pursuant
      to
      Section 3.5 hereof. The Master Servicer shall be required to pay all expenses
      incurred by it in connection with its master servicing activities hereunder
      (including payment of any premiums for hazard insurance and any Primary
      Insurance Policy and maintenance of the other forms of insurance coverage
      required by this Agreement) and shall not be entitled to reimbursement therefor
      except as specifically provided in this Agreement.

     

    SECTION
      3.15  Access
      to
      Certain Documentation.

     

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

     

     

    
      
        
        

      

      
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    SECTION
      3.16  Annual
      Statement as to Compliance.

     

    (a) The
      Master Servicer shall deliver to the Depositor and the Trustee on or before
      March 15 of each year, commencing in 2007, an Officer’s Certificate stating, as
      to the signer thereof, that (i) a review of the activities of the Master
      Servicer during the preceding calendar year (or applicable portion thereof)
      and
      of the performance of the Master Servicer under this Agreement has been made
      under such officer’s supervision and (ii) to the best of such officer’s
      knowledge, based on such review, the Master Servicer has fulfilled all its
      obligations under this Agreement in all material respects throughout such year
      (or applicable portion thereof), or, if there has been a failure to fulfill
      any
      such obligation in any material respect, specifying each such failure known
      to
      such officer and the status thereof.

     

    (b) The
      Master Servicer shall cause each Subservicer that is a reporting Subcontractor
      to deliver to the Depositor and the Trustee on or before March 15 of each year,
      commencing in 2007, an Officer’s Certificate stating, as to the signer thereof,
      that (i) a review of the activities of such Subservicer during the preceding
      calendar year (or applicable portion thereof) and of the performance of the
      Subservicer under the applicable Subservicing Agreement or primary servicing
      agreement, has been made under such officer’s supervision and (ii) to the best
      of such officer’s knowledge, based on such review, such Subservicer has
      fulfilled all its obligations under the applicable Subservicing Agreement or
      primary servicing agreement, in all material respects throughout such year
      (or
      applicable portion thereof), or, if there has been a failure to fulfill any
      such
      obligation in any material respect, specifying each such failure known to such
      officer and the nature and status thereof.

     

    SECTION
      3.17  Errors
      and Omissions Insurance; Fidelity Bonds.

     

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

     

    SECTION
      3.18  Notification
      of Adjustments.

     

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

     

    
      
        
        

      

      
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    ARTICLE
      IV

    DISTRIBUTIONS
      AND ADVANCES BY THE MASTER SERVICER

     

    SECTION
      4.1  Advances.

     

    The
      Master Servicer shall determine on the Business Day prior to each Master
      Servicer Advance Date whether it is required to make an Advance pursuant to
      the
      definition thereof. If the Master Servicer determines it is required to make
      an
      Advance, it shall, on or before the Master Servicer Advance Date, either (i)
      deposit into the Certificate Account an amount equal to the Advance or (ii)
      make
      an appropriate entry in its records relating to the Certificate Account that
      any
      Amount Held for Future Distribution has been used by the Master Servicer in
      discharge of its obligation to make any such Advance. Any funds so applied
      shall
      be replaced by the Master Servicer by deposit in the Certificate Account no
      later than the close of business on the Business Day preceding the next Master
      Servicer Advance Date. The Master Servicer shall be entitled to be reimbursed
      from the Certificate Account for all Advances of its own funds made pursuant
      to
      this Section as provided in Section 3.8. The obligation to make Advances with
      respect to any Mortgage Loan shall continue until the ultimate disposition
      of
      the REO Property or Mortgaged Property relating to such Mortgage Loan. As to
      any
      Distribution Date, the Master Servicer shall inform the Trustee in writing
      of
      the amount of the Advance to be made by the Master Servicer on each Master
      Servicer Advance Date no later 1:30 p.m. Central time on the second Business
      Day
      immediately preceding such Distribution Date.

     

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

     

    SECTION
      4.2  Priorities
      of Distribution.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (iii) to
      the
      Classes of Senior Certificates entitled to distributions of principal, to the
      extent of remaining Available Funds the Senior Optimal Principal Amount for
      such
      Distribution Date, in the order of priority set forth below in Sections 4.2(b),
      until the respective Class Certificate Balances thereof have been reduced to
      zero;

     

    (iv) to
      the
      Class B-1 Certificates, to the extent of remaining Available Funds, in the
      following order: (1) the Accrued Certificate Interest thereon for such
      Distribution Date, (2) any Accrued Certificate Interest thereon remaining
      undistributed from previous Distribution Dates and (3) such Class’ Allocable
      Share for such Distribution Date;

     

    (v) to
      the
      Class B-2 Certificates, to the extent of remaining Available Funds, in the
      following order: (1) the Accrued Certificate Interest thereon for such
      Distribution Date, (2) any Accrued Certificate Interest thereon remaining
      undistributed from previous Distribution Dates and (3) such Class’ Allocable
      Share for such Distribution Date;

     

    (vi) to
      the
      Class B-3 Certificates, to the extent of remaining Available Funds, in the
      following order: (1) the Accrued Certificate Interest thereon for such
      Distribution Date, (2) any Accrued Certificate Interest thereon remaining
      undistributed from previous Distribution Dates and (3) such Class’ Allocable
      Share for such Distribution Date;

     

    (vii) to
      the
      Class B-4 Certificates, to the extent of remaining Available Funds, in the
      following order: (1) the Accrued Certificate Interest thereon for such
      Distribution Date, (2) any Accrued Certificate Interest thereon remaining
      undistributed from previous Distribution Dates and (3) such Class’ Allocable
      Share for such Distribution Date;

     

    (viii) to
      the
      Class B-5 Certificates, to the extent of remaining Available Funds, in the
      following order: (1) the Accrued Certificate Interest thereon for such
      Distribution Date, (2) any Accrued Certificate Interest thereon remaining
      undistributed from previous Distribution Dates and (3) such Class’ Allocable
      Share for such Distribution Date; and

     

    (ix) to
      the
      Class B-6 Certificates, to the extent of remaining Available Funds, in the
      following order: (1) the Accrued Certificate Interest thereon for such
      Distribution Date, (2) any Accrued Certificate Interest thereon remaining
      undistributed from previous Distribution Dates and (3) such Class’ Allocable
      Share for such Distribution Date.

     

    (b) Amounts
      allocated to the Senior Certificates pursuant to Section 4.2(a)(iii) above
      will
      be distributed in the following order of priority:

     

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

     

    
      
        
        

      

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

     

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

     

    (d) On
      and
      after the Cross-Over Date, the amount distributable to the Senior Certificates
      pursuant to Section 4.2(a)(iii) for the related Distribution Date shall be
      allocated among the related Classes of Senior Certificates, pro
      rata,
      on the
      basis of their respective Class Certificate Balances immediately prior to such
      Distribution Date, regardless of the priorities and amounts set forth in Section
      4.2.

     

    (e) If
      on any
      Distribution Date (i) the Class Certificate Balance of any Class of Subordinated
      Certificates (other than the Class of Subordinated Certificates with the highest
      priority of distribution) for which the related Class Prepayment Distribution
      Trigger was satisfied on such Distribution Date is reduced to zero and (ii)
      amounts distributable to such Class or Classes of Subordinated Certificates
      pursuant to clauses (2), (3) and (5) of the applicable Subordinated Optimal
      Principal Amount remain undistributed on such Distribution Date after all
      amounts otherwise distributable on such date pursuant to clauses (iv) through
      (ix) of Section 4.2(a) have been distributed, such amounts, to the extent of
      such Class’ remaining Allocable Share, shall be distributed on such Distribution
      Date to the remaining Classes of Subordinated Certificates on a pro rata basis,
      subject to the priority of payments described in Section 4.2(a).

     

    (f) In
      the
      event that in any calendar month the Master Servicer recovers an amount, net
      of
      reimbursable expenses (an “Unanticipated Recovery”) in respect of principal of a
      Mortgage Loan which had previously been allocated as a Realized Loss to any
      Class of Certificates pursuant to Section 4.4, on the Distribution Date in
      the
      next succeeding calendar month, the Trustee shall withdraw the Unanticipated
      Recovery from the Distribution Account and sequentially increase, in order
      of
      payment priority, the Class Certificate Balance of each Class of Certificates
      to
      which such Realized Losses were previously allocated by the amount of such
      Unanticipated Recovery, but not to exceed the amount of Realized Losses
      previously allocated to such Class pursuant to Section 4.4, and shall distribute
      the amount of such Unanticipated Recovery to each such Class of Certificates
      in
      the order of payment priority described in Section 4.2(a) of this Agreement.
      Holders of any Class of Certificates for which the Class Certificate Balance
      has
      been increased by the amount of any Unanticipated Recovery will not be entitled
      to any payment in respect of Accrued Certificate Interest on the amount of
      any
      such increase for any Interest Accrual Period preceding the Distribution Date
      on
      which such increase occurs. When the Class Certificate Balance of a Class of
      Certificates has been reduced to zero, the Holders of such Class shall not
      be
      entitled to any share of an Unanticipated Recovery, and such Unanticipated
      Recovery shall be allocated among all outstanding Classes of Certificates
      entitled thereto in accordance with the preceding sentence, subject to the
      remainder of this subsection (f). In the event that (i) any Unanticipated
      Recovery remains undistributed in accordance with the preceding sentence or
      (ii)
      the amount of an Unanticipated Recovery exceeds the amount of the Realized
      Loss
      previously allocated to any outstanding Classes with respect to the related
      Mortgage Loan, on the applicable Distribution Date the Trustee shall distribute
      such Unanticipated Recoveries in accordance with the priorities set forth in
      Section 4.2(a). 

     

    
      
        
        

      

      
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    For
      purposes of the preceding paragraph, the share of an Unanticipated Recovery
      allocable to any Class of Certificates with respect to a Mortgage Loan shall
      be
      based on its pro
      rata
      share
      (in proportion to the Class Certificate Balances thereof with respect to such
      Distribution Date) of the principal portion of any such Realized Loss previously
      allocated with respect to such Mortgage Loan (or Loans).

     

    SECTION
      4.3  Method
      of
      Distribution.

     

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

     

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

     

    (c) The
      Trustee shall withhold or cause to be withheld such amounts as it reasonably
      determines are required by the Code (giving full effect to any exemptions from
      withholding and related certifications required to be furnished by
      Certificateholders or Certificate Owners and any reductions to withholding
      by
      virtue of any bilateral tax treaties and any applicable certification required
      to be furnished by Certificateholders or Certificate Owners with respect
      thereto) from distributions to be made to Non-U.S. Persons. If the Trustee
      reasonably determines that a more accurate determination of the amount required
      to be withheld for a distribution can be made within a reasonable period after
      the scheduled date for such distribution, it may hold such distribution in
      trust
      for a Holder of a Residual Certificate until such determination can be made.
      For
      the purposes of this paragraph, a “Non-U.S. Person” is (i) an individual other
      than a citizen or resident of the United States, (ii) a partnership, corporation
      or entity treated as a partnership or corporation for U.S. federal income tax
      purposes not formed under the laws of the United States, any state thereof
      or
      the District of Columbia (unless, in the case of a partnership, Treasury
      regulations provide otherwise), (iii) any estate, the income of which is not
      subject to U.S. federal income taxation, regardless of source, and (iv) any
      trust, other than a trust that a court within the United States is able to
      exercise primary supervision over the administration of the trust and one or
      more U.S. Persons have the authority to control all substantial decisions of
      the
      trust.

     

     

    
      
        
        

      

      
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    SECTION
      4.4  Allocation
      of Losses.

     

    (a) On
      or
      prior to each Determination Date, the Master Servicer shall determine the amount
      of any Realized Loss in respect of each Mortgage Loan that occurred during
      the
      immediately preceding calendar month.

     

    (b) With
      respect to any Distribution Date, the principal portion of each Realized Loss
      (other than any Excess Loss) with respect to the Mortgage Pool shall be
      allocated in the following order of priority:

     

    (i) to
      the
      Class B-6 Certificates until the Class Certificate Balance thereof has been
      reduced to zero;

     

    (ii) to
      the
      Class B-5 Certificates until the Class Certificate Balance thereof has been
      reduced to zero;

     

    (iii) to
      the
      Class B-4 Certificates until the Class Certificate Balance thereof has been
      reduced to zero;

     

    (iv) to
      the
      Class B-3 Certificates until the Class Certificate Balance thereof has been
      reduced to zero;

     

    (v) to
      the
      Class B-2 Certificates until the Class Certificate Balance thereof has been
      reduced to zero;

     

    (vi) to
      the
      Class B-1 Certificates until the Class Certificate Balance thereof has been
      reduced to zero; and

     

    (vii) to
      the
      Classes of Senior Certificates,
      pro
      rata,
      in
      accordance with their Class Certificate Balances; provided,
      that
      the principal portion of Realized Losses (other than Excess Losses) on the
      Mortgage Loans allocable to the Class A-1 Certificates will instead be borne
      first by the Class A-2 Certificates until the related Class Certificate Balance
      is reduced to zero (in addition to other Realized Losses allocable to the Class
      A-2 Certificates), and not by the Class A-1 Certificates, for so long as the
      Class Certificate Balance of the Class A-2 Certificates is greater than
      zero.

     

    (c) With
      respect to any Distribution Date, the principal portion of any Excess Loss
      (other than Excess Bankruptcy Losses attributable to Debt Service Reductions)
      shall be allocated pro
      rata
      to each
      Class of Certificates based on their respective Class Certificate
      Balances.

     

    
      
        
        

      

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

     

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

     

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

     

    (g) Notwithstanding
      the foregoing, no such allocation of any Realized Loss shall be made on a
      Distribution Date to a Class of Certificates to the extent that such allocation
      would result in the reduction of the aggregate Class Certificate Balances of
      all
      the Certificates as of such Distribution Date, after giving effect to all
      distributions and prior allocations of Realized Losses on such date, to an
      amount less than the Stated Principal Balance of the Mortgage Loans as of the
      first day of the month of such Distribution Date, less any Deficient Valuations
      occurring on or prior to the Bankruptcy Coverage Termination Date (such
      limitation, the “Loss Allocation Limitation”).

     

    SECTION
      4.5  [RESERVED]

     

    SECTION
      4.6  Monthly
      Statements to Certificateholders.

     

    (a) Not
      later
      than each Distribution Date, the Trustee shall prepare and cause to be forwarded
      by first class mail to each Certificateholder, the Master Servicer, the
      Depositor and each Rating Agency a statement, that complies with Item 1121
      of
      Regulation AB, setting forth, among other things, with respect to the related
      distribution and/or may post such statement on its website located at
      www.bnyinvestorreporting.com:

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (x) the
      number and aggregate principal amounts of Mortgage Loans (A) delinquent
      (exclusive of Mortgage Loans in foreclosure) (1) 1 to 30 days (2) 31 to 60
      days
      (3) 61 to 90 days and (4) 91 or more days and (B) in foreclosure and delinquent
      (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days,
      as
      of the close of business on the last day of the calendar month preceding such
      Distribution Date;

     

    (xi) with
      respect to any Mortgage Loan that became an REO Property during the preceding
      calendar month, the loan number and Stated Principal Balance of such Mortgage
      Loan as of the close of business on the Determination Date preceding such
      Distribution Date and the date of acquisition thereof;

     

    (xii) the
      total
      number and principal balance of any REO Properties (and market value, if
      available) as of the close of business on the Determination Date preceding
      such
      Distribution Date;

     

    (xiii) the
      Senior Prepayment Percentage for the following Distribution Date;

     

    (xiv) the
      aggregate amount of Realized Losses incurred during the preceding calendar
      month;

     

    
      
        
        

      

      
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    (xv) the
      cumulative amount of Realized Losses applied in reduction of the principal
      balance of each Class of Certificates since the Closing Date;

     

    (xvi) the
      Special Hazard Loss Coverage Amount, the Fraud Loss Coverage Amount and the
      Bankruptcy Loss Coverage Amount, in each case as of the related Determination
      Date; and

     

    (xvii) with
      respect to the second Distribution Date, the number and aggregate balance of
      any
      Delay Delivery Mortgage Loans not delivered within thirty days after the Closing
      Date.

     

    (b) The
      Trustee’s responsibility for disbursing the above information to the
      Certificateholders is limited to the availability, timeliness and accuracy
      of
      the information provided by the Master Servicer.

     

    (c) On
      or
      before the fifth Business Day following the end of each Prepayment Period (but
      in no event later than the third Business Day prior to the related Distribution
      Date), the Master Servicer shall deliver to the Trustee (which delivery may
      be
      by electronic data transmission) a report in substantially the form set forth
      as
      Schedule III hereto.

     

    (d) Within
      a
      reasonable period of time after the end of each calendar year, the Trustee
      shall
      cause to be furnished to each Person who at any time during the calendar year
      was a Certificateholder, a statement containing the information set forth in
      clauses (a)(i), (a)(ii) and (a)(vii) of this Section 4.6 aggregated for such
      calendar year or applicable portion thereof during which such Person was a
      Certificateholder. Such obligation of the Trustee shall be deemed to have been
      satisfied to the extent that substantially comparable information shall be
      provided by the Trustee pursuant to any requirements of the Code as from time
      to
      time in effect.

     

    ARTICLE
      V

    THE
      CERTIFICATES

     

    SECTION
      5.1  The
      Certificates.

     

    The
      Certificates shall be substantially in the forms attached hereto as exhibits.
      The Certificates shall be issuable in registered form, in the minimum
      denominations, integral multiples in excess thereof (except that one Certificate
      in each Class may be issued in a different amount which must be in excess of
      the
      applicable minimum denomination) and aggregate denominations per Class set
      forth
      in the Preliminary Statement.

     

    Subject
      to Section 9.2 hereof respecting the final distribution on the Certificates,
      on
      each Distribution Date the Trustee shall make distributions to each
      Certificateholder of record on the preceding Record Date either (x) by wire
      transfer in immediately available funds to the account of such Holder at a
      bank
      or other entity having appropriate facilities therefor, if (i) such Holder
      has
      so notified the Trustee at least five Business Days prior to the related Record
      Date and (ii) such Holder shall hold (A) 100% of the Class Certificate Balance
      of any Class of Certificates or (B) Certificates of any Class with aggregate
      principal Denominations of not less than $1,000,000 or (y) by check mailed
      by
      first class mail to such Certificateholder at the address of such Holder
      appearing in the Certificate Register.

     

    
      
        
        

      

      
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    The
      Certificates shall be executed by manual or facsimile signature on behalf of
      the
      Trustee by an authorized officer. Certificates bearing the manual or facsimile
      signatures of individuals who were, at the time when such signatures were
      affixed, authorized to sign on behalf of the Trustee shall bind the Trustee,
      notwithstanding that such individuals or any of them have ceased to be so
      authorized prior to the countersignature and delivery of such Certificates
      or
      did not hold such offices at the date of such Certificate. No Certificate shall
      be entitled to any benefit under this Agreement, or be valid for any purpose,
      unless countersigned by the Trustee by manual signature, and such
      countersignature upon any Certificate shall be conclusive evidence, and the
      only
      evidence, that such Certificate has been duly executed and delivered hereunder.
      All Certificates shall be dated the date of their countersignature. On the
      Closing Date, the Trustee shall countersign the Certificates to be issued at
      the
      direction of the Depositor, or any affiliate thereof.

     

    The
      Depositor shall provide, or cause to be provided, to the Trustee on a continuous
      basis, an adequate inventory of Certificates to facilitate
      transfers.

     

    SECTION
      5.2  Certificate
      Register; Registration of Transfer and Exchange of Certificates.

     

    (a) The
      Trustee shall maintain, or cause to be maintained in accordance with the
      provisions of Section 5.6 hereof, a Certificate Register for the Trust Fund
      in
      which, subject to the provisions of subsections (b) and (c) below and to such
      reasonable regulations as it may prescribe, the Trustee shall provide for the
      registration of Certificates and of transfers and exchanges of Certificates
      as
      herein provided. Upon surrender for registration of transfer of any Certificate,
      the Trustee shall execute and deliver, in the name of the designated transferee
      or transferees, one or more new Certificates of the same Class and aggregate
      Percentage Interest.

     

    At
      the
      option of a Certificateholder, Certificates may be exchanged for other
      Certificates of the same Class in authorized denominations and evidencing the
      same aggregate Percentage Interest upon surrender of the Certificates to be
      exchanged at the office or agency of the Trustee. Whenever any Certificates
      are
      so surrendered for exchange, the Trustee shall execute, authenticate, and
      deliver the Certificates which the Certificateholder making the exchange is
      entitled to receive. Every Certificate presented or surrendered for registration
      of transfer or exchange shall be accompanied by a written instrument of transfer
      in form satisfactory to the Trustee duly executed by the Holder thereof or
      his
      attorney duly authorized in writing.

     

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

     

    
      
        
        

      

      
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    All
      Certificates surrendered for registration of transfer or exchange shall be
      cancelled and subsequently destroyed by the Trustee in accordance with the
      Trustee’s customary procedures.

     

    (b) No
      transfer of a Private Certificate shall be made unless such transfer is made
      pursuant to an effective registration statement under the Securities Act and
      any
      applicable state securities laws or is exempt from the registration requirements
      under said Act and such state securities laws. In the event that a transfer
      is
      to be made in reliance upon an exemption from the Securities Act and such laws,
      in order to assure compliance with the Securities Act and such laws, any Holder
      of a Private Certificate (other than a Private Certificate that is a Book-Entry
      Certificate) desiring to effect such transfer and such Certificateholder’s
      prospective transferee shall each certify to the Trustee in writing the facts
      surrounding the transfer in substantially the forms set forth in Exhibit I
      (the
“Transferor Certificate”) and (i) deliver a letter in substantially the form of
      either Exhibit J (the “Investment Letter”) or Exhibit K (the “Rule 144A Letter”)
      or (ii) there shall be delivered to the Trustee at the expense of the transferor
      an Opinion of Counsel that such transfer may be made pursuant to an exemption
      from the Securities Act. 

     

    Each
      Holder of a Private Certificate that is a Book-Entry Certificate, by its
      acquisition thereof (or a beneficial interest therein), shall be deemed to
      have
      represented and warranted for the benefit of the Depositor, the Servicer and
      the
      Trustee that (a) it understands that the Private Certificates are not being
      registered under the Securities Act, or any state securities laws and are being
      transferred to it in a transaction that is exempt from the registration
      requirements of the Securities Act and any such laws, (b) it has such knowledge
      and experience in financial and business matters that it is capable of
      evaluating the merits and risks of investments in the Private Certificates,
      (c)
      it has had the opportunity to ask questions of and receive answers from the
      Depositor concerning the purchase of the Private Certificates and all matters
      relating thereto or any additional information deemed necessary to its decision
      to purchase the Private Certificates, (d) neither it, nor any anyone acting
      on
      its behalf, has offered, transferred, pledged, sold or otherwise disposed of
      the
      Private Certificates or any interest therein, or solicited any offer to buy
      or
      accept a transfer, pledge or other disposition of the Private Certificates
      or
      any interest therein from, or otherwise approached or negotiated with respect
      to
      the Private Certificates or any interest therein with, any person in any manner,
      or made any general solicitation by means of general advertising or in any
      other
      manner, or taken any other action, that would constitute a distribution of
      the
      Private Certificates under the Securities Act or that would render the
      disposition of the Private Certificates a violation of Section 5 of the
      Securities Act or require registration pursuant thereto, nor will it act, nor
      has it authorized or will authorize any person to act, in such manner with
      respect to the Private Certificates, (e) it is a “qualified institutional buyer”
as that term is defined in Rule 144A under the Securities Act (“Rule 144A”), (f)
      it is aware that the sale of the Private Certificates to it is being made in
      reliance on Rule 144A, (g) it is acquiring the Private Certificates for its
      own
      account or for resale pursuant to Rule 144A and it understands that the Private
      Certificates may be resold, pledged or transferred only (A) to a person whom
      it
      reasonably believes to be a qualified institutional buyer that purchases for
      its
      own account or for the account of a qualified institutional buyer to whom notice
      is given that the resale, pledge or transfer is being made in reliance on Rule
      144A, or (B) pursuant to another exemption from registration under the
      Securities Act; and (h) it understands that no representation is made as to
      the
      availability of the exemption provided by Rule 144A for resales of the Private
      Certificates. 

     

    
      
        
        

      

      
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    The
      Depositor shall provide to any Holder of a Private Certificate and any
      prospective transferee designated by any such Holder, information regarding
      the
      related Certificates and the Mortgage Loans and such other information as shall
      be necessary to satisfy the condition to eligibility set forth in Rule
      144A(d)(4) for transfer of any such Certificate without registration thereof
      under the Securities Act pursuant to the registration exemption provided by
      Rule
      144A. The Trustee and the Master Servicer shall cooperate with the Depositor
      in
      providing the Rule 144A information referenced in the preceding sentence,
      including providing to the Depositor such information regarding the
      Certificates, the Mortgage Loans and other matters regarding the Trust Fund
      as
      the Depositor shall reasonably request to meet its obligation under the
      preceding sentence. Each Holder of a Private Certificate desiring to effect
      such
      transfer shall, and by its acceptance of a Private Certificate does hereby
      agree
      to, indemnify the Trustee and the Depositor, the Seller and the Master Servicer
      against any liability that may result if the transfer is not so exempt or is
      not
      made in accordance with such federal and state laws.

     

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

     

    
      
        
        

      

      
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    To
      the
      extent permitted under applicable law (including, but not limited to, ERISA),
      the Trustee shall be under no liability to any Person for any registration
      of
      transfer of any ERISA-Restricted Certificate that is in fact not permitted
      by
      this Section 5.2(b) or for making any payments due on such Certificate to the
      Holder thereof or taking any other action with respect to such Holder under
      the
      provisions of this Agreement so long as the transfer was registered by the
      Trustee in accordance with the foregoing requirements.

     

    Each
      Holder of a Private Certificate that is a Book-Entry Certificate, by its
      acquisition thereof (or a beneficial interest therein) shall be deemed to have
      represented and warranted for the benefit of the Depositor, the Servicer, the
      Trustee and the other Certificateholders, that (a) it is not an employee benefit
      plan or arrangement that is subject to Section 406 of ERISA, or a plan or
      arrangement that is subject to Section 4975 of the Internal Revenue Code of
      1986, as amended, nor is it acting on behalf of any such plan or arrangement
      or
      using the assets of any such plan or arrangement to effect such acquisition,
      or
      (b) if it is an insurance company, in the case of Private Certificates that
      have
      been the subject of an ERISA-Qualifying Underwriting, it is purchasing the
      Private Certificates with funds contained in an “insurance company general
      account” (as defined in Section V(e) of Prohibited Transaction Class Exemption
      95-60 (“PTCE 95-60”)) and its purchase and holding of the Private Certificates
      are covered under Sections I and III of PTCE 95-60. To the extent permitted
      under applicable law (including, but not limited to, ERISA), the Trustee shall
      be under no liability to any Person for any registration of transfer of any
      ERISA-Restricted Certificate that is in fact not permitted by this Section
      5.2(b) or for making any payments due on such Certificate to the Holder thereof
      or taking any other action with respect to such Holder under the provisions
      of
      this Agreement so long as the transfer was registered by the Trustee in
      accordance with the foregoing requirements. The Trustee shall be entitled,
      but
      not obligated, to recover from any Holder of any ERISA-Restricted Certificate
      that was in fact a Plan or a Person acting on behalf of any such Plan any
      payments made on such ERISA-Restricted Certificate at and after either such
      time. Any such payments so recovered by the Trustee shall be paid and delivered
      by the Trustee to the last preceding Holder of such Certificate that is not
      such
      a Plan or Person acting on behalf of a Plan.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (iv) Any
      attempted or purported Transfer of any Ownership Interest in a Residual
      Certificate in violation of the provisions of this Section 5.2(c) shall be
      absolutely null and void and shall vest no rights in the purported Transferee.
      If any purported transferee shall become a Holder of a Residual Certificate
      in
      violation of the provisions of this Section 5.2(c), then the last preceding
      Permitted Transferee shall be restored to all rights as Holder thereof
      retroactive to the date of registration of Transfer of such Residual
      Certificate. The Trustee shall be under no liability to any Person for any
      registration of Transfer of a Residual Certificate that is in fact not permitted
      by Section 5.2(b) and this Section 5.2(c) or for making any payments due on
      such
      Certificate to the Holder thereof or taking any other action with respect to
      such Holder under the provisions of this Agreement so long as the Transfer
      was
      registered after receipt of the related Transfer Affidavit, Transferor
      Certificate and, in the case of a Residual Certificate which is also a Private
      Certificate, either the Rule 144A Letter or the Investment Letter. The Trustee
      shall be entitled but not obligated to recover from any Holder of a Residual
      Certificate that was in fact not a Permitted Transferee at the time it became
      a
      Holder or, at such subsequent time as it became other than a Permitted
      Transferee, all payments made on such Residual Certificate at and after either
      such time. Any such payments so recovered by the Trustee shall be paid and
      delivered by the Trustee to the last preceding Permitted Transferee of such
      Certificate.

     

    (v) The
      Depositor shall use its best efforts to make available, upon receipt of written
      request from the Trustee, all information necessary to compute any tax imposed
      under Section 860E(e) of the Code as a result of a Transfer of an Ownership
      Interest in a Residual Certificate to any Holder who is not a Permitted
      Transferee.

     

    
      
        
        

      

      
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    The
      restrictions on Transfers of a Residual Certificate set forth in this Section
      5.2(c) shall cease to apply (and the applicable portions of the legend on a
      Residual Certificate may be deleted) with respect to Transfers occurring after
      delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
      shall
      not be an expense of the Trust Fund, the Trustee, the Seller or the Master
      Servicer, to the effect that the elimination of such restrictions will not
      cause
      the REMIC created hereunder to fail to qualify as a REMIC at any time that
      the
      Certificates are outstanding or result in the imposition of any tax on the
      Trust
      Fund, a Certificateholder or another Person. Each Person holding or acquiring
      any Ownership Interest in a Residual Certificate hereby consents to any
      amendment of this Agreement which, based on an Opinion of Counsel furnished
      to
      the Trustee, is reasonably necessary (a) to ensure that the record ownership
      of,
      or any beneficial interest in, a Residual Certificate is not transferred,
      directly or indirectly, to a Person that is not a Permitted Transferee and
      (b)
      to provide for a means to compel the Transfer of a Residual Certificate which
      is
      held by a Person that is not a Permitted Transferee to a Holder that is a
      Permitted Transferee.

     

    (d) The
      preparation and delivery of all certificates and opinions referred to above
      in
      this Section 5.2 in connection with transfer shall be at the expense of the
      parties to such transfers.

     

    (e) Except
      as
      provided below, the Book-Entry Certificates shall at all times remain registered
      in the name of the Depository or its nominee and at all times: (i) registration
      of the Certificates may not be transferred by the Trustee except to another
      Depository; (ii) the Depository shall maintain book-entry records with respect
      to the Certificate Owners and with respect to ownership and transfers of such
      Book-Entry Certificates; (iii) ownership and transfers of registration of the
      Book-Entry Certificates on the books of the Depository shall be governed by
      applicable rules established by the Depository; (iv) the Depository may collect
      its usual and customary fees, charges and expenses from its Depository
      Participants; (v) the Trustee shall deal with the Depository, Depository
      Participants and indirect participating firms as representatives of the
      Certificate Owners of the Book-Entry Certificates for purposes of exercising
      the
      rights of holders under this Agreement, and requests and directions for and
      votes of such representatives shall not be deemed to be inconsistent if they
      are
      made with respect to different Certificate Owners; and (vi) the Trustee may
      rely
      and shall be fully protected in relying upon information furnished by the
      Depository with respect to its Depository Participants and furnished by the
      Depository Participants with respect to indirect participating firms and persons
      shown on the books of such indirect participating firms as direct or indirect
      Certificate Owners.

     

    All
      transfers by Certificate Owners of Book-Entry Certificates shall be made in
      accordance with the procedures established by the Depository Participant or
      brokerage firm representing such Certificate Owner. Each Depository Participant
      shall only transfer Book-Entry Certificates of Certificate Owners it represents
      or of brokerage firms for which it acts as agent in accordance with the
      Depository’s normal procedures.

     

    
      
        
        

      

      
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    If
      (x)
      (i) the Depository or the Depositor advises the Trustee in writing that the
      Depository is no longer willing or able to properly discharge its
      responsibilities as Depository, and (ii) the Trustee or the Depositor is unable
      to locate a qualified successor, (y) the Depositor at its option advises the
      Trustee in writing that it elects to terminate the book-entry system through
      the
      Depository or (z) after the occurrence of an Event of Default, Certificate
      Owners representing at least 51% of the Class Certificate Balance of the
      Book-Entry Certificates together advise the Trustee and the Depository through
      the Depository Participants in writing that the continuation of a book-entry
      system through the Depository is no longer in the best interests of the
      Certificate Owners, the Trustee shall notify all Certificate Owners, through
      the
      Depository, of the occurrence of any such event and of the availability of
      definitive, fully-registered Certificates (the “Definitive Certificates”) to
      Certificate Owners requesting the same. Upon surrender to the Trustee of the
      related Class of Certificates by the Depository, accompanied by the instructions
      from the Depository for registration, the Trustee shall issue the Definitive
      Certificates. Neither the Master Servicer, the Depositor nor the Trustee shall
      be liable for any delay in delivery of such instruction and each may
      conclusively rely on, and shall be protected in relying on, such instructions.
      The Master Servicer shall provide the Trustee with an adequate inventory of
      certificates to facilitate the issuance and transfer of Definitive Certificates.
      Upon the issuance of Definitive Certificates all references herein to
      obligations imposed upon or to be performed by the Depository shall be deemed
      to
      be imposed upon and performed by the Trustee, to the extent applicable with
      respect to such Definitive Certificates and the Trustee shall recognize the
      Holders of the Definitive Certificates as Certificateholders hereunder; provided
      that the Trustee shall not by virtue of its assumption of such obligations
      become liable to any party for any act or failure to act of the
      Depository.

     

    SECTION
      5.3  Mutilated,
      Destroyed, Lost or Stolen Certificates.

     

    If
      (a)
      any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
      evidence to its satisfaction of the destruction, loss or theft of any
      Certificate and (b) there is delivered to the Master Servicer and the Trustee
      such security or indemnity as may be required by them to save each of them
      harmless, then, in the absence of notice to the Trustee that such Certificate
      has been acquired by a bona fide purchaser, the Trustee shall execute,
      countersign and deliver, in exchange for or in lieu of any such mutilated,
      destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
      and Percentage Interest. In connection with the issuance of any new Certificate
      under this Section 5.3, the Trustee may require the payment of a sum sufficient
      to cover any tax or other governmental charge that may be imposed in relation
      thereto and any other expenses (including the fees and expenses of the Trustee)
      connected therewith. Any replacement Certificate issued pursuant to this Section
      5.3 shall constitute complete and indefeasible evidence of ownership, as if
      originally issued, whether or not the lost, stolen or destroyed Certificate
      shall be found at any time.

     

    SECTION
      5.4  Persons
      Deemed Owners.

     

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

     

     

    
      
        
        

      

      
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    SECTION
      5.5  Access
      to
      List of Certificateholders’ Names and Addresses.

     

    If
      three
      or more Certificateholders or Certificate Owners (a) request such information
      in
      writing from the Trustee, (b) state that such Certificateholders or Certificate
      Owners desire to communicate with other Certificateholders with respect to
      their
      rights under this Agreement or under the Certificates, and (c) provide a copy
      of
      the communication which such Certificateholders or Certificate Owners propose
      to
      transmit, or if the Depositor or Master Servicer shall request such information
      in writing from the Trustee, then the Trustee shall, within ten Business Days
      after the receipt of such request, provide the Depositor, the Master Servicer
      or
      such Certificateholders or Certificate Owners at such recipients’ expense the
      most recent list of the Certificateholders of such Trust Fund held by the
      Trustee, if any. The Depositor and every Certificateholder or Certificate Owner,
      by receiving and holding a Certificate, agree that the Trustee shall not be
      held
      accountable by reason of the disclosure of any such information as to the list
      of the Certificateholders hereunder, regardless of the source from which such
      information was derived.

     

    SECTION
      5.6  Maintenance
      of Office or Agency.

     

    The
      Trustee will maintain or cause to be maintained at its expense an office or
      offices or agency or agencies in New York City where Certificates may be
      surrendered for registration of transfer or exchange. The Trustee initially
      designates its Corporate Trust Office for such purposes. The Trustee will give
      prompt written notice to the Certificateholders of any change in such location
      of any such office or agency.

     

    ARTICLE
      VI

    THE
      DEPOSITOR AND THE MASTER SERVICER

     

    SECTION
      6.1  Respective
      Liabilities of the Depositor and the Master Servicer.

     

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

     

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

     

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

     

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

     

     

    
      
        
        

      

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

     

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

     

    SECTION
      6.4  Limitation
      on Resignation of Master Servicer.

     

    The
      Master Servicer shall not resign from the obligations and duties hereby imposed
      on it except (a) upon appointment of a successor servicer and receipt by the
      Trustee of a letter from each Rating Agency that such a resignation and
      appointment will not result in a downgrading of the rating of any of the
      Certificates, or (b) upon determination that its duties hereunder are no longer
      permissible under applicable law. Any such determination under clause (b)
      permitting the resignation of the Master Servicer shall be evidenced by an
      Opinion of Counsel to such effect delivered to the Trustee. No such resignation
      shall become effective until the Trustee or a successor master servicer shall
      have assumed the Master Servicer’s responsibilities, duties, liabilities and
      obligations hereunder.

     

    
      
        
        

      

      
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    ARTICLE
      VII

    DEFAULT

     

    SECTION
      7.1  Events
      of
      Default.

     

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

     

    (i) any
      failure by the Master Servicer to deposit in the Certificate Account or remit
      to
      the Trustee any payment required to be made under the terms of this Agreement,
      which failure shall continue unremedied for five days after the date upon which
      written notice of such failure shall have been given to the Master Servicer
      by
      the Trustee or the Depositor or to the Master Servicer and the Trustee by the
      Holders of Certificates having not less than 25% of the Voting Rights evidenced
      by the Certificates; or

     

    (ii) any
      failure by the Master Servicer to observe or perform in any material respect
      any
      other of the covenants or agreements on the part of the Master Servicer
      contained in this Agreement (except with respect to failure related to a Limited
      Exchange Act Reporting Obligation), which failure materially affects the rights
      of Certificateholders, which failure continues unremedied for a period of 60
      days after the date on which written notice of such failure shall have been
      given to the Master Servicer by the Trustee or the Depositor, or to the Master
      Servicer and the Trustee by the Holders of Certificates evidencing not less
      than
      25% of the Voting Rights evidenced by the Certificates; provided, however,
      that
      the 60-day cure period shall not apply to the initial delivery of the Mortgage
      File for Delay Delivery Mortgage Loans nor the failure to substitute or
      repurchase in lieu thereof; or

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    If
      an
      Event of Default described in clauses (i) to (v) of this Section shall occur,
      then, and in each and every such case, so long as such Event of Default shall
      not have been remedied, the Trustee may, or at the direction of the Holders
      of
      Certificates evidencing not less than 66 2/3% of the Voting Rights evidenced
      by
      the Certificates, the Trustee shall by notice in writing to the Master Servicer
      (with a copy to each Rating Agency), terminate all of the rights and obligations
      of the Master Servicer under this Agreement and in and to the Mortgage Loans
      and
      the proceeds thereof, other than its rights as a Certificateholder hereunder.
      If
      an Event of Default described in clause (vi) of this Section shall occur, the
      Trustee shall immediately, by notice in writing to the Master Servicer (with
      a
      copy to each Rating Agency), terminate all of the rights and obligations of
      the
      Master Servicer under this Agreement and in and to the Mortgage Loans and
      proceeds thereof, other than its rights as a Certificateholder hereunder. In
      addition, if during the period that the Depositor is required to file Exchange
      Act Reports with respect to the Trust Fund, the Master Servicer shall fail
      to
      observe or perform any of the obligations set forth in Section 3.16(a) or
      Section 10.1(a)(i) and (ii), and such failure continues for the lesser of ten
      (10) calendar days or such period in which the applicable Exchange Act Report
      can be filed timely (without taking into account any extensions), so long as
      such failure shall not have been remedied, the Trustee shall, but only at the
      direction of the Depositor, terminate all of the rights and obligations of
      the
      Master Servicer under this Agreement and in and to the Mortgage Loans and the
      proceeds thereof, other than its rights as a Certificateholder hereunder. The
      Depositor shall not be entitled to terminate the rights and obligations of
      the
      Master Servicer if a failure of the Master Servicer to identify a Subcontractor
      “participating in the servicing function” within the meaning of Item 1122 of
      Regulation AB was attributable solely to the role or functions of such
      Subcontractor with respect to mortgage loans other than the Mortgage Loans.
      On
      and after the receipt by the Master Servicer of such written notice, all
      authority and power of the Master Servicer hereunder, whether with respect
      to
      the Mortgage Loans or otherwise, shall pass to and be vested in the
      Trustee or
      another successor to the Master Servicer appointed by the Trustee pursuant
      to
      Section 7.2. The Trustee, in its capacity as successor to the Master Servicer,
      shall thereupon make any Advance which the Master Servicer failed to make
      subject to Section 4.1 hereof. The Trustee is hereby authorized and empowered
      to
      execute and deliver, on behalf of the Master Servicer, as attorney-in-fact
      or
      otherwise, any and all documents and other instruments, and to do or accomplish
      all other acts or things necessary or appropriate to effect the purposes of
      such
      notice of termination, whether to complete the transfer and endorsement or
      assignment of the Mortgage Loans and related documents, or otherwise. Unless
      expressly provided in such written notice, no such termination shall affect
      any
      obligation of the Master Servicer to pay amounts owed pursuant to Article VIII.
      The Master Servicer agrees to cooperate with the Trustee in effecting the
      termination of the Master Servicer’s responsibilities and rights hereunder,
      including, without limitation, the transfer to the Trustee of all cash amounts
      which shall at the time be credited to the Certificate Account, or thereafter
      be
      received with respect to the Mortgage Loans. All expenses incurred in the
      transferring of the servicing duties from the Master Servicer to a Successor
      Servicer shall be paid by the Master Servicer, and if not paid by the Master
      Servicer, shall be paid from amounts on deposit in the Certificate Account.
      

     

    
      
        
        

      

      
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    Notwithstanding
      any termination of the activities of the Master Servicer hereunder, the Master
      Servicer shall be entitled to receive, out of any late collection of a Scheduled
      Payment on a Mortgage Loan which was due prior to the notice terminating such
      Master Servicer’s rights and obligations as Master Servicer hereunder and
      received after such notice, that portion thereof to which such Master Servicer
      would have been entitled pursuant to Sections 3.8(a)(i) through (viii),and
      any
      other amounts payable to such Master Servicer hereunder the entitlement to
      which
      arose prior to the termination of its activities hereunder. Any termination
      of
      the activities of the Master Servicer hereunder will simultaneously result
      in
      the termination of the Master Servicer’s duties as a subservicer pursuant to the
      Servicing Rights Transfer and Subservicing Agreement.

     

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

     

    SECTION
      7.2  Trustee
      to Act; Appointment of Successor.

     

    On
      and
      after the time the Master Servicer receives a notice of termination pursuant
      to
      Section 7.1 hereof, the Trustee shall, subject to and to the extent provided
      in
      Section 3.4, be the successor to the Master Servicer under this Agreement and
      the transactions set forth or provided for herein and shall be subject to all
      the responsibilities, duties and liabilities relating thereto placed on the
      Master Servicer by the terms and provisions hereof and applicable law including
      the obligation to make Advances pursuant to Section 4.1. As compensation
      therefor, the Trustee shall be entitled to all funds relating to the Mortgage
      Loans that the Master Servicer would have been entitled to charge to the
      Certificate Account or Distribution Account if the Master Servicer had continued
      to act hereunder. Notwithstanding the foregoing, if the Trustee has become
      the
      successor to the Master Servicer in accordance with Section 7.1 hereof, the
      Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
      by applicable law from making Advances pursuant to Section 4.1 hereof or if
      it
      is otherwise unable to so act appoint, or petition a court of competent
      jurisdiction to appoint, any established mortgage loan servicing institution
      the
      appointment of which does not adversely affect the then current rating of the
      Certificates by each Rating Agency as the successor to the Master Servicer
      hereunder in the assumption of all or any part of the responsibilities, duties
      or liabilities of the Master Servicer hereunder. Any successor to the Master
      Servicer shall be an institution which is a FNMA and FHLMC approved
      seller/servicer in good standing, which has a net worth of at least $10,000,000,
      and which is willing to service the Mortgage Loans and executes and delivers
      to
      the Depositor and the Trustee an agreement accepting such delegation and
      assignment, which contains an assumption by such Person of the rights, powers,
      duties, responsibilities, obligations and liabilities of the Master Servicer
      (other than liabilities of the Master Servicer under Section 6.3 hereof incurred
      prior to termination of the Master Servicer under Section 7.1), with like effect
      as if originally named as a party to this Agreement; and provided further that
      each Rating Agency acknowledges that its rating of the Certificates in effect
      immediately prior to such assignment and delegation will not be qualified or
      reduced, as a result of such assignment and delegation. The Trustee shall
      provide written notice to the Depositor of such successor pursuant to this
      Section. The successor to the Master Servicer shall provide to the Depositor
      in
      writing, fifteen (15) days prior to the effective date of such appointment,
      and
      in form and substance reasonably satisfactory to the Depositor, all information
      reasonably requested by the Depositor in order to comply with its reporting
      obligation under Item 6.02 of Form 8-K with respect to a replacement master
      servicer. The Trustee shall not resign as servicer until a successor servicer
      has been appointed and has accepted such appointment. Pending appointment of
      a
      successor to the Master Servicer hereunder, the Trustee, unless the Trustee
      is
      prohibited by law from so acting, shall, subject to Section 3.4 hereof, act
      in
      such capacity as provided above. In connection with such appointment and
      assumption, the Trustee may make such arrangements for the compensation of
      such
      successor out of payments on Mortgage Loans as it and such successor shall
      agree; provided, however, that no such compensation shall be in excess of the
      Master Servicing Fee permitted the Master Servicer hereunder. The Trustee and
      such successor shall take such action, consistent with this Agreement, as shall
      be necessary to effectuate any such succession. Neither the Trustee nor any
      other successor master servicer shall be deemed to be in default hereunder
      by
      reason of any failure to make, or any delay in making, any distribution
      hereunder or any portion thereof or any failure to perform, or any delay in
      performing, any duties or responsibilities hereunder, in either case caused
      by
      the failure of the Master Servicer to deliver or provide, or any delay in
      delivering or providing, any cash, information, documents or records to
      it.

     

    
      
        
        

      

      
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    Any
      successor to the Master Servicer as master servicer shall give notice to the
      Mortgagors of such change of servicer and shall, during the term of its service
      as master servicer maintain in force the policy or policies that the Master
      Servicer is required to maintain pursuant to Section 3.17.

     

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

     

    SECTION
      7.3  Notification
      to Certificateholders.

     

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

     

     

    
      
         

      

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

       

      ARTICLE
        VIII

      CONCERNING
        THE TRUSTEE

       

      SECTION
        8.1  Duties
        of
        Trustee.

       

      The
        Trustee, prior to the occurrence of an Event of Default of which a Responsible
        Officer of the Trustee has actual knowledge and after the curing of all Events
        of Default that may have occurred, shall undertake to perform such duties
        and
        only such duties as are specifically set forth in this Agreement. In case
        an
        Event of Default of which a Responsible Officer of the Trustee has actual
        knowledge has occurred and remains uncured, the Trustee shall exercise such
        of
        the rights and powers vested in it by this Agreement, and use the same degree
        of
        care and skill in their exercise as a prudent person would exercise or use
        under
        the circumstances in the conduct of such person’s own affairs.

       

      The
        Trustee, upon receipt of all resolutions, certificates, statements, opinions,
        reports, documents, orders or other instruments furnished to the Trustee
        that
        are specifically required to be furnished pursuant to any provision of this
        Agreement shall examine them to determine whether they are in the form required
        by this Agreement; provided, however, that the Trustee shall not be responsible
        for the accuracy or content of any such resolution, certificate, statement,
        opinion, report, document, order or other instrument. If any such instrument
        is
        found not to conform in any material respect to the requirements of this
        Agreement, the Trustee shall notify the Certificateholders of such instrument
        in
        the event that the Trustee, after so requesting, does not receive a
        satisfactorily corrected instrument.

       

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

       

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

       

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

       

      
        
           

        

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

       

      (iii) the
        Trustee shall not be liable with respect to any action taken, suffered or
        omitted to be taken by it in good faith in accordance with the direction
        of
        Holders of Certificates evidencing not less than 25% of the Voting Rights
        of
        Certificates relating to the time, method and place of conducting any proceeding
        for any remedy available to the Trustee, or exercising any trust or power
        conferred upon the Trustee under this Agreement;

       

      (iv) the
        Trustee shall not be required to expend or risk its own funds or otherwise
        incur
        financial liability in the performance of any of its duties hereunder or
        the
        exercise of any of its rights or powers if there is reasonable ground for
        believing that the repayment of such funds or adequate indemnity against
        such
        risk or liability is not assured to it, and none of the provisions contained
        in
        this Agreement shall in any event require the Trustee to perform, or be
        responsible for the manner of performance of, any of the obligations of the
        Master Servicer under this Agreement except during such time, if any, as
        the
        Trustee shall be the successor to, and be vested with the rights, duties,
        powers
        and privileges of, the Master Servicer; and

       

      (v) without
        limiting the generality of this Section 8.1, the Trustee shall have no duty
        (A)
        to see to any recording, filing, or depositing of this Agreement or any
        agreement referred to herein or any financing statement or continuation
        statement evidencing a security interest, or to see to the maintenance of
        any
        such recording or filing or deposit or to any rerecording, refiling or
        redepositing of any thereof, (B) to see to any insurance, (C) to see to the
        payment or discharge of any tax, assessment, or other governmental charge
        or any
        lien or encumbrance of any kind owing with respect to, assessed or levied
        against, any part of the Trust Fund other than from funds available in the
        Distribution Account (D) to confirm or verify the contents of any reports
        or
        certificates of the Servicer delivered to the Trustee pursuant to this Agreement
        believed by the Trustee to be genuine and to have been signed or presented
        by
        the proper party or parties.

       

      SECTION
        8.2  Certain
        Matters Affecting the Trustee.

       

      Except
        as
        otherwise provided in Section 8.1:

       

      (i) the
        Trustee may request and rely upon and shall be protected in acting or refraining
        from acting upon any resolution, Officers’ Certificate, certificate of auditors
        or any other certificate, statement, instrument, opinion, report, notice,
        request, consent, order, appraisal, bond or other paper or document believed
        by
        it to be genuine and to have been signed or presented by the proper party
        or
        parties and the Trustee shall have no responsibility to ascertain or confirm
        the
        genuineness of any signature of any such party or parties;

       

      
        
           

        

        
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      (ii) the
        Trustee may consult with counsel, financial advisers or accountants and the
        advice of any such counsel, financial advisers or accountants and any Opinion
        of
        Counsel shall be full and complete authorization and protection in respect
        of
        any action taken or suffered or omitted by it hereunder in good faith and
        in
        accordance with such Opinion of Counsel;

       

      (iii) the
        Trustee shall not be liable for any action taken, suffered or omitted by
        it in
        good faith and believed by it to be authorized or within the discretion or
        rights or powers conferred upon it by this Agreement;

       

      (iv) the
        Trustee shall not be bound to make any investigation into the facts or matters
        stated in any resolution, certificate, statement, instrument, opinion, report,
        notice, request, consent, order, approval, bond or other paper or document,
        unless requested in writing so to do by Holders of Certificates evidencing
        not
        less than 25% of the Voting Rights allocated to each Class of Certificates;
        provided, however, that if the payment within a reasonable time to the Trustee
        of the costs, expenses or liabilities likely to be incurred by it in the
        making
        of such investigation is, in the opinion of the Trustee, not assured to the
        Trustee by the security afforded to it by the terms of this Agreement, the
        Trustee may require indemnity satisfactory to the Trustee against such cost,
        expense or liability as a condition to taking any such action. The reasonable
        expense of every such examination shall be paid by the Master Servicer or,
        if
        paid by the Trustee, shall be repaid by the Master Servicer upon demand from
        the
        Servicer’s own funds.

       

      (v) the
        Trustee may execute any of the trusts or powers hereunder or perform any
        duties
        hereunder either directly or by or through agents, accountants or attorneys
        and
        the Trustee shall not be responsible for any misconduct or negligence on
        the
        part of such agent, accountant or attorney appointed by the Trustee with
        due
        care;

       

      (vi) the
        Trustee shall not be required to risk or expend its own funds or otherwise
        incur
        any financial liability in the performance of any of its duties or in the
        exercise of any of its rights or powers hereunder if it shall have reasonable
        grounds for believing that repayment of such funds or adequate indemnity
        against
        such risk or liability is not assured to it;

       

      (vii) the
        Trustee shall not be liable for any loss on any investment of funds pursuant
        to
        this Agreement (other than as issuer of the investment security);

       

      
        
           

        

        
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      (viii) the
        Trustee shall not be deemed to have knowledge of an Event of Default until
        a
        Responsible Officer of the Trustee shall have received written notice thereof
        and in the absence of such notice, the Trustee may conclusively assume that
        there is no Event of Default;

       

      (ix) the
        Trustee shall be under no obligation to exercise any of the trusts, rights
        or
        powers vested in it by this Agreement or to institute, conduct or defend
        any
        litigation hereunder or in relation hereto at the request, order or direction
        of
        any of the Certificateholders, pursuant to the provisions of this Agreement,
        unless such Certificateholders shall have offered to the Trustee reasonable
        security or indemnity satisfactory to the Trustee against the costs, expenses
        and liabilities which may be incurred therein or thereby;

       

      (x) the
        right
        of the Trustee to perform any discretionary act enumerated in this Agreement
        shall not be construed as a duty, and the Trustee shall not be answerable
        for
        other than its negligence or willful misconduct in the performance of such
        act;
        and 

       

      (xi) the
        Trustee shall not be required to give any bond or surety in respect of the
        execution of the Trust Fund created hereby or the powers granted
        hereunder.

       

      SECTION
        8.3  Trustee
        Not Liable for Certificates or Mortgage Loans.

       

      The
        recitals contained herein and in the Certificates shall be taken as the
        statements of the Depositor and the Trustee assumes no responsibility for
        their
        correctness. The Trustee makes no representations as to the validity or
        sufficiency of this Agreement or of the Certificates or of any Mortgage Loan
        or
        related document or of MERS or the MERS® System other than with respect to the
        Trustee’s execution and counter-signature of the Certificates. The Trustee shall
        not be accountable for the use or application by the Depositor or the Master
        Servicer of any funds paid to the Depositor or the Master Servicer in respect
        of
        the Mortgage Loans or deposited in or withdrawn from the Certificate Account
        by
        the Depositor or the Master Servicer.

       

      SECTION
        8.4  Trustee
        May Own Certificates.

       

      The
        Trustee in its individual or any other capacity may become the owner or pledgee
        of Certificates with the same rights as it would have if it were not the
        Trustee.

       

      SECTION
        8.5  Trustee’s
        Fees and Expenses.

       

      The
        Trustee, as compensation for its activities prior to making the distributions
        pursuant to Section 4.2 hereunder, shall be entitled to withdraw from the
        Distribution Account on each Distribution Date an amount equal to the Trustee
        Fee for such Distribution Date. The Trustee and any director, officer, employee
        or agent of the Trustee shall be indemnified by the Master Servicer and held
        harmless against any loss, liability or expense (including reasonable attorney’s
        fees) (i) incurred in connection with any claim or legal action relating
        to (a)
        this Agreement, (b) the Certificates or (c) in connection with the performance
        of any of the Trustee’s duties hereunder, other than any loss, liability or
        expense incurred by reason of willful misfeasance, bad faith or negligence
        in
        the performance of any of the Trustee’s duties hereunder or incurred by reason
        of any action of the Trustee taken at the direction of the Certificateholders
        and (ii) resulting from any error in any tax or information return prepared
        by
        the Master Servicer. Such indemnity shall survive the termination of this
        Agreement or the resignation or removal of the Trustee hereunder. Without
        limiting the foregoing, the Master Servicer covenants and agrees, except
        as
        otherwise agreed upon in writing by the Depositor and the Trustee, and except
        for any such expense, disbursement or advance as may arise from the Trustee’s
        negligence, bad faith or willful misconduct, to pay or reimburse the Trustee,
        for all reasonable expenses, disbursements and advances incurred or made
        by the
        Trustee in accordance with any of the provisions of this Agreement with respect
        to: (A) the reasonable compensation and the expenses and disbursements of
        its
        counsel not associated with the closing of the issuance of the Certificates,
        (B)
        the reasonable compensation, expenses and disbursements of any accountant,
        engineer or appraiser that is not regularly employed by the Trustee, to the
        extent that the Trustee must engage such persons to perform acts or services
        hereunder and (C) printing and engraving expenses in connection with preparing
        any Definitive Certificates. Except as otherwise provided herein, the Trustee
        shall not be entitled to payment or reimbursement for any routine ongoing
        expenses incurred by the Trustee in the ordinary course of its duties as
        Trustee, Registrar, Tax Matters Person or Paying Agent hereunder or for any
        other expenses.

       

      
        
           

        

        
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      SECTION
        8.6  Eligibility
        Requirements for Trustee.

       

      The
        Trustee hereunder shall at all times be a corporation or association organized
        and doing business under the laws of a state or the United States of America,
        authorized under such laws to exercise corporate trust powers, having a combined
        capital and surplus of at least $50,000,000, subject to supervision or
        examination by federal or state authority and with a credit rating which
        would
        not cause either of the Rating Agencies to reduce their respective then current
        ratings of the Certificates (or having provided such security from time to
        time
        as is sufficient to avoid such reduction). If such corporation or association
        publishes reports of condition at least annually, pursuant to law or to the
        requirements of the aforesaid supervising or examining authority, then for
        the
        purposes of this Section 8.6 the combined capital and surplus of such
        corporation or association shall be deemed to be its combined capital and
        surplus as set forth in its most recent report of condition so published.
        In
        case at any time the Trustee shall cease to be eligible in accordance with
        the
        provisions of this Section 8.6, the Trustee shall resign immediately in the
        manner and with the effect specified in Section 8.7 hereof. The entity serving
        as Trustee may have normal banking and trust relationships with the Depositor
        and its affiliates or the Master Servicer and its affiliates; provided, however,
        that such entity cannot be an affiliate of the Master Servicer other than
        the
        Trustee in its role as successor to the Master Servicer.

       

      SECTION
        8.7  Resignation
        and Removal of Trustee.

       

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

       

      
        
           

        

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

       

      If
        at any
        time (i) the Trustee shall cease to be eligible in accordance with the
        provisions of Section 8.6 hereof and shall fail to resign after written request
        thereto by the Depositor, (ii) the Trustee shall become incapable of acting,
        or
        shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee
        or of
        its property shall be appointed, or any public officer shall take charge
        or
        control of the Trustee or of its property or affairs for the purpose of
        rehabilitation, conservation or liquidation, (iii)(A) a tax is imposed with
        respect to the Trust Fund by any state in which the Trustee or the Trust
        Fund is
        located, (B) the imposition of such tax would be avoided by the appointment
        of a
        different trustee and (C) the Trustee fails to indemnify the Trust Fund against
        such tax, or (iv) during the period that the Depositor is required to file
        Exchange Act Reports with respect to the Trust Fund, the Trustee fails to
        comply
        with its obligations under the last sentence of Section 7.1, Section 8.9
        or
        Article X and such failure is not remedied within the lesser of ten (10)
        calendar days or such period in which the applicable Exchange Act Report
        can be
        filed timely (without taking into account any extensions), then, in the case
        of
        clauses (i) through (iii), the Depositor or the Master Servicer may remove
        the
        Trustee and appoint a successor trustee by written instrument, in triplicate,
        one copy of which instrument shall be delivered to the Trustee, one copy
        of
        which shall be delivered to the Master Servicer and one copy to the successor
        trustee.

       

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

       

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

       

      SECTION
        8.8  Successor
        Trustee.

       

      Any
        successor trustee appointed as provided in Section 8.7 hereof shall execute,
        acknowledge and deliver to the Depositor and to its predecessor trustee and
        the
        Master Servicer an instrument accepting such appointment hereunder and thereupon
        the resignation or removal of the predecessor trustee shall become effective
        and
        such successor trustee, without any further act, deed or conveyance, shall
        become fully vested with all the rights, powers, duties and obligations of
        its
        predecessor hereunder, with the like effect as if originally named as trustee
        herein. The Depositor, the Master Servicer and the predecessor trustee shall
        execute and deliver such instruments and do such other things as may reasonably
        be required for more fully and certainly vesting and confirming in the successor
        trustee all such rights, powers, duties, and obligations.

       

      
        
           

        

        
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      No
        successor trustee shall accept appointment as provided in this Section 8.8
        unless at the time of such acceptance such successor trustee shall be eligible
        under the provisions of Section 8.6 hereof and its appointment shall not
        adversely affect the then current rating of the Certificates.

       

      Upon
        acceptance of appointment by a successor trustee as provided in this Section
        8.8, the Depositor shall mail notice of the succession of such trustee hereunder
        to all Holders of Certificates. If the Depositor fails to mail such notice
        within 10 days after acceptance of appointment by the successor trustee,
        the
        successor trustee shall cause such notice to be mailed at the expense of
        the
        Depositor.

       

      SECTION
        8.9  Merger
        or
        Consolidation of Trustee.

       

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

       

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

       

      SECTION
        8.10  Appointment
        of Co-Trustee or Separate Trustee.

       

      Notwithstanding
        any other provisions of this Agreement, at any time, for the purpose of meeting
        any legal requirements of any jurisdiction in which any part of the Trust
        Fund
        or property securing any Mortgage Note may at the time be located, the Master
        Servicer and the Trustee acting jointly shall have the power and shall execute
        and deliver all instruments to appoint one or more Persons approved by the
        Trustee to act as co-trustee or co-trustees jointly with the Trustee, or
        separate trustee or separate trustees, of all or any part of the Trust Fund,
        and
        to vest in such Person or Persons, in such capacity and for the benefit of
        the
        Certificateholders, such title to the Trust Fund or any part thereof, whichever
        is applicable, and, subject to the other provisions of this Section 8.10,
        such
        powers, duties, obligations, rights and trusts as the Master Servicer and
        the
        Trustee may consider necessary or desirable. If the Master Servicer shall
        not
        have joined in such appointment within 15 days after the receipt by it of
        a
        request to do so, or in the case an Event of Default shall have occurred
        and be
        continuing, the Trustee alone shall have the power to make such appointment.
        No
        co-trustee or separate trustee hereunder shall be required to meet the terms
        of
        eligibility as a successor trustee under Section 8.6 and no notice to
        Certificateholders of the appointment of any co-trustee or separate trustee
        shall be required under Section 8.8.

       

      
        
           

        

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

       

      (i) To
        the
        extent necessary to effectuate the purposes of this Section 8.10, all rights,
        powers, duties and obligations conferred or imposed upon the Trustee shall
        be
        conferred or imposed upon and exercised or performed by the Trustee and such
        separate trustee or co-trustee jointly (it being understood that such separate
        trustee or co-trustee is not authorized to act separately without the Trustee
        joining in such act), except to the extent that under any law of any
        jurisdiction in which any particular act or acts are to be performed (whether
        as
        Trustee hereunder or as successor to the Master Servicer hereunder), the
        Trustee
        shall be incompetent or unqualified to perform such act or acts, in which
        event
        such rights, powers, duties and obligations (including the holding of title
        to
        the applicable Trust Fund or any portion thereof in any such jurisdiction)
        shall
        be exercised and performed singly by such separate trustee or co-trustee,
        but
        solely at the direction of the Trustee;

       

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

       

      (iii) The
        Trustee may at any time accept the resignation of or remove any separate
        trustee
        or co-trustee; and

       

      (iv) The
        Master Servicer, and not the Trustee, shall be liable for the payment of
        reasonable compensation, reimbursement and indemnification to any such separate
        trustee or co-trustee.

       

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

       

      
        
           

        

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

       

      SECTION
        8.11  Tax
        Matters.

       

      It
        is
        intended that the assets with respect to which the REMIC election is to be
        made,
        as set forth in the preliminary statement shall constitute, and that the
        conduct
        of matters relating to such assets shall be such as to qualify such assets
        as, a
“real estate mortgage investment conduit” as defined in and in accordance with
        the REMIC Provisions. In furtherance of such intention, the Trustee covenants
        and agrees that it shall act as agent (and the Trustee is hereby appointed
        to
        act as agent) on behalf of the and that in such capacity it shall: (a) prepare
        and file, or cause to be prepared and filed, in a timely manner, a U.S. Real
        Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any successor
        form adopted by the Internal Revenue Service) and prepare and file or cause
        to
        be prepared and filed with the Internal Revenue Service and applicable state
        or
        local tax authorities income tax or information returns for each taxable
        year
        with respect to the, containing such information and at the times and in
        the
        manner as may be required by the Code or state or local tax laws, regulations,
        or rules, and furnish or cause to be furnished to Certificateholders the
        schedules, statements or information at such times and in such manner as
        may be
        required thereby; (b) within thirty days of the Closing Date, furnish or
        cause
        to be furnished to the Internal Revenue Service, on Forms 8811 or as otherwise
        may be required by the Code, the name, title, address, and telephone number
        of
        the person that the Holders of the Certificates may contact for tax information
        relating thereto, together with such additional information as may be required
        by such Form, and update such information at the time or times in the manner
        required by the Code; (c) make or cause to be made elections that such assets
        be
        treated as a REMIC on the federal tax return for its first taxable year (and,
        if
        necessary, under applicable state law); (d) prepare and forward, or cause
        to be
        prepared and forwarded, to the Certificateholders and to the Internal Revenue
        Service and, if necessary, state tax authorities, all information returns
        and
        reports as and when required to be provided to them in accordance with the
        REMIC
        Provisions, including without limitation, the calculation of any original
        issue
        discount using the prepayment assumption; (e) provide information necessary
        for
        the computation of tax imposed on the transfer of a Residual Certificate
        to a
        Person that is not a Permitted Transferee, or an agent (including a broker,
        nominee or other middleman) of a Non-Permitted Transferee, or a pass-through
        entity in which a Non-Permitted Transferee is the record holder of an interest
        (the reasonable cost of computing and furnishing such information may be
        charged
        to the Person liable for such tax); (f) to the extent that they are under
        its
        control conduct matters relating to such assets at all times that any
        Certificates are outstanding so as to maintain the status as a REMIC under
        the
        REMIC Provisions; (g) not knowingly or intentionally take any action or omit
        to
        take any action that would cause the termination of the REMIC status; (h)
        pay,
        from the sources specified in the last paragraph of this Section 8.11, the
        amount of any federal or state tax, including prohibited transaction taxes
        as
        described below, imposed on the prior to its termination when and as the
        same
        shall be due and payable (but such obligation shall not prevent the Trustee
        or
        any other appropriate Person from contesting any such tax in appropriate
        proceedings and shall not prevent the Trustee from withholding payment of
        such
        tax, if permitted by law, pending the outcome of such proceedings); (i) ensure
        that federal, state or local income tax or information returns shall be signed
        by the Trustee or such other person as may be required to sign such returns
        by
        the Code or state or local laws, regulations or rules; (j) maintain records
        relating to the, including but not limited to the income, expenses, assets
        and
        liabilities thereof and the fair market value and adjusted basis of the assets
        determined at such intervals as may be required by the Code, as may be necessary
        to prepare the foregoing returns, schedules, statements or information; and
        (k)
        as and when necessary and appropriate, represent the in any administrative
        or
        judicial proceedings relating to an examination or audit by any governmental
        taxing authority, request an administrative adjustment as to any taxable
        year of
        the, enter into settlement agreements with any governmental taxing agency,
        extend any statute of limitations relating to any tax item of the, and otherwise
        act on behalf of the in relation to any tax matter or controversy involving
        it.

       

      
        
           

        

        
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      In
        order
        to enable the Trustee to perform its duties as set forth herein, the Depositor
        shall provide, or cause to be provided, to the Trustee within ten (10) days
        after the Closing Date all information or data that the Trustee requests
        in
        writing and determines to be relevant for tax purposes to the valuations
        and
        offering prices of the Certificates, including, without limitation, the price,
        yield, prepayment assumption and projected cash flows of the Certificates
        and
        the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
        promptly upon written request therefor, any such additional information or
        data
        that the Trustee may, from time to time, reasonably request in order to enable
        the Trustee to perform its duties as set forth herein. The Depositor hereby
        indemnifies the Trustee for any losses, liabilities, damages, claims or expenses
        of the Trustee arising from any errors or miscalculations of the Trustee
        that
        result from any failure of the Depositor to provide, or to cause to be provided,
        accurate information or data to the Trustee on a timely basis.

       

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

       

      
        
           

        

        
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      ARTICLE
        IX

      TERMINATION

       

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

       

      Subject
        to Section 9.3, the obligations and responsibilities of the Depositor, the
        Master Servicer and the Trustee created hereby with respect to the Trust
        Fund
        shall terminate upon the earlier of (a) the purchase by the Master Servicer
        of
        all Mortgage Loans (and REO Properties) remaining in the Trust Fund at the
        price
        equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
        Loan (other than a Mortgage Loan that has been foreclosed and subject to
        clause
        (ii)) plus one month’s accrued interest thereon at the applicable Adjusted
        Mortgage Rate, (ii) the lesser of (x) the appraised value of any REO Property
        as
        determined by the higher of two appraisals completed by two independent
        appraisers selected by the Master Servicer at the expense of the Master Servicer
        and (y) the Stated Principal Balance of each Mortgage Loan related to any
        REO
        Property, plus accrued and unpaid interest thereon at the applicable Adjusted
        Mortgage Rate, and (iii) any costs and damages incurred by the Trust in
        connection with the noncompliance of such Mortgage Loan with any specifically
        applicable predatory or abusive lending law, and (b) the later of (i) the
        maturity or other liquidation (or any Advance with respect thereto) of the
        last
        Mortgage Loan remaining in the Trust Fund and the disposition of all REO
        Property and (ii) the distribution to Certificateholders of all amounts required
        to be distributed to them pursuant to this Agreement. In no event shall the
        trusts created hereby continue beyond the earlier of (i) the expiration of
        21
        years from the death of the survivor of the descendants of Joseph P. Kennedy,
        the late Ambassador of the United States to the Court of St. James’s, living on
        the date hereof, and (ii) the Latest Possible Maturity Date. The right to
        purchase all Mortgage Loans and REO Properties pursuant to clause (a) above
        shall be conditioned upon the Pool Principal Balance, at the time of any
        such
        repurchase, being less than ten percent (10%) of the Cut-off Date Pool Principal
        Balance.

       

      SECTION
        9.2  Final
        Distribution on the Certificates.

       

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

       

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

       

      
        
           

        

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

       

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

       

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

       

      SECTION
        9.3  Additional
        Termination Requirements.

       

      (a) In
        the
        event the Master Servicer exercises its purchase option as provided in Section
        9.1, the Trust Fund and the REMIC created hereunder shall be terminated in
        accordance with the following additional requirements, unless the Trustee
        has
        been supplied with an Opinion of Counsel, at the expense of the Master Servicer,
        to the effect that the failure to comply with the requirements of this Section
        9.3 will not (i) result in the imposition of taxes on “prohibited transactions”
on the REMIC as defined in Section 860F of the Code, or (ii) cause the REMIC
        to
        fail to qualify as a REMIC at any time that any Certificates are
        outstanding:

       

      (1) Within
        90
        days prior to the final Distribution Date set forth in the notice given by
        the
        Master Servicer under Section 9.2, the Master Servicer shall prepare and
        the
        Trustee, at the expense of the “tax matters person,” shall adopt a plan of
        complete liquidation within the meaning of Section 860F(a)(4) of the Code
        for
        the REMIC created hereunder which, as evidenced by an Opinion of Counsel
        addressed to the Trustee (which opinion shall not be an expense of the Trustee
        or the Tax Matters Person), meets the requirements of a qualified liquidation;
        and

       

      
        
           

        

        
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      (2) Within
        90
        days after the time of adoption of such plans of complete liquidation, the
        Trustee shall sell all of the assets of the Trust Fund to the Master Servicer
        for cash in accordance with Section 9.1.

       

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

       

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

       

      ARTICLE
        X

      EXCHANGE
        ACT REPORTING

       

      SECTION
        10.1  Filing
        Obligations.

       

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

       

      SECTION
        10.2  Form
        10-D
        Filings.

       

      (a) Although
        the Depositor is responsible under Regulation AB for filing the Form 10-D,
        the
        Trustee hereby agrees it shall prepare for filing and file within fifteen
        days
        after each Distribution Date (subject to permitted extensions under the Exchange
        Act) with the SEC with respect to the Trust Fund, a Form 10-D with copies
        of the
        Monthly Report and, to the extent delivered to the Trustee, no later than
        ten
        days following the Distribution Date, such other information identified by
        the
        Depositor or the Master Servicer, in writing, to be filed with the SEC (such
        other information, the “Additional Designated Information”). If the Depositor or
        Master Servicer directs that any Additional Designated Information is to
        be
        filed with any Form 10-D, the Depositor or Master Servicer, as the case may
        be,
        shall specify the Item on Form 10-D to which such information is responsive
        and,
        with respect to any Exhibit to be filed on Form 10-D, the Exhibit number.
        Any
        information to be filed on Form 10-D shall be delivered to the Trustee in
        EDGAR-compatible form or as otherwise agreed upon by the Trustee and the
        Depositor or the Master Servicer, as the case may be, at the Depositor’s
        expense, and any necessary conversion to EDGAR-compatible format will be
        at the
        Depositor’s expense. At the reasonable request of, and in accordance with the
        reasonable directions of, the Depositor or the Master Servicer, subject to
        the
        two preceding sentences, the Trustee shall prepare for filing and file an
        amendment to any Form 10-D previously filed with the SEC with respect to
        the
        Trust Fund. The Master Servicer shall sign the Form 10-D filed on behalf
        of the
        Trust Fund.

       

      
        
           

        

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

       

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

       

      SECTION
        10.3  Form
        8-K
        Filings.

       

      The
        Master Servicer shall prepare and file on behalf of the Trust Fund any Form
        8-K
        required by the Exchange Act. Each Form 8-K must be signed by the Master
        Servicer. Each of the Trustee and the Master Servicer shall (and the Master
        Servicer shall cause any Subservicer to), promptly notify the Depositor and
        the
        Master Servicer (if the notifying party is not the Master Servicer), but
        in no
        event later than one (1) Business Day after its occurrence, of any Reportable
        Event related to it, of which it has actual knowledge. The Master Servicer
        shall
        notify the Depositor if any material pool characteristic of the actual asset
        pool at the time of issuance of the Certificates differs by five percent
        or more
        (other than as a result of the pool assets converting into cash in accordance
        with their terms) from the description of the asset pool in the Prospectus
        Supplement.

       

       

      
        
           

        

        
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      SECTION
        10.4  Form
        10-K
        Filings.

       

      Prior
        to
        March 30th of each year, commencing in 2007 (or such earlier date as may
        be
        required by the Exchange Act), the Depositor shall prepare and file on behalf
        of
        the Trust Fund a Form 10-K, in form and substance as required by the Exchange
        Act. A senior officer in charge of the servicing function of the Master Servicer
        shall sign each Form 10-K filed on behalf of the Trust Fund. Such Form 10-K
        shall include as exhibits each (i) annual compliance statement described
        under
        Section 3.16(a), (ii) annual report on assessments of compliance with servicing
        criteria described under Section 10.7 and (iii) accountant’s report described
        under Section 10.7. Each Form 10-K shall also include any Sarbanes-Oxley
        Certification required to be included therewith, as described in Section
        10.5.

       

      If
        the
        Item 1119 Parties listed on Exhibit P have changed since the Closing Date,
        no
        later than March 1 of each year, the Depositor shall provide each of the
        Master
        Servicer (and the Master Servicer shall provide any Subservicer) and the
        Trustee
        with an updated Exhibit P setting forth the Item 1119 Parties. No later than
        March 15 of each year, commencing in 2007, the Master Servicer and the Trustee
        shall notify (and the Master Servicer shall cause any Subservicer to notify)
        the
        Depositor of any Form 10-K Disclosure Item related to it, together with a
        description of any such Form 10-K Disclosure Item in form and substance
        reasonably acceptable to the Depositor. Additionally, each of the Master
        Servicer and the Trustee shall provide to the Depositor, and shall cause
        each
        Reporting Subcontractor retained by the Master Servicer or the Trustee, as
        applicable, and in the case of the Master Servicer shall cause each Subservicer
        that is a Reporting Subcontractor, to provide to the Depositor, the following
        information no later than March 15 of each year in which a Form 10-K is required
        to be filed on behalf of the Trust Fund: (i) if such Person’s report on
        assessment of compliance with servicing criteria described under Section
        10.7 or
        related registered public accounting firm attestation report described under
        Section 10.7 identifies any material instance of noncompliance, notification
        of
        such instance of noncompliance and (ii) if any such Person’s report on
        assessment of compliance with servicing criteria or related registered public
        accounting firm attestation report is not provided to be filed as an exhibit
        to
        such Form 10-K, information detailing the explanation why such report is
        not
        included.

       

      SECTION
        10.5  Sarbanes-Oxley
        Certification.

       

      Each
        Form
        10-K shall include a certification (the “Sarbanes-Oxley Certification”) required
        by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section
        302
        of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC
        promulgated thereunder (including any interpretations thereof by the SEC’s
        staff)). No later than March 15 of each year, beginning in 2007, the Master
        Servicer (unless such Person is the Certifying Person) and the Trustee shall,
        and the Master Servicer shall cause each Subservicer to, provide to the Person
        who signs the Sarbanes-Oxley Certification (the “Certifying Person”) a
        certification (each, a “Performance Certification”), substantially in the form
        attached hereto as Exhibit N-1 (in the case of a Subservicer) and Exhibit
        N-2
        (in the case of the Trustee), unless such other form is mutually agreed upon,
        on
        which the Certifying Person, the entity for which the Certifying Person acts
        as
        an officer, and such entity’s officers, directors and Affiliates (collectively
        with the Certifying Person, “Certification Parties”) can reasonably rely. The
        senior officer in charge of the servicing function of the Master Servicer
        shall
        serve as the Certifying Person on behalf of the Trust Fund. Neither the Master
        Servicer nor the Depositor will request delivery of a certification under
        this
        clause unless the Depositor is required under the Exchange Act to file an
        annual
        report on Form 10-K with respect to the Trust Fund. In the event that prior
        to
        the filing date of the Form 10-K in March of each year, a Responsible Officer
        of
        the Trustee or the Depositor has actual knowledge of information material
        to the
        Sarbanes-Oxley Certification, the Trustee or the Depositor, as the case may
        be,
        shall promptly notify the Master Servicer and the Depositor. The respective
        parties hereto agree to cooperate with all reasonable requests made by any
        Certifying Person or Certification Party in connection with such Person’s
        attempt to conduct any due diligence that such Person reasonably believes
        to be
        appropriate in order to allow it to deliver any Sarbanes-Oxley Certification
        or
        portion thereof with respect to the Trust Fund.

       

       

      
        
           

        

        
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      SECTION
        10.6  Form
        15
        Filing.

       

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

       

      SECTION
        10.7  Report
        on
        Assessment of Compliance and Attestation.

       

      (a) On
        or
        before March 15 of each calendar year in which a Form 10-K is required to
        be
        filed on behalf of the Trust Fund, commencing in 2007:

       

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

       

      
        
           

        

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

       

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

       

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

       

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

       

      SECTION
        10.8  Use
        of
        Subservicers and Subcontractors.

       

      (a) The
        Master Servicer shall cause any Subservicer that is a Reporting Subcontractor
        used by the Master Servicer (or by any Subservicer) for the benefit of the
        Depositor to comply with the provisions of Section 3.16 and this Article
        X to
        the same extent as if such Subservicer were the Master Servicer (except with
        respect to the Master Servicer’s duties with respect to preparing and filing any
        Exchange Act Reports or as the Certifying Person). The Master Servicer shall
        be
        responsible for obtaining from each Subservicer that is a Reporting
        Subcontractor and delivering to the Depositor any servicer compliance statement
        required to be delivered by such Subservicer under Section 3.16, any assessment
        of compliance and attestation required to be delivered by such Subservicer
        under
        Section 10.7 and any certification required to be delivered to the Certifying
        Person under Section 10.5 as and when required to be delivered. As a condition
        to the succession to any Subservicer as subservicer under this Agreement
        by any
        Person (i) into which such Subservicer may be merged or consolidated, or
        (ii)
        which may be appointed as a successor to any Subservicer, the Master Servicer
        shall provide to the Depositor, at least fifteen (15) calendar days prior
        to the
        effective date of such succession or appointment, (x) written notice to the
        Depositor of such succession or appointment and (y) in writing and in form
        and
        substance reasonably satisfactory to the Depositor, all information reasonably
        requested by the Depositor in order to comply with its reporting obligation
        under Item 6.2 of Form 8-K.

       

      
        
           

        

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

       

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

       

      SECTION
        10.9  Amendments.

       

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

       

      
        
           

        

        
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      ARTICLE
        XI

      MISCELLANEOUS
        PROVISIONS

       

      SECTION
        11.1  Amendment.

       

      This
        Agreement may be amended from time to time by the Depositor, the Master Servicer
        and the Trustee without the consent of any of the Certificateholders (i)
        to cure
        any ambiguity or mistake, (ii) to correct any defective provision herein
        or to
        supplement any provision herein which may be inconsistent with any other
        provision herein, (iii) to add to the duties of the Depositor, the Seller
        or the
        Master Servicer, (iv) to add any other provisions with respect to matters
        or
        questions arising hereunder or (v) to modify, alter, amend, add to or rescind
        any of the terms or provisions contained in this Agreement; provided that
        any
        action pursuant to clauses (iv) or (v) above shall not, as evidenced by an
        Opinion of Counsel delivered to the Trustee (which Opinion of Counsel shall
        not
        be an expense of the Trustee or the Trust Fund), adversely affect in any
        material respect the interests of any Certificateholder; provided, however,
        that
        the amendment shall not be deemed to adversely affect in any material respect
        the interests of the Certificateholders if the Person requesting the amendment
        obtains a letter from each Rating Agency stating that the amendment would
        not
        result in the downgrading or withdrawal of the respective ratings then assigned
        to the Certificates; it being understood and agreed that any such letter
        in and
        of itself will not represent a determination as to the materiality of any
        such
        amendment and will represent a determination only as to the credit issues
        affecting any such rating. The Trustee, the Depositor and the Master Servicer
        also may at any time and from time to time amend this Agreement without the
        consent of the Certificateholders to modify, eliminate or add to any of its
        provisions to such extent as shall be necessary or helpful to (i) maintain
        the
        qualification of the REMIC established hereunder as a REMIC under the Code,
        (ii)
        avoid or minimize the risk of the imposition of any tax on the REMIC established
        hereunder pursuant to the Code that would be a claim at any time prior to
        the
        final redemption of the Certificates or (iii) comply with any other requirements
        of the Code, provided that the Trustee has been provided an Opinion of Counsel,
        which opinion shall be an expense of the party requesting such opinion but
        in
        any case shall not be an expense of the Trustee or the Trust Fund, to the
        effect
        that such action is necessary or helpful to, as applicable, (i) maintain
        such
        qualification, (ii) avoid or minimize the risk of the imposition of such
        a tax
        or (iii) comply with any such requirements of the Code.

       

      This
        Agreement may also be amended from time to time by the Depositor, the Master
        Servicer and the Trustee with the consent of the Holders of a Majority in
        Interest of each Class of Certificates affected thereby for the purpose of
        adding any provisions to or changing in any manner or eliminating any of
        the
        provisions of this Agreement or of modifying in any manner the rights of
        the
        Holders of Certificates; provided, however, that no such amendment shall
        (i)
        reduce in any manner the amount of, or delay the timing of, payments required
        to
        be distributed on any Certificate without the consent of the Holder of such
        Certificate, (ii) adversely affect in any material respect the interests
        of the
        Holders of any Class of Certificates in a manner other than as described
        in (i),
        without the consent of the Holders of Certificates of such Class evidencing,
        as
        to such Class, Percentage Interests aggregating 66%, or (iii) reduce the
        aforesaid percentages of Certificates the Holders of which are required to
        consent to any such amendment, without the consent of the Holders of all
        such
        Certificates then outstanding. In addition, the permitted activities of the
        Trust under this Agreement cannot be significantly modified without the approval
        of Holders of Certificates evidencing a Majority in Interest.

       

      
        
           

        

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

       

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

       

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

       

      Nothing
        in this Agreement shall require the Trustee to enter into an amendment without
        receiving an Opinion of Counsel (which Opinion shall not be an expense of
        the
        Trustee or the Trust Fund), satisfactory to the Trustee that (i) such amendment
        is permitted and is not prohibited by this Agreement and that all requirements
        for amending this Agreement have been complied with; and (ii) either (A)
        the
        amendment does not adversely affect in any material respect the interests
        of any
        Certificateholder or (B) the conclusion set forth in the immediately preceding
        clause (A) is not required to be reached pursuant to this Section
        11.1.

       

      SECTION
        11.2  Recordation
        of Agreement; Counterparts.

       

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

       

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

       

      SECTION
        11.3  Governing
        Law.

       

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

       

      
        
           

        

        
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      SECTION
        11.4  Intention
        of Parties. 

       

      It
        is the
        express intent of the parties hereto that the conveyance of the Trust Fund
        by
        the Depositor to the Trustee be, and be construed as, absolute sales thereof
        to
        the Trustee. It is, further, not the intention of the parties that such
        conveyances be deemed a pledge thereof by the Depositor to the Trustee. However,
        in the event that, notwithstanding the intent of the parties, such assets
        are
        held to be the property of the Depositor, or if for any other reason this
        Agreement is held or deemed to create a security interest in such assets,
        then
        (i) this Agreement shall be deemed to be a security agreement within the
        meaning
        of the Uniform Commercial Code of the State of New York and (ii) the conveyance
        provided for in this Agreement shall be deemed to be an assignment and a
        grant
        by the Depositor to the Trustee, for the benefit of the Certificateholders,
        of a
        security interest in all of the assets that constitute the Trust Fund, whether
        now owned or hereafter acquired. 

       

      The
        Depositor, for the benefit of the Certificateholders, shall, to the extent
        consistent with this Agreement, take such actions as may be necessary to
        ensure
        that, if this Agreement were deemed to create a security interest in the
        Trust
        Fund, such security interest would be deemed to be a perfected security interest
        of first priority under applicable law and will be maintained as such throughout
        the term of the Agreement. The Depositor shall arrange for filing any Uniform
        Commercial Code financing and continuation statements in connection with
        any
        security interest granted or assigned to the Trustee for the benefit of the
        Certificateholders.

       

      SECTION
        11.5  Notices.

       

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

       

      
        	 	
                (1)

              	
                Any
                  material change or amendment to this
                  Agreement;

              

      

       

      
        	 	
                (2)

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

              

      

       

      
        	 	
                (3)

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

              

      

       

      
        	 	
                (4)

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

              

      

       

      
        	 	
                (5)

              	
                The
                  final payment to
                  Certificateholders.

              

      

       

      
        	 	
                (6)

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

              

      

       

      
        
           

        

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

       

      
        	 	
                (1)

              	
                Each
                  report to Certificateholders described in Section
                  4.6;

              

      

       

      
        	 	
                (2)

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

              

      

       

      
        	 	
                (3)

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

              

      

       

      (b) All
        directions, demands, authorizations, consents, waivers, communications and
        notices hereunder shall be in writing and shall be deemed to have been duly
        given when delivered to by first class mail, facsimile or courier (a) in
        the
        case of the Depositor, First Horizon Asset Securities Inc., 4000 Horizon
        Way,
        Irving, Texas 75063, Attention: Alfred Chang; (b) in the case of the Master
        Servicer, First Horizon Home Loan Corporation, 4000 Horizon Way, Irving,
        Texas
        75063, Attention: Larry P. Cole or such other address as may be hereafter
        furnished to the Depositor and the Trustee by the Master Servicer in writing;
        (c) in the case of the Trustee, The Bank of New York, 101 Barclay Street,
        8W,
        New York, New York 10286, Attention: Corporate Trust Administration—First
        Horizon 2006-AA3, or such other address as the Trustee may hereafter furnish
        to
        the Depositor or Master Servicer; and (d) in the case of the Rating Agencies,
        the address specified therefor in the definition corresponding to the name
        of
        such Rating Agency. Notices to Certificateholders shall be deemed given when
        mailed, first class postage prepaid, to their respective addresses appearing
        in
        the Certificate Register.

       

      SECTION
        11.6  Severability
        of Provisions.

       

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

       

      SECTION
        11.7  Assignment.

       

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

       

      SECTION
        11.8  Limitation
        on Rights of Certificateholders.

       

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

       

      
        
           

        

        
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      No
        Certificateholder shall have any right to vote (except as provided herein)
        or in
        any manner otherwise control the operation and management of the Trust Fund,
        or
        the obligations of the parties hereto, nor shall anything herein set forth
        or
        contained in the terms of the Certificates be construed so as to constitute
        the
        Certificateholders from time to time as partners or members of an association;
        nor shall any Certificateholder be under any liability to any third party
        by
        reason of any action taken by the parties to this Agreement pursuant to any
        provision hereof.

       

      No
        Certificateholder shall have any right by virtue or by availing itself of
        any
        provisions of this Agreement to institute any suit, action or proceeding
        in
        equity or at law upon or under or with respect to this Agreement, unless
        such
        Holder previously shall have given to the Trustee a written notice of an
        Event
        of Default and of the continuance thereof, as herein provided, and unless
        the
        Holders of Certificates evidencing not less than 25% of the Voting Rights
        evidenced by the Certificates shall also have made written request to the
        Trustee to institute such action, suit or proceeding in its own name as Trustee
        hereunder and shall have offered to the Trustee such reasonable indemnity
        as it
        may require against the costs, expenses, and liabilities to be incurred therein
        or thereby, and the Trustee, for 60 days after its receipt of such notice,
        request and offer of indemnity shall have neglected or refused to institute
        any
        such action, suit or proceeding; it being understood and intended, and being
        expressly covenanted by each Certificateholder with every other
        Certificateholder and the Trustee, that no one or more Holders of Certificates
        shall have any right in any manner whatever by virtue or by availing itself
        or
        themselves of any provisions of this Agreement to affect, disturb or prejudice
        the rights of the Holders of any other of the Certificates, or to obtain
        or seek
        to obtain priority over or preference to any other such Holder or to enforce
        any
        right under this Agreement, except in the manner herein provided and for
        the
        common benefit of all Certificateholders. For the protection and enforcement
        of
        the provisions of this Section 11.8, each and every Certificateholder and
        the
        Trustee shall be entitled to such relief as can be given either at law or
        in
        equity.

       

      SECTION
        11.9  Inspection
        and Audit Rights.

       

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

       

       

      
        
           

        

        
          103

          
            

          

        

        
           

        

      

      SECTION
        11.10  Certificates
        Nonassessable and Fully Paid.

       

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

       

      SECTION
        11.11  Limitations
        on Actions; No Proceedings.

       

      (a) Other
        than pursuant to this Agreement, or in connection with or incidental to the
        provisions or purposes of this Agreement, the trust created hereunder shall
        not
        (i) issue debt or otherwise borrow money, (ii) merge or consolidate with
        any
        other entity reorganize, liquidate or transfer all or substantially all of
        its
        assets to any other entity, or (iii) otherwise engage in any activity or
        exercise any power not provided for in this Agreement.

       

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

       

      SECTION
        11.12  Acknowledgment
        of Seller.

       

      Seller
        hereby acknowledges the provisions of this Agreement, including the obligations
        under Sections 2.1(a), 2.2, 2.3(b) and 8.11 of this Agreement and further
        acknowledges the Depositor’s assignment of its rights and remedies for the
        breach of the representations and warranties made by the Seller under the
        MLPA.

       

      

      *
        * * * *
        *

      
        
           

        

        
          104

          
            

          

        

        
           

        

      

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

       

      
        	 	
                FIRST
                  HORIZON ASSET SECURITIES INC.,

              
	 	
                as
                  Depositor

              
	 	 
	 	 
	 	
                By:________________________________________

              
	 	
                Alfred
                  Chang

              
	 	
                Vice
                  President

              
	 	 
	 	 
	 	
                THE
                  BANK OF NEW YORK,

              
	 	
                not
                  in its individual capacity, but solely as Trustee

              
	 	 
	 	 
	 	
                
                  By:________________________________________

                

              
	 	
                Diane
                  Pickett

              
	 	
                Vice
                  President

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

              
	 	 
	 	 
	 	
                
                  By:________________________________________

                

              
	 	
                Terry
                  L. McCoy

              
	 	
                Executive
                  Vice President

              

      

      

      The
        foregoing agreement is hereby

      acknowledged
        and accepted as of the

      date
        first above written:

       

      FIRST
        HORIZON HOME LOAN CORPORATION,

      in
        its
        capacity as Seller

       

      By:
        ___________________________________

      Terry
        L.
        McCoy

      Executive
        Vice President

      

       

      
        FHAMS
          2006-AA3

        Pooling
          and Servicing Agreement - Signature Page 

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      SCHEDULE
        I

       

      First
        Horizon Asset Securities Inc.

      Mortgage
        Pass-Through Certificates Series 2006-AA3

       

      Mortgage
        Loan Schedule

       

      [Available
        Upon Request from Trustee]

       

      
        
           

        

        
          I-1

          
            

          

        

        
           

        

      

      SCHEDULE
        II

       

      First
        Horizon Asset Securities Inc.

      Mortgage
        Pass-Through Certificates Series 2006-AA3

       

      Representations
        and Warranties of the Master Servicer

       

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

       

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

       

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

       

      (3) The
        execution and delivery of the Pooling and Servicing Agreement by First Horizon,
        the servicing of the Mortgage Loans by First Horizon under the Pooling and
        Servicing Agreement, the consummation of any other of the transactions
        contemplated by the Pooling and Servicing Agreement, and the fulfillment
        of or
        compliance with the terms thereof are in the ordinary course of business
        of
        First Horizon and will not (A) result in a material breach of any term or
        provision of the charter or by-laws of First Horizon or (B) materially conflict
        with, result in a material breach, violation or acceleration of, or result
        in a
        material default under, the terms of any other material agreement or instrument
        to which First Horizon is a party or by which it may be bound, or (C) constitute
        a material violation of any statute, order or regulation applicable to First
        Horizon of any court, regulatory body, administrative agency or governmental
        body having jurisdiction over First Horizon; and First Horizon is not in
        breach
        or violation of any material indenture or other material agreement or
        instrument, or in violation of any statute, order or regulation of any court,
        regulatory body, administrative agency or governmental body having jurisdiction
        over it which breach or violation may materially impair First Horizon’s ability
        to perform or meet any of its obligations under the Pooling and Servicing
        Agreement. 

       

      
        
           

        

        
          II-1

          
            

          

        

        
           

        

      

      (4) No
        litigation is pending or, to the best of First Horizon’s knowledge, threatened
        against First Horizon that would prohibit the execution or delivery of, or
        performance under, the Pooling and Servicing Agreement by First Horizon.
        

       

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

       

      
        
           

        

        
          II-2

          
            

          

        

        
           

        

      

      SCHEDULE
        III

       

      First
        Horizon Asset Securities Inc.

      Mortgage
        Pass-Through Certificates Series 2006-AA3

       

      Form
        of Monthly Master Servicer Report

       

      [Begins
        on Next Page]

       

      
        
           

        

        
          III-1

          
            

          

        

        
           

        

      

      EXHIBIT
        A

       

      [FORM
        OF
        SENIOR CERTIFICATE]

       

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

       

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

       

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

      
        	
                Certificate
                  No.

              	:	 
	
                Cut-off
                  Date

              	:	 
	
                First
                  Distribution Date

              	:	 
	
                Initial
                  Certificate Balance of this Certificate (“Denominations”)

              	:	
                $

              
	
                Initial
                  Certificate Balances of all Certificate of this Class

              	:	
                $

              
	
                CUSIP

              	:	 

      

       

      First
        Horizon Alternative Mortgage Securities Trust 2006-AA3

      Mortgage
        Pass-Through Certificates, Series 2006-AA3

      Class
        [________]

       

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

       

      First
        Horizon Asset Securities Inc., as Depositor

       

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

       

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

       

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

       

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

       

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

       

      
        
           

        

        
          A-3

          
            

          

        

        
           

        

      

       

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

       

      Dated:
        May __, 2006

       

      
        	 	
                THE
                  BANK OF NEW YORK,

                not
                  in its individual capacity, but solely as Trustee

              
	 	 
	 	 
	 	 
	 	
                By:     
                  _________________________________________

              
	 	
                Authorized
                  Signatory of 

              
	 	
                THE
                  BANK OF NEW YORK

              
	 	
                not
                  in its individual capacity,

              
	 	
                but
                  solely as Trustee

              

      

       

       

      Countersigned:

       

      By
        ___________________________ 

      Authorized
        Signatory of

      THE
        BANK
        OF NEW YORK, 

      not
        in
        its individual capacity, 

      but
        solely as Trustee

       

      
        
           

        

        
          A-4

          
            

          

        

        
           

        

      

      EXHIBIT
        B

       

      [FORM
        OF
        SUBORDINATED CERTIFICATE]

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          B-1

          
            

          

        

        
           

        

      

      

        
          	
                  Certificate
                    No.

                	:	 
	
                  Cut-off
                    Date

                	:	 
	
                  First
                    Distribution Date

                	:	 
	
                  Initial
                    Certificate Balance of this Certificate (“Denominations”)

                	:	
                  $

                
	
                  Initial
                    Certificate Balances of all Certificate of this Class

                	:	
                  $

                
	
                  CUSIP

                	:	 

        

      

       

      First
        Horizon Alternative Mortgage Securities Trust 2006-AA3

      Mortgage
        Pass-Through Certificates, Series 2006-AA3 

      Class
        [___]

       

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

       

      First
        Horizon Asset Securities Inc., as Depositor

       

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

       

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

       

      
        
           

        

        
          B-2

          
            

          

        

        
           

        

      

      [No
        transfer of a Certificate of this Class shall be made unless such transfer
        is
        made pursuant to an effective registration statement under the Securities
        Act
        and any applicable state securities laws or is exempt from the registration
        requirements under said Act and such laws. In the event that a transfer is
        to be
        made in reliance upon an exemption from the Securities Act and such laws,
        in
        order to assure compliance with the Securities Act and such laws, the
        Certificateholder desiring to effect such transfer and such Certificateholder’s
        prospective transferee shall each certify to the Trustee in writing the facts
        surrounding the transfer. In the event that such a transfer is to be made
        within
        two years from the date of the initial issuance of Certificates pursuant
        hereto,
        there shall also be delivered (except in the case of a transfer pursuant
        to Rule
        144A of the Securities Act) to the Trustee an Opinion of Counsel that such
        transfer may be made pursuant to an exemption from the Securities Act and
        such
        state securities laws, which Opinion of Counsel shall not be obtained at
        the
        expense of the Trustee, the Seller, the Master Servicer or the Depositor.
        The
        Holder hereof desiring to effect such transfer shall, and does hereby agree
        to,
        indemnify the Trustee and the Depositor against any liability that may result
        if
        the transfer is not so exempt or is not made in accordance with such federal
        and
        state laws.]

       

      [No
        transfer of a Certificate of this Class shall be made unless the Trustee
        shall
        have received either (i) a representation [letter] from the transferee of
        such
        Certificate, acceptable to and in form and substance satisfactory to the
        Trustee, to the effect that such transferee is not an employee benefit plan
        or
        arrangement subject to Section 406 of ERISA or Section 4975 of the Code,
        nor a
        person acting on behalf of any such plan, which representation letter shall
        not
        be an expense of the Trustee, the Depositor or the Master Servicer, (ii)
        if the
        purchaser is an insurance company and the certificate has been subject to
        an
        ERISA-Qualifying Underwriting, a representation that the purchaser is an
        insurance company which is purchasing such Certificates with funds contained
        in
        an “insurance company general account” (as such term is defined in Section V(e)
        of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and that the
        purchase and holding of such Certificates are covered under Sections I and
        III
        of PTCE 95-60 or (iii) in the case of any such Certificate presented for
        registration in the name of an employee benefit plan subject to ERISA or
        Section
        4975 of the Code (or comparable provisions of any subsequent enactments),
        or a
        trustee of any such plan or any other person acting on behalf of any such
        plan,
        an Opinion of Counsel satisfactory to the Trustee to the effect that the
        purchase or holding of such Certificate will not result in prohibited
        transactions under Section 406 of ERISA and Section 4975 of the Code and
        will
        not subject the Trustee, the Depositor or the Master Servicer to any obligation
        in addition to those undertaken in the Agreement, which Opinion of Counsel
        shall
        not be an expense of the Trustee, the Depositor or the Master Servicer. [Such
        representation shall be deemed to have been made to the Trustee by the
        Transferee’s acceptance of a Certificate of this Class and by a beneficial
        owner’s acceptance of its interest in a Certificate of this Class.]
        Notwithstanding anything else to the contrary herein, any purported transfer
        of
        a Certificate of this Class to or on behalf of an employee benefit plan subject
        to ERISA or to the Code without the opinion of counsel satisfactory to the
        Trustee as described above shall be void and of no effect.]Reference is hereby
        made to the further provisions of this Certificate set forth on the reverse
        hereof, which further provisions shall for all purposes have the same effect
        as
        if set forth at this place.

       

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

       

      
        
           

        

        
          B-3

          
            

          

        

        
           

        

      

       

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

       

      
        
           

        

        
          B-4

          
            

          

        

        
           

        

      

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

       

      Dated:
        May __, 2006

       

      
        
          
            	 	
                    THE
                      BANK OF NEW YORK,

                    not
                      in its individual capacity, but solely as Trustee

                  
	 	 
	 	 
	 	 
	 	
                    By:     
                      _________________________________________

                  
	 	
                    Authorized
                      Signatory of 

                  
	 	
                    THE
                      BANK OF NEW YORK

                  
	 	
                    not
                      in its individual capacity,

                  
	 	
                    but
                      solely as Trustee

                  

          

           

           

          Countersigned:

           

          By
            ___________________________ 

          Authorized
            Signatory of

          THE
            BANK
            OF NEW YORK, 

          not
            in
            its individual capacity, 

          but
            solely as Trustee

        

      

      
        
           

        

        
          B-5

          
            

          

        

        
           

        

      

      EXHIBIT
        C

       

      [FORM
        OF
        RESIDUAL CERTIFICATE]

      

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          C-1

          
            

          

        

        
           

        

      

       

      
        

          
            	
                    Certificate
                      No.

                  	:	 
	
                    Cut-off
                      Date

                  	:	 
	
                    First
                      Distribution Date

                  	:	 
	
                    Initial
                      Certificate Balance of this Certificate (“Denominations”)

                  	:	
                    $

                  
	
                    Initial
                      Certificate Balances of all Certificate of this Class

                  	:	
                    $

                  
	
                    CUSIP

                  	:	 

          

        

      

       

      First
        Horizon Alternative Mortgage Securities Trust 2006-AA3

      Mortgage
        Pass-Through Certificates, Series 2006-AA3

       

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

       

      First
        Horizon Asset Securities Inc., as Depositor

       

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

       

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

       

      Any
        distribution of the proceeds of any remaining assets of the Trust Fund will
        be
        made only upon presentment and surrender of this Class A-R Certificate at
        the
        Corporate Trust Office or the office or agency maintained by the Trustee
        in New
        York, New York. 

       

      
        
           

        

        
          C-2

          
            

          

        

        
           

        

      

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

       

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

       

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

       

      
        
           

        

        
          C-3

          
            

          

        

        
           

        

      

       

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

       

      
        
           

        

        
          C-4

          
            

          

        

        
           

        

      

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

       

      Dated:
        May __, 2006

      
         

        
          
            
              	 	
                      THE
                        BANK OF NEW YORK,

                      not
                        in its individual capacity, but solely as Trustee

                    
	 	 
	 	 
	 	 
	 	
                      By:     
                        _________________________________________

                    
	 	
                      Authorized
                        Signatory of 

                    
	 	
                      THE
                        BANK OF NEW YORK

                    
	 	
                      not
                        in its individual capacity,

                    
	 	
                      but
                        solely as Trustee

                    

            

             

             

            Countersigned:

             

            By
              ___________________________ 

            Authorized
              Signatory of

            THE
              BANK
              OF NEW YORK, 

            not
              in
              its individual capacity, 

            but
              solely as Trustee

          

        

      

      
        
           

        

        
          C-5

          
            

          

        

        
           

        

      

      EXHIBIT
        D

       

      [Form
        of
        Reverse of Certificates]

       

      First
        Horizon Alternative Mortgage Securities Trust 2006-AA3

      Mortgage
        Pass-Through Certificates

       

      This
        Certificate is one of a duly authorized issue of Certificates designated
        as
        First Horizon Alternative Mortgage Securities Trust 2006-AA3 Mortgage
        Pass-Through Certificates, of the Series specified on the face hereof (herein
        collectively called the “Certificates”), and representing a beneficial ownership
        interest in the Trust Fund created by the Agreement.

       

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

       

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

       

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

       

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

       

      The
        Agreement permits, with certain exceptions therein provided, the amendment
        thereof and the modification of the rights and obligations of the Trustee
        and
        the rights of the Certificateholders under the Agreement at any time by the
        Depositor, the Master Servicer and the Trustee with the consent of the Holders
        of Certificates affected by such amendment evidencing the requisite Percentage
        Interest, as provided in the Agreement. Any such consent by the Holder of
        this
        Certificate shall be conclusive and binding on such Holder and upon all future
        Holders of this Certificate and of any Certificate issued upon the transfer
        hereof or in exchange therefor or in lieu hereof whether or not notation
        of such
        consent is made upon this Certificate. The Agreement also permits the amendment
        thereof, in certain limited circumstances, without the consent of the Holders
        of
        any of the Certificates.

       

      
        
           

        

        
          D-1

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          D-2

          
            

          

        

        
           

        

      

      ASSIGNMENT

       

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

       

      ______________________________

      (Please
        insert social security or

      other
        identifying number of assignee)

       

      __________________________________________________________________________________________

       

      __________________________________________________________________________________________

      (Please
        print or typewrite name and address

      including
        postal zip code of assignee)

       

      __________________________________________________________________________________________

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

       

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

       

      __________________________________________________________________________________________

       

      __________________________________________________________________________________________

       

      __________________________________________________________________________________________

       

      Dated: __________________

       

      ____________________________________________

      Signature
        by or on behalf of assignor

      

       

      DISTRIBUTION
        INSTRUCTIONS

       

      The
        assignee should include the following for purposes of distribution:

       

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

       

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

       

      
        
           

        

        
          D-3

          
            

          

        

        
           

        

      

      EXHIBIT
        E

       

      FORM
        OF
        INITIAL CERTIFICATION OF CUSTODIAN

       

      [date]

       

      First
        Horizon Asset Securities Inc. 

      First
        Horizon Home Loan Corporation 

      4000
        Horizon Way 

      Irving,
        Texas 75063

       

      The
        Bank
        of New York 

      101
        Barclay Street, 8W 

      New
        York,
        New York 10286

       

      
        	 	
                Re:

              	
                Custodial
                  Agreement dated as of May 30, 2006 by and among The Bank of New
                  York, as
                  Trustee, First Horizon Home Loan Corporation, as Servicer and First
                  Tennessee Bank National Association, as
                  Custodian

              

      

       

      Gentlemen:

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          E-1

          
            

          

        

        
           

        

      

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

       

      
        	 	
                FIRST
                  TENNESSEE BANK NATIONAL ASSOCIATION,

              
	 	
                as
                  Custodian

              
	 	 
	 	 
	 	
                By:     
                  _________________________________

              
	 	
                Name: _________________________________

              
	 	
                Title:  
                  _________________________________

              

      

      

      
        
           

        

        
          E-2

          
            

          

        

        
           

        

      

      EXHIBIT
        F

       

      FORM
        OF
        DELAY DELIVERY CERTIFICATION

       

      [date]

      

       

      First
        Horizon Asset Securities Inc. 

      First
        Horizon Home Loan Corporation 

      4000
        Horizon Way 

      Irving,
        Texas 75063

       

      The
        Bank
        of New York 

      101
        Barclay Street, 8W 

      New
        York,
        New York 10286

       

      
        	 	
                Re:

              	
                Custodial
                  Agreement dated as of May 30, 2006 by and among The Bank of New
                  York, as
                  Trustee, First Horizon Home Loan Corporation, as Servicer, and
                  First
                  Tennessee Bank National Association, as
                  Custodian

              

      

       

      Ladies
        and Gentlemen:

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          F-1

          
            

          

        

        
           

        

      

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

       

      
         

        
          	 	
                  FIRST
                    TENNESSEE BANK NATIONAL ASSOCIATION,

                
	 	
                  as
                    Custodian

                
	 	 
	 	 
	 	
                  By:     
                    _________________________________

                
	 	
                  Name: _________________________________

                
	 	
                  Title:  
                    _________________________________

                

        

      

      

      
        
           

        

        
          F-2

          
            

          

        

        
           

        

      

      EXHIBIT
        G

       

      FORM
        OF
        SUBSEQUENT CERTIFICATION OF CUSTODIAN

       

      [date]

       

       

      First
        Horizon Asset Securities Inc. 

      First
        Horizon Home Loan Corporation 

      4000
        Horizon Way 

      Irving,
        Texas 75063

       

      The
        Bank
        of New York 

      101
        Barclay Street, 8W 

      New
        York,
        New York 10286

       

      
        	 	
                Re:

              	
                Custodial
                  Agreement dated as of May 30, 2006 by and among The Bank of New
                  York, as
                  Trustee, First Horizon Home Loan Corporation, as Servicer, and
                  First
                  Tennessee Bank National Association, as
                  Custodian

              

      

       

      Ladies
        and Gentlemen:

       

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

       

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

              

      

       

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

              

      

       

      
        	 	
                (ii)

              	
                except
                  as provided in Section 2(c) of the Custodial Agreement and for
                  each
                  Mortgage Loan that is not a MERS Mortgage Loan, the
                  original recorded Mortgage or a copy of such Mortgage certified
                  by the
                  Seller as being a true and complete copy of the Mortgage, and in
                  the case
                  of each MERS Mortgage Loan, the original recorded Mortgage, noting
                  the
                  presence of the MIN of the Mortgage Loans and either language indicating
                  that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a
                  MOM Loan or
                  if the Mortgage Loan was not a MOM Loan at origination, the original
                  Mortgage and the assignment thereof to MERS, with evidence of recording
                  indicated thereon, or a copy of the Mortgage certified by the Seller
                  as
                  being a true and complete copy of the Mortgage;

              

      

       

       

      
        
           

        

        
          G-1

          
            

          

        

        
           

        

      

      
        	 	
                (iii)

              	
                in
                  the case of each Mortgage Loan that is not a MERS Mortgage Loan,
                  a duly
                  executed assignment of the Mortgage, or a copy of such assignment
                  certified by the Seller as being a true and complete copy of the
                  assignment, in blank (which may be included in a blanket assignment
                  or
                  assignments), together with, except as provided below, all interim
                  recorded assignments, or copies of such interim assignments certified
                  by
                  the Seller as being true and complete copies of the interim assignments,
                  of such Mortgage (each such assignment, when duly and validly completed,
                  to be in recordable form and sufficient to effect the assignment
                  of and
                  transfer to the assignee thereof, under the Mortgage to which the
                  assignment relates); provided that, if the related Mortgage has
                  not been
                  returned from the applicable public recording office, such assignment
                  of
                  the Mortgage may exclude the information to be provided by the
                  recording
                  office;

              

      

       

      
        	 	
                (iv)

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

              

      

       

      
        	 	
                (v)

              	
                either
                  the original or duplicate original title policy, or a copy of such
                  title
                  policy certified by the Seller as being a true and complete copy
                  of the
                  title policy (including all riders thereto), with respect to the
                  related
                  Mortgaged Property, if available, provided that the title policy
                  (including all riders thereto) will be delivered as soon as it
                  becomes
                  available, and if the title policy is not available, and to the
                  extent
                  required pursuant to the second paragraph below or otherwise in
                  connection
                  with the rating of the Certificates, a written commitment or interim
                  binder or preliminary report of the title issued by the title insurance
                  or
                  escrow company with respect to the Mortgaged Property, or in lieu
                  thereof,
                  an Alternative Title Product or a copy of such Alternative Title
                  Product
                  certified by the Seller as being a true and complete copy of the
                  Alternative Title Product; and

              

      

       

      
        	 	
                (vi)

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

              

      

       

      
        	 	
                (a)

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

              

      

       

      
        	 	
                (b)

              	
                The
                  executed Security Agreement;

              

      

       

      
        	 	
                (c)

              	
                The
                  executed Proprietary Lease;

              

      

       

      
        	 	
                (d)

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

              

      

       

      
        	 	
                (e)

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

              

      

       

       

      
        
           

        

        
          G-2

          
            

          

        

        
           

        

      

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

       

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

       

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

       

      
         

        
          	 	
                  FIRST
                    TENNESSEE BANK NATIONAL ASSOCIATION,

                
	 	
                  as
                    Custodian

                
	 	 
	 	 
	 	
                  By:     
                    _________________________________

                
	 	
                  Name: _________________________________

                
	 	
                  Title:  
                    _________________________________

                

        

      

      

      
        
           

        

        
          G-3

          
            

          

        

        
           

        

      

      EXHIBIT
        H

       

      TRANSFER
        AFFIDAVIT

       

      First
        Horizon Alternative Mortgage Securities Trust 2006-AA3

      Mortgage
        Pass-Through Certificates

      Series
        2006-AA3

       

      
        	
                STATE
                  OF

              	
                )

              
	 	
                )
                  ss.:

              
	
                COUNTY
                  OF

              	
                )

              

      

      

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          H-1

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

      11. The
        Transferee is not an employee benefit plan or arrangement subject to Section
        406
        of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor
        a
        person acting on behalf of any such plan or arrangement, nor using the assets
        of
        any such plan or arrangement to effect such transfer.

       

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

       

      
        
           

        

        
          H-2

          
            

          

        

        
           

        

      

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

       

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

       

      
         

        
          	 	
                  ______________________________________

                
	 	
                  
                    Print
                      Name of Transferee

                  

                
	 	 
	 	 
	 	
                  By:     
                    _________________________________

                
	 	
                  Name: _________________________________

                
	 	
                  Title:  
                    _________________________________

                

        

         

      

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

       

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

       

      
        	 	 
	 	
                ______________________________________

              
	 	
                NOTARY
                  PUBLIC

              
	 	 
	 	
                My
                  Commission expires the ___ day of 

                ________________,
                  20___.

              

      

       

      
        
           

        

        
          H-3

          
            

          

        

        
           

        

      

      EXHIBIT
        1
        to EXHIBIT H

       

      Certain
        Definitions

       

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

       

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

       

      “Person”:
        Any individual, corporation, partnership, joint venture, association, bank,
        joint-stock company, trust (including any beneficiary thereof), unincorporated
        organization or government or any agency or political subdivision
        thereof.

       

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

       

      
        
           

        

        
          H-4

          
            

          

        

        
           

        

      

       

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

       

      
        
           

        

        
          H-5

          
            

          

        

        
           

        

      

      EXHIBIT
        2
        to EXHIBIT H

       

      Section
        5.2(c) of the Agreement

       

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

       

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

       

      (ii) No
        Ownership Interest in a Residual Certificate may be registered on the Closing
        Date or thereafter transferred, and the Trustee shall not register the Transfer
        of any Residual Certificate unless, in addition to the certificates required
        to
        be delivered to the Trustee under subparagraph (b) above, the Trustee shall
        have
        been furnished with an affidavit (a “Transfer Affidavit”) of the initial owner
        or the proposed transferee in the form attached hereto as Exhibit H. The
        Transferee does not hold REMIC residual interests as nominee to facilitate
        the
        clearance and settlement of such interests through electronic book-entry
        changes
        in accounts of participating organizations.

       

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

       

      (iv) Any
        attempted or purported Transfer of any Ownership Interest in a Residual
        Certificate in violation of the provisions of this Section 5.2(c) shall be
        absolutely null and void and shall vest no rights in the purported Transferee.
        If any purported transferee shall become a Holder of a Residual Certificate
        in
        violation of the provisions of this Section 5.2(c), then the last preceding
        Permitted Transferee shall be restored to all rights as Holder thereof
        retroactive to the date of registration of Transfer of such Residual
        Certificate. The Trustee shall be under no liability to any Person for any
        registration of Transfer of a Residual Certificate that is in fact not permitted
        by Section 5.2(b) and this Section 5.2(c) or for making any payments due
        on such
        Certificate to the Holder thereof or taking any other action with respect
        to
        such Holder under the provisions of this Agreement so long as the Transfer
        was
        registered after receipt of the related Transfer Affidavit, Transferor
        Certificate, and in the case of a Residual Certificate which is also a Private
        Certificate, either the Rule 144A Letter or the Investment Letter. The Trustee
        shall be entitled but not obligated to recover from any Holder of a Residual
        Certificate that was in fact not a Permitted Transferee at the time it became
        a
        Holder or, at such subsequent time as it became other than a Permitted
        Transferee, all payments made on such Residual Certificate at and after either
        such time. Any such payments so recovered by the Trustee shall be paid and
        delivered by the Trustee to the last preceding Permitted Transferee of such
        Certificate.

       

      
        
           

        

        
          H-6

          
            

          

        

        
           

        

      

      (v) The
        Depositor shall use its best efforts to make available, upon receipt of written
        request from the Trustee, all information necessary to compute any tax imposed
        under Section 860E(e) of the Code as a result of a Transfer of an Ownership
        Interest in a Residual Certificate to any Holder who is not a Permitted
        Transferee.

       

      The
        restrictions on Transfers of a Residual Certificate set forth in this Section
        5.2(c) shall cease to apply (and the applicable portions of the legend on
        a
        Residual Certificate may be deleted) with respect to Transfers occurring
        after
        delivery to the Trustee of an Opinion of Counsel, which Opinion of Counsel
        shall
        not be an expense of the Trust Fund, the Trustee or the Master Servicer,
        to the
        effect that the elimination of such restrictions will not cause the REMIC
        created hereunder to fail to qualify as a REMIC at any time that the
        Certificates are outstanding or result in the imposition of any tax on the
        Trust
        Fund, a Certificateholder or another Person. Each Person holding or acquiring
        any Ownership Interest in a Residual Certificate hereby consents to any
        amendment of this Agreement which, based on an Opinion of Counsel furnished
        to
        the Trustee, is reasonably necessary (a) to ensure that the record ownership
        of,
        or any beneficial interest in, a Residual Certificate is not transferred,
        directly or indirectly, to a Person that is not a Permitted Transferee and
        (b)
        to provide for a means to compel the Transfer of a Residual Certificate which
        is
        held by a Person that is not a Permitted Transferee to a Holder that is a
        Permitted Transferee. 

       

      
        
           

        

        
          H-7

          
            

          

        

        
           

        

      

      EXHIBIT
        I

       

      FORM
        OF
        TRANSFEROR CERTIFICATE

       

      _______________,
        20___

       

      

       

      First
        Horizon Asset Securities Inc. 

      First
        Horizon Home Loan Corporation 

      4000
        Horizon Way 

      Irving,
        Texas 75063

       

      The
        Bank
        of New York 

      101
        Barclay Street, 8W 

      New
        York,
        New York 10286

       

      
        	 	
                Re:

              	
                First
                  Horizon Alternative Mortgage Securities Trust 2006-AA3 Mortgage
                  Pass-Through Certificates, Series 2006-AA3, Class
                  ___

              

      

       

      Ladies
        and Gentlemen:

       

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

       

      Capitalized
        terms used herein shall have the meaning ascribed to such terms in the Pooling
        and Servicing Agreement, dated as of May 1, 2006, by and among First Horizon
        Asset Securities Inc., as depositor, First Horizon Home Loan Corporation,
        as
        master servicer, and The Bank of New York, as trustee, pursuant to which
        the
        Residual Certificates were issued. 

       

      
        
          	 	
                  Very
                    truly yours,

                
	 	 
	 	 
	 	
                  _________________________________

                
	 	
                  Print
                    Name of Transferor

                
	 	 
	 	 
	 	
                  By:
                    ______________________________

                
	 	
                  Authorized
                    Officer

                

        

      

       

      
        
           

        

        
          I-1

          
            

          

        

        
           

        

      

      EXHIBIT
        J

       

      FORM
        OF
        INVESTMENT LETTER (NON-RULE 144A)

       

      _____________,
        20___

       

      First
        Horizon Asset Securities Inc. 

      4000
        Horizon Way 

      Irving,
        Texas 75063

       

      The
        Bank
        of New York 

      101
        Barclay Street, 8W 

      New
        York,
        New York 10286 

      Attention:
        Mortgage-Backed Securities Group 

       

       

      
        	 	
                Re:

              	
                First
                  Horizon Alternative Mortgage Securities Trust 2006-AA3 Mortgage
                  Pass-Through Certificates, Series 2006-AA3, Class
                  ___

              

      

       

      Ladies
        and Gentlemen:

       

      In
        connection with our acquisition of the above Certificates we certify that
        (a) we
        understand that the Certificates are not being registered under the Securities
        Act of 1933, as amended (the “Act”), or any state securities laws and are being
        transferred to us in a transaction that is exempt from the registration
        requirements of the Act and any such laws, (b) we are an “accredited investor,”
as defined in Regulation D under the Act, and have such knowledge and experience
        in financial and business matters that we are capable of evaluating the merits
        and risks of investments in the Certificates, (c) we have had the opportunity
        to
        ask questions of and receive answers from the Depositor concerning the purchase
        of the Certificates and all matters relating thereto or any additional
        information deemed necessary to our decision to purchase the Certificates,
        (d)
        either (i) we are not an employee benefit plan or arrangement that is subject
        to
        the Employee Retirement Income Security Act of 1974, as amended, or a plan
        or
        arrangement that is subject to Section 4975 of the Internal Revenue Code
        of
        1986, as amended, nor are we acting on behalf of any such plan or arrangement
        nor are we using the assets of any such plan or arrangement to effect such
        acquisition or (ii) if, in the case of ERISA-Restricted Certificates that
        have
        been the subject of an ERISA-Qualifying Underwriting, we are an insurance
        company, a representation that we are an insurance company which is purchasing
        such Certificates with funds contained in an “insurance company general account”
(as such term is defined in Section V(e) of Prohibited Transaction Class
        Exemption 95-60 (“PTCE 95-60”)) and that the purchase and holding of such
        Certificates are covered under Sections I and III of PTCE 95-60, (e) we are
        acquiring the Certificates for investment for our own account and not with
        a
        view to any distribution of such Certificates (but without prejudice to our
        right at all times to sell or otherwise dispose of the Certificates in
        accordance with clause (g) below), (f) we have not offered or sold any
        Certificates to, or solicited offers to buy any Certificates from, any person,
        or otherwise approached or negotiated with any person with respect thereto,
        or
        taken any other action which would result in a violation of Section 5 of
        the
        Act, and (g) we will not sell, transfer or otherwise dispose of any Certificates
        unless (1) such sale, transfer or other disposition is made pursuant to an
        effective registration statement under the Act or is exempt from such
        registration requirements, and if requested, we will at our expense provide
        an
        opinion of counsel satisfactory to the addressees of this Certificate that
        such
        sale, transfer or other disposition may be made pursuant to an exemption
        from
        the Act, (2) the purchaser or transferee of such Certificate has executed
        and
        delivered to you a certificate to substantially the same effect as this
        certificate, and (3) the purchaser or transferee has otherwise complied with
        any
        conditions for transfer set forth in the Pooling and Servicing
        Agreement.

       

      
        	 	
                Very
                  truly yours,

              
	 	 
	 	 
	 	
                _________________________________

              
	 	
                Print
                  Name of Transferor

              
	 	 
	 	 
	 	
                By:
                  ______________________________

              
	 	
                Authorized
                  Officer

              

      

       

      
        
           

        

        
          J-1

          
            

          

        

        
           

        

      

      EXHIBIT
        K

       

      FORM
        OF
        RULE 144A LETTER

       

      ___________,
        20__

       

      First
        Horizon Asset Securities Inc.

      4000
        Horizon Way

      Irving,
        Texas 75063

       

      The
        Bank
        of New York

      101
        Barclay Street, 8W

      New
        York,
        New York 10286

      Attention:
        Mortgage-Backed Securities Group

       

      
        	 	
                Re:

              	
                First
                  Horizon Alternative Mortgage Securities Trust 2006-AA3 Mortgage
                  Pass-Through Certificates, Series 2006-AA3, Class
                  ___

              

      

       

      Ladies
        and Gentlemen:

       

      In
        connection with our acquisition of the above Certificates we certify that
        (a) we
        understand that the Certificates are not being registered under the Securities
        Act of 1933, as amended (the “Act”), or any state securities laws and are being
        transferred to us in a transaction that is exempt from the registration
        requirements of the Act and any such laws, (b) we have such knowledge and
        experience in financial and business matters that we are capable of evaluating
        the merits and risks of investments in the Certificates, (c) we have had
        the
        opportunity to ask questions of and receive answers from the Depositor
        concerning the purchase of the Certificates and all matters relating thereto
        or
        any additional information deemed necessary to our decision to purchase the
        Certificates, (d) we are not an employee benefit plan or arrangement that
        is
        subject to the Employee Retirement Income Security Act of 1974, as amended,
        or a
        plan or arrangement that is subject to Section 4975 of the Internal Revenue
        Code
        of 1986, as amended, nor are we acting on behalf of any such plan or arrangement
        nor using the assets of any such plan or arrangement to effect such acquisition,
        (e) if an insurance company, in the case of ERISA-restricted Certificates
        that
        have been the subject of an ERISA-Qualifying Underwriting, we are purchasing
        the
        Certificates with funds contained in an “insurance company general account” (as
        defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE
        95-60”)) and our purchase and holding of the Certificates are covered under
        Sections I and III of PTCE 95-60, (f) we have not, nor has anyone acting
        on our
        behalf offered, transferred, pledged, sold or otherwise disposed of the
        Certificates, any interest in the Certificates or any other similar security
        to,
        or solicited any offer to buy or accept a transfer, pledge or other disposition
        of the Certificates, any interest in the Certificates or any other similar
        security from, or otherwise approached or negotiated with respect to the
        Certificates, any interest in the Certificates or any other similar security
        with, any person in any manner, or made any general solicitation by means
        of
        general advertising or in any other manner, or taken any other action, that
        would constitute a distribution of the Certificates under the Act or that
        would
        render the disposition of the Certificates a violation of Section 5 of the
        Act
        or require registration pursuant thereto, nor will act, nor has authorized
        or
        will authorize any person to act, in such manner with respect to the
        Certificates, (g) we are a “qualified institutional buyer” as that term is
        defined in Rule 144A under the Act (“Rule 144A”) and have completed either of
        the forms of certification to that effect attached hereto as Annex 1 or Annex
        2,
        (h) we are aware that the sale to us is being made in reliance on Rule 144A,
        and
        (i) we are acquiring the Certificates for our own account or for resale pursuant
        to Rule 144A and further, understand that such Certificates may be resold,
        pledged or transferred only (A) to a person reasonably believed to be a
        qualified institutional buyer that purchases for its own account or for the
        account of a qualified institutional buyer to whom notice is given that the
        resale, pledge or transfer is being made in reliance on Rule 144A, or (B)
        pursuant to another exemption from registration under the Act.

       

      
        	 	
                Very
                  truly yours,

              
	 	 
	 	 
	 	
                _________________________________

              
	 	
                Print
                  Name of Transferor

              
	 	 
	 	 
	 	
                By:
                  ______________________________

              
	 	
                Authorized
                  Officer

              

      

       

      
        
           

        

        
          K-1

          
            

          

        

        
           

        

      

      ANNEX
        1
        TO EXHIBIT K

       

      QUALIFIED
        INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

       

      [For
        Transferees Other Than Registered Investment Companies]

       

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

       

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

       

      2.
         In
        connection with purchases by the Buyer, the Buyer is a “qualified institutional
        buyer” as that term is defined in Rule 144A under the Securities Act of 1933, as
        amended (“Rule 144A”) because (i) the Buyer owned and/or invested on a
        discretionary basis $ ______1 
        in
        securities (except for the excluded securities referred to below) as of the
        end
        of the Buyer’s most recent fiscal year (such amount being calculated in
        accordance with Rule 144A and (ii) the Buyer satisfies the criteria in the
        category marked below.

       

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

       

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

       

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

       

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

       

      ___ Insurance
        Company.
        The
        Buyer is an insurance company whose primary and predominant business activity
        is
        the writing of insurance or the reinsuring of risks underwritten by insurance
        companies and which is subject to supervision by the insurance commissioner
        or a
        similar official or agency of a State, territory or the District of
        Columbia.

       

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

      

      
        
           

        

        
          K-2

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      6.
         Until
        the
        date of purchase of the Rule 144A Securities, the Buyer will notify each
        of the
        parties to which this certification is made of any changes in the information
        and conclusions herein. Until such notice is given, the Buyer’s purchase of the
        Certificates will constitute a reaffirmation of this certification as of
        the
        date of such purchase. In addition, if the Buyer is a bank or savings and
        loan
        is provided above, the Buyer agrees that it will furnish to such parties
        updated
        annual financial statements promptly after they become available.

       

      

      
        	 	
                _________________________________

              
	 	
                Print
                  Name of Transferee

              
	 	 
	 	
                By:
                  ______________________________

              
	 	
                Name:
                  ____________________________

              
	 	
                Title:
                  _____________________________

              
	 	 
	 	
                Date:
                  _____________________________

              
	 	 

      

      
        
           

        

        
          K-3

          
            

          

        

        
           

        

      

      ANNEX
        2
        TO EXHIBIT K

       

      QUALIFIED
        INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

       

      [For
        Transferees That are Registered Investment Companies]

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          K-4

          
            

          

        

        
           

        

      

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

       

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

       

      
        	 	
                
                  _________________________________

                

              
	 	
                Print
                  Name of Transferee

              
	 	 
	 	
                By:
                  ______________________________

              
	 	
                Name:
                  ____________________________

              
	 	
                Title:
                  _____________________________

              
	 	 
	 	 
	 	
                IF
                  AN ADVISER:

              
	 	 
	 	
                
                  _________________________________

                

              
	 	
                Print
                  Name of Buyer

              
	 	 
	 	
                Date:
                  _____________________________

              

      

      
 

      
        
           

        

        
          K-5

          
            

          

        

        
           

        

      

      EXHIBIT
        L

       

      REQUEST
        FOR RELEASE

       

      [Substitution
        of Deleted Mortgage Loans

      or

      Mortgage
        Loans Paid in Full]

       

      ____________________________________
        Mortgage Loan Files

       

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

       

      (Check
        One)

       

      
        	
                □

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

              

      

       

      
        	
                □

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

              

      

       

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

       

      Loan
        Number: _________________________________

      

       

      Borrower’s
        Name: ______________________________

      

       

      County:
        ______________________________________

       

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

       

      ______________________________

       

      Dated:
        ______________________

       

      o Vice
        President

       

      o Assistant
        Vice President

       

      
        
           

        

        
          L-1

          
            

          

        

        
           

        

      

      EXHIBIT
        M

       

      REQUEST
        FOR RELEASE AND RECEIPT

       

      [For
        Servicing and Foreclosure]

       

      _____________________________________
        Mortgage Loan Files

       

      LOAN
        INFORMATION

       

      Name
        of
        Mortgagor:  __________________________________       

       

      Loan
        No.:
  __________________________________ 

       

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

       

      [complete
        as necessary]

       

      The
        undersigned hereby acknowledges an agrees as follows:

       

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

       

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

       

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

       

      Date: _____________________   

      

       

      
        	 	
                NAME

              
	 	 
	 	
                By:
                  __________________________________

              
	 	
                Name:
                  ________________________________

              
	 	
                Title:
                  _________________________________

              

      

      

      
        
           

        

        
          M-1

          
            

          

        

        
           

        

      

      EXHIBIT
        N-1

       

      FORM
        OF
        ANNUAL CERTIFICATION

       

      (Subservicer)

       

      Re: First
        Horizon Alternative Mortgage Securities Trust 2006-[ ] (the “Trust”),
        Mortgage Pass-Through Certificates, Series 2006-[ ], issued pursuant to the
        Pooling and Servicing Agreement, dated as of _____ 1, 2006 (the “Pooling
        and Servicing Agreement”),
        among
        First Horizon Asset Securities Inc., as depositor (the “Depositor”),
        First
        Horizon Home Loan Corporation, as master servicer (the “Master Servicer”) and
        The Bank of New York, as trustee (the “Trustee”)

       

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

       

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

       

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

       

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

       

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

      
        
           

        

        
          N-1

          
            

          

        

        
           

        

      

       

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

       

      

      
        	 	
                Date:  
                  _________________________

              
	 	
                _______________________________

                [Signature]

                [Title]

              

      

      

      
        
           

        

        
          N-2

          
            

          

        

        
           

        

      

      EXHIBIT
        N-2

       

      FORM
        OF
        ANNUAL CERTIFICATION

       

      (Trustee)

       

      Re: First
        Horizon Alternative Mortgage Securities Trust 2006-[ ] (the “Trust”),
        Mortgage Pass-Through Certificates, Series 2006-[ ], issued pursuant to the
        Pooling and Servicing Agreement, dated as of _____ 1, 2006 (the “Pooling
        and Servicing Agreement”),
        among
        First Horizon Asset Securities Inc., as depositor (the “Depositor”),
        First
        Horizon Home Loan Corporation, as master servicer (the “Master Servicer”) and
        The Bank of New York, as trustee (the “Trustee”)

       

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

       

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

       

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

       

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

       

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

       

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

      
         

        

        
          	 	
                  Date:  
                    _________________________

                
	 	
                  _______________________________

                  [Signature]

                  [Title]

                

        

      

       

      
        
           

        

        
          N-2-1

          
            

          

        

        
           

        

      

      EXHIBIT
        O

       

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

       

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

       

      
        	
                SERVICING
                  CRITERIA

              

      

       

      
        	
                Reference

              	 	
                Criteria

              	 	
                Responsible
                  Party *

              
	 	 	 	 	 
	 	 	
                General
                  Servicing Considerations

              	 	 
	 	 	 	 	 
	
                1122(d)(1)(i)

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

              	 	
                Master
                  Servicer

                Trustee

              
	
                1122(d)(1)(ii)

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

              	 	
                Master
                  Servicer

                Trustee

              
	
                1122(d)(1)(iii)

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

              	 	
                N/A

              
	
                1122(d)(1)(iv)

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

              	 	
                Master
                  Servicer

              
	 	 	
                Cash
                  Collection and Administration

              	 	 
	 	 	 	 	 
	
                1122(d)(2)(i)

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

              	 	
                Master/Sub
                  Servicer (Certificate Account)

              
	
                1122(d)(2)(ii)

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

              	 	
                Master
                  Servicer

                Trustee

              
	
                1122(d)(2)(iii)

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

              	 	
                Master/Sub
                  Servicer

              

      

       

      

        *
          Unless
          otherwise mutually agreed upon.

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        	
                1122(d)(2)(iv)

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

              	 	
                Master/Sub
                  Servicer

                Trustee

              
	
                1122(d)(2)(v)

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

              	 	
                Trustee
                  (Distribution Account)*; Master/Sub Servicer (Certificate
                  Account)

              
	
                1122(d)(2)(vi)

              	 	
                Unissued
                  checks are safeguarded so as to prevent unauthorized
                  access.

              	 	
                N/A

              
	
                1122(d)(2)(vii)

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

              	 	
                Master/Sub
                  Servicer

                Trustee

              
	 	 	
                Investor
                  Remittances and Reporting

              	 	 
	 	 	 	 	 
	
                1122(d)(3)(i)

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

              	 	
                Trustee

              
	
                1122(d)(3)(ii)

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

              	 	
                Master
                  Servicer

                Trustee

              

      

       

      

        *
          Pending
          further clarification from the SEC.

      

       

      
        
           

        

        
          O-2

          
            

          

        

        
           

        

      

      
        	
                1122(d)(3)(iii)

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

              	 	
                Trustee

              
	 	 	 	 	 
	
                1122(d)(3)(iv)

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

              	 	
                Trustee

              
	 	 	
                Pool
                  Asset Administration

              	 	 
	 	 	 	 	 
	
                1122(d)(4)(i)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(ii)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(iii)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(iv)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(v)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(vi)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(vii)

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

              	 	
                Master/Sub
                  Servicer

              

      

      
        
          	
                  1122(d)(4)(viii)

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

                	 	
                  Master/Sub
                    Servicer

                

        

      

      
        
           

        

        
          O-3

          
            

          

        

        
           

        

      

       

      
        	
                1122(d)(4)(ix)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(x)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(xi)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(xii)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(xiii)

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

              	 	
                Master/Sub

                Servicer

              
	
                1122(d)(4)(xiv)

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

              	 	
                Master/Sub
                  Servicer

              
	
                1122(d)(4)(xv)

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

              	 	
                Trustee*;

                Master/Sub
                  Servicer

              

      

      

      

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

      

      
 

      
        
           

        

        
          O-4

          
            

          

        

        
           

        

      

       

       

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

              
	 	 
	 	
                Date:
                  

              
	 	 
	 	
                By:     
                  ______________________________

                Name:
                  ______________________________

                Title:  
                  ______________________________

              

      

       

      
        
           

        

        
          O-5

          
            

          

        

        
           

        

      

      EXHIBIT
        P

       

      [FORM
        OF]
        LIST OF ITEM 1119 PARTIES

      ___________
        ALTERNATIVE MORTGAGE SECURITIES TRUST 200_-___

       

      Mortgage
        Pass-Through Certificates,

      Series
        200__-___

       

      
        	
                Party

              	 	
                Contact
                  Information

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

       

      
        
           

        

        
          P-1

          
            

          

        

        
           

        

      

       

      EXHIBIT
        Q

       

      FORM
        OF
        SARBANES-OXLEY CERTIFICATION

      (Replacement
        of the Master Servicer) 

       

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

       

      6. I
        have
        reviewed the report on Form 10-K and all reports on Form 10-D required to
        be
        filed in respect of the period covered by this report on Form 10-K of First
        Horizon Alternative Mortgage Trust 2006-AA3 (the “Exchange
        Act Reports”);

       

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

       

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

       

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

       

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

       

      

        
          	 	
                  Date:  _______________________________

                
	 	
                  _______________________________

                
	 	
                  [Signature]

                  [Title]
                    

                

        

      

      
 

      
        
           

        

        
          Q-1

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