Document:

EXHIBIT 10.1

                        MORTGAGE LOAN PURCHASE AGREEMENT

      THIS  MORTGAGE LOAN  PURCHASE  AGREEMENT  dated as of June 30, 2005 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: Means 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,  or the State of Texas or
New York City is located are  authorized or obligated by law or executive  order
to be closed.

      Closing Date: June 30, 2005

      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.

                                      -1-
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      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 June 30,
2005 by and among The Bank of New York,  as  trustee,  First  Horizon  Home Loan
Corporation, as master servicer, and the Custodian.

      Cut-Off Date: June 1, 2005.

      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.

                                      -2-
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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(R)   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.

      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.

                                      -3-
<PAGE>

      Principal  Prepayment:  Any  payment  of  principal  by a  Mortgagor  on a
Mortgage  Loan that is received in advance of its  scheduled Due Date and is not
accompanied  by an amount  representing  scheduled  interest  due on any date or
dates in any month or months subsequent to the month of prepayment.

      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: $286,632,459.38

      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.

      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

                                      -4-
<PAGE>

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;  (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 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.

                                   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"):

                                      -5-
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      (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

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

                                      -6-
<PAGE>

                  (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.

                                      -7-
<PAGE>

      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:

                  (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.

                                      -8-
<PAGE>

                  (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.

                  (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.

                                      -9-
<PAGE>

      (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
            pools 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.

      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.

                                      -10-
<PAGE>

                                    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-
<PAGE>

      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-
<PAGE>

      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 June, 2005.

                                       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

MORTGAGE LOAN PURCHASE AGREEMENT - 2005-4 SIGNATURE PAGE

<PAGE>

                                   SCHEDULE A

                              [BEGINS ON NEXT PAGE]

                      [Available Upon Request From Trustee]

<PAGE>

                                   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 June 30, 2005 (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 June 1, 2005,  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
<PAGE>

      (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
<PAGE>

      (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

                                      B-3
<PAGE>

            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.

      (19)  If at the time of  origination  of each Mortgage  Loan,  related the
            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 Pool I
            and Pool II had stated  terms to  maturity of 30 years and 15 years,
            respectively.

      (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)  The  Mortgage  Loans  may be  prepaid  at any  time  by the  related
            Mortgagors without penalty.

                                      B-4
<PAGE>

      (28)  Some 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 Pool I and Pool II was  originated on or after
            November 16, 2004 and November 30, 2004, respectively.

      (30)  The latest  stated  maturity  date of any Mortgage Loan in Pool I is
            July 1, 2035,  and the  earliest is May 1, 2025.  The latest  stated
            maturity date of any Mortgage  Loan in Pool II is July 1, 2020,  and
            the earliest is January 1, 2020.

      (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  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  LEVELS(R)  Glossary  which  is  now  Version  5.6b  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 June 1, 2005

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

          FIRST HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2005-FA5

               MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-FA5

<PAGE>

                                       iii

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   Page
<S>                                                                                                                <C>
ARTICLE I DEFINITIONS.........................................................................................        6

ARTICLE II CONVEYANCE OF MORTGAGE LOANS;  REPRESENTATIONS AND WARRANTIES......................................       39
   SECTION 2.1 Conveyance of Mortgage Loans...................................................................       39
   SECTION 2.2 Acceptance by Trustee of the Mortgage Loans....................................................       43
   SECTION 2.3 Representations and Warranties of the Master Servicer;  Covenants of the Seller................       45
   SECTION 2.4 Representations and Warranties of the Depositor as to the Mortgage Loans.......................       47
   SECTION 2.5 Delivery of Opinion of Counsel in Connection with Substitutions................................       47
   SECTION 2.6 Execution and Delivery of Certificates.........................................................       48
   SECTION 2.7 REMIC Matters..................................................................................       48
   SECTION 2.8 Covenants of the Master Servicer...............................................................       54

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS....................................................       54
   SECTION 3.1 Master Servicer to Service Mortgage Loans......................................................       54
   SECTION 3.2 Subservicing; Enforcement of the Obligations of Servicers......................................       55
   SECTION 3.3 Rights of the Depositor and the Trustee in Respect of the Master Servicer......................       56
   SECTION 3.4 Trustee to Act as Master Servicer..............................................................       56
   SECTION 3.5 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account................       57
   SECTION 3.6 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................       60
   SECTION 3.7 Access to Certain Documentation and Information Regarding the Mortgage Loans...................       61
   SECTION 3.8 Permitted Withdrawals from the Certificate Account and Distribution Account....................       61
   SECTION 3.9 Maintenance of Hazard Insurance; Maintenance of Primary Insurance Policies.....................       63
   SECTION 3.10 Enforcement of Due-on-Sale Clauses; Assumption Agreements.....................................       65
   SECTION 3.11 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans...............       66
   SECTION 3.12 Trustee to Cooperate; Release of Mortgage Files...............................................       68
   SECTION 3.13 Documents Records and Funds in Possession of Master Servicer to be Held for the Trustee.......       69
   SECTION 3.14 Master Servicing Compensation.................................................................       70
   SECTION 3.15 Access to Certain Documentation...............................................................       70
   SECTION 3.16 Annual Statement as to Compliance.............................................................       70
   SECTION 3.17 Annual Independent Public Accountants' Servicing Statement; Financial Statements..............       71
   SECTION 3.18 Errors and Omissions Insurance; Fidelity Bonds................................................       71

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER..................................................       72
   SECTION 4.1 Advances.......................................................................................       72
   SECTION 4.2 Priorities of Distribution.....................................................................       72
   SECTION 4.3 Method of Distribution.........................................................................       78
   SECTION 4.4 Allocation of Losses...........................................................................       79
   SECTION 4.5 Reserved.......................................................................................       82
   SECTION 4.6 Monthly Statements to Certificateholders.......................................................       82
   SECTION 4.7 [RESERVED].....................................................................................       84
   SECTION 4.8 [RESERVED].....................................................................................       84
   SECTION 4.9 Determination of Pass-Through Rates for LIBOR Certificates.....................................       84
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                <C>
ARTICLE V THE CERTIFICATES....................................................................................       86
   SECTION 5.1 The Certificates...............................................................................       86
   SECTION 5.2 Certificate Register; Registration of Transfer and Exchange of Certificates....................       86
   SECTION 5.3 Mutilated, Destroyed, Lost or Stolen Certificates..............................................       92
   SECTION 5.4 Persons Deemed Owners..........................................................................       92
   SECTION 5.5 Access to List of Certificateholders' Names and Addresses......................................       92
   SECTION 5.6 Maintenance of Office or Agency................................................................       93

ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER..............................................................       93
   SECTION 6.1 Respective Liabilities of the Depositor and the Master Servicer................................       93
   SECTION 6.2 Merger or Consolidation of the Depositor or the Master Servicer................................       93
   SECTION 6.3 Limitation on Liability of the Depositor, the Master Servicer and Others.......................       93
   SECTION 6.4 Limitation on Resignation of Master Servicer...................................................       94

ARTICLE VII DEFAULT...........................................................................................       94
   SECTION 7.1 Events of Default..............................................................................       94
   SECTION 7.2 Trustee to Act; Appointment of Successor.......................................................       96
   SECTION 7.3 Notification to Certificateholders.............................................................       98

ARTICLE VIII CONCERNING THE TRUSTEE...........................................................................       98
   SECTION 8.1 Duties of Trustee..............................................................................       98
   SECTION 8.2 Certain Matters Affecting the Trustee..........................................................      100
   SECTION 8.3 Trustee Not Liable for Certificates or Mortgage Loans..........................................      101
   SECTION 8.4 Trustee May Own Certificates...................................................................      102
   SECTION 8.5 Trustee's Fees and Expenses....................................................................      102
   SECTION 8.6 Eligibility Requirements for Trustee...........................................................      102
   SECTION 8.7 Resignation and Removal of Trustee.............................................................      103
   SECTION 8.8 Successor Trustee..............................................................................      103
   SECTION 8.9 Merger or Consolidation of Trustee.............................................................      104
   SECTION 8.10 Appointment of Co-Trustee or Separate Trustee.................................................      104
   SECTION 8.11 Tax Matters...................................................................................      106
   SECTION 8.12 Periodic Filings..............................................................................      107

ARTICLE IX TERMINATION........................................................................................      108
   SECTION 9.1 Termination upon Liquidation or Purchase of all Mortgage Loans.................................      108
   SECTION 9.2 Final Distribution on the Certificates.........................................................      108
   SECTION 9.3 Additional Termination Requirements............................................................      109

ARTICLE X [RESERVED]..........................................................................................      110
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                                <C>
ARTICLE XI MISCELLANEOUS PROVISIONS...........................................................................      110
   SECTION 11.1 Amendment.....................................................................................      110
   SECTION 11.2 Recordation of Agreement; Counterparts........................................................      112
   SECTION 11.3 Governing Law.................................................................................      112
   SECTION 11.4 Intention of Parties..........................................................................      112
   SECTION 11.5 Notices.......................................................................................      113
   SECTION 11.6 Severability of Provisions....................................................................      114
   SECTION 11.7 Assignment....................................................................................      114
   SECTION 11.8 Limitation on Rights of Certificateholders....................................................      114
   SECTION 11.9 Inspection and Audit Rights...................................................................      115
   SECTION 11.10 Certificates Nonassessable and Fully Paid....................................................      115
   SECTION 11.11 Limitations on Actions; No Proceedings.......................................................      115
   SECTION 11.12 Acknowledgment of Seller.....................................................................      116

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

                                      iii
<PAGE>

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

                                 WITNESSETH THAT

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

                              PRELIMINARY STATEMENT

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

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

                  [Remainder of Page Intentionally Left Blank]

                                       1
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                             Initial Class                                     Minimum          Integral Multiples
   Class Designation      Certificate Balance      Pass-Through Rate        Denominations      in Excess of Minimum
--------------------------------------------------------------------------------------------------------------------
<S>                          <C>                      <C>                    <C>                   <C>
      Class I-A-1            $   222,772,000.00          5.000%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-2            $    55,693,000.00       variable(1)            $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-3                   (2)               variable(3)            $     500,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-4            $    31,205,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-5            $     4,369,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-6            $    20,000,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-7            $     1,150,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-8            $     1,795,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
     Class I-A-PO            $       705,524.82             (4)              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
      Class I-A-R            $           100.00          5.500%              $         100             N/A
--------------------------------------------------------------------------------------------------------------------
     Class II-A-1            $    23,920,000.00          5.000%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
     Class II-A-PO           $        29,160.33             (4)              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
     Class III-A-1           $    79,108,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
     Class III-A-2           $     4,549,000.00          5.500%              $      25,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
       Class B-1             $     8,603,000.00       variable(5)            $     100,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
       Class B-2             $     4,186,000.00       variable(5)            $     100,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
       Class B-3             $     2,325,000.00       variable(5)            $     100,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
       Class B-4             $     1,861,000.00       variable(5)            $     100,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
       Class B-5             $     1,627,000.00       variable(5)            $     100,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
       Class B-6             $     1,163,584.52       variable(5)            $     100,000         $       1,000
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Pass-Through  Rate with respect to any  Distribution  Date for the Class
I-A-2  Certificates is the per annum rate equal to (a) 3.60% with respect to the
first Distribution Date, and (b) thereafter,  the lesser of (i) LIBOR plus 0.30%
and (ii) 7.50%, subject to a minimum rate of 0.30%.

(2) The Class I-A-3  Certificates  are  Notional  Amount  Certificates  and will
accrue interest  during each Interest  Accrual Period on a Notional Amount equal
to the Class Certificate  Balance of the Class I-A-2  Certificates.  The initial
Notional Amount of the Class I-A-3 Certificates will be $55,693,000.

(3) The Pass-Through  Rate with respect to any  Distribution  Date for the Class
I-A-3  Certificates is the per annum rate equal to (a) 3.90% with respect to the
first Distribution Date, and (b) thereafter, the lesser of (i) 7.20% minus LIBOR
and (ii) 7.20%, subject to a minimum rate of 0.00%.

(4) The Class I-A-PO and Class II-A-PO are principal only  certificates and will
not accrue interest.

                                       2
<PAGE>

(5) The Pass-Through Rate on each Class of Subordinated Certificates is variable
and will be equal to the weighted average of the Designated Mortgage Pool Rates,
weighted on the basis of the Group  Subordinate  Amount for each Mortgage  Pool.
The initial Pass-Through Rate on each Class of Subordinated Certificates for the
first Interest Accrual Period will be 5.473%.

                                       3
<PAGE>

<TABLE>
<S>                                        <C>
Accretion Directed Certificates.......     The Class I-A-1 and Class I-A-2 Certificates.
Accrual Certificates..................     The Class I-A-5 Certificates.
Accrual Components....................     None.
Book-Entry Certificates...............     All Classes of Certificates other than the Physical Certificates.
Certificate Group.....................     With respect to Pool I, the Group I Senior Certificates, with respect to
                                           Pool II, the Group II Senior Certificates and with respect to Pool III,
                                           the Group III Senior Certificates. The Subordinated Certificates
                                           correspond to all of the Mortgage Pools.
COFI Certificates.....................     None.
Component Certificates................     None.
Components............................     None.
Delay Certificates....................     All interest-bearing Classes of Certificates other than the Non-Delay
                                           Certificates, if any.
ERISA-Restricted Certificates.........     The Residual Certificates, Private Certificates and Certificates of any
                                           Class that no longer satisfy the applicable rating requirement of the
                                           Underwriters' Exemption.
Floating Rate Certificates............     The Class I-A-2 Certificates.
Group I Senior Certificates...........     The Class I-A-1, Class I-A-2, Class I-A-3, Class I-A-4, Class I-A-5,
                                           Class  I-A-6, Class I-A-7, Class I-A-8, Class I-A-PO and Class I-A-R
                                           Certificates.
Group II Senior Certificates..........     The Class II-A-1 and Class II-A-PO Certificates.
Group III Senior Certificates.........     The Class III-A-1 and Class III-A-2 Certificates.
Inverse Floating Rate Certificates....     The Class I-A-3 Certificates.
LIBOR Certificates....................     The Class I-A-2 and Class I-A-3 Certificates.
NAS Certificates......................     The Class I-A-4 and Class I-A-8 Certificates.
Non-Delay Certificates................     The LIBOR Certificates.
Notional Amount Certificates..........     The Class I-A-3 Certificates.
Offered Certificates..................     All Classes of Certificates other than the Class PO Certificates and the
                                           Private Certificates.
Physical Certificates.................     The Class PO Certificates, the Residual Certificates and the Private
                                           Certificates.
Planned Principal Classes.............     None.
Principal Only Certificates...........     The Class I-A-PO and Class II-A-PO Certificates.
Private Certificates..................     The Class B-4, Class B-5 and Class B-6 Certificates.
Rating Agencies.......................     S&P and Moody's; except that, for purposes of the Class B-1, B-2, Class
                                           B-3, Class B-4 and Class B-5 Certificates, S&P shall be the sole
                                           Rating Agency.
</TABLE>

                                       4
<PAGE>

<TABLE>
<S>                                        <C>
Regular Certificates..................     All Classes of Certificates, other than the Residual Certificates.
Residual Certificates.................     The Class I-A-R Certificates.
Retail/Lottery Certificates...........     None.
Scheduled Certificates................     None.
Senior Certificates...................     The Group I Senior Certificates, Group II Senior Certificates and Group
                                           III Senior Certificates, collectively.
Senior Mezzanine
Certificates..........................     The Class I-A-7 and Class I-A-8 Certificates.
Senior Support Certificates...........     None.
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 I-A-4 and Class I-A-6 Certificates.
Support Classes.......................     None.
Targeted Principal Classes............     None.
Underwriter...........................     Credit Suisse First Boston LLC.
</TABLE>

         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.

                                       5
<PAGE>

                                   ARTICLE I
                                  DEFINITIONS

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

         Accretion  Directed  Certificates:  As  specified  in  the  Preliminary
Statement.

         Accretion Termination Date: For each class of Accrual Certificates, the
earlier of (x) the Cross-over  Date and (y) the  Distribution  Date on which the
Class Certificate Balances of each Class of Accretion Directed  Certificates has
been reduced to zero.

         Accrual  Amount:  For each  Distribution  Date  through  the  Accretion
Termination Date and the Accrual Certificates, an amount equal to the sum of (a)
Accrued  Certificate   Interest  in  respect  of  the  Accrual  Certificates  in
accordance with clause (i) of Section 4.2(a),  and (b) amounts  allocable to the
Accrual  Certificates in accordance with clause (ii) of Section 4.2(a),  in each
case on such Distribution Date.

         Accrual Certificates:  As specified in the Preliminary Statement.

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

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

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

         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.

                                       6
<PAGE>

         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 each of the components of
the Subordinated Optimal Principal Amount for each Mortgage Pool; provided that,
solely for purposes of this  definition,  the  applicable  Subordinated  Optimal
Principal  Amount for each Mortgage Pool will be reduced by the amounts required
to be  distributed  to the  related  Class PO  Certificates  in  respect  of the
applicable  Class PO Deferred  Amount on such  Distribution  Date,  and any such
reduction  in the  applicable  Subordinate  Optimal  Principal  Amount  for each
Mortgage Pool shall reduce the amounts calculated  pursuant to clauses (1), (4),
(2),  (3) and  (5) of the  definition  thereof,  in that  order,  and the  Class
Certificate Balances of each Class of Subordinated  Certificates will be reduced
by such  amounts  in  reverse  order of  priority  until  the  respective  Class
Certificate Balances of each Class of Subordinated Certificates has been reduced
to zero;  provided  further,  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.

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

         Apportioned   Principal   Balance:   For  any  Class  of   Subordinated
Certificates and any Distribution Date, an amount equal to the Class Certificate
Balance of such Class  immediately prior to that Distribution Date multiplied by
a fraction,  the numerator of which is the applicable Group  Subordinate  Amount
for such  Distribution Date and the denominator of which is the sum of the Group
Subordinate Amounts for such Distribution Date.

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

                                       7
<PAGE>

         Available   Funds:   For  each  Mortgage  Pool,  with  respect  to  any
Distribution Date, an amount equal to the sum of:

         (a)  all  scheduled   installments  of  interest,  net  of  the  Master
              Servicing  Fee,  the  Trustee  Fee and any  amounts  due to  First
              Horizon  in  respect of the  Retained  Yield on such  Distribution
              Date, and all scheduled  installments  of principal due in respect
              of the Mortgage Loans in such Mortgage Pool on the Due Date in the
              month in which the  Distribution  Date occurs and received  before
              the related  Determination  Date,  together  with any  Advances in
              respect thereof;

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

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

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

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

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

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

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

                                       8
<PAGE>

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

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

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

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

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

         Certificate  Account: The separate Eligible Account or Accounts created
and maintained by the Master Servicer  pursuant to Section 3.5 with a depository
institution in the name of the Master Servicer for the benefit of the Trustee on
behalf of Certificateholders and designated "First Horizon Home Loan Corporation
in trust for the  registered  holders of First  Horizon  Asset  Securities  Inc.
Mortgage Pass-Through Certificates, Series 2005-FA5."

         Certificate Group:  As specified in the Preliminary Statement.

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

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

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

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

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

                                       9
<PAGE>

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

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

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

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

         Class  I-A  PO  Deferred  Amount:  With  respect  to the  Class  I-A-PO
Certificates and any  Distribution  Date through the Cross-over Date, the sum of
(1) the Class I-A-PO Percentage of the principal portion of Non-Excess Losses on
a Discount Mortgage Loan in Pool I allocated to the Class I-A-PO Certificates on
such  date,  and  (2) all  amounts  previously  allocated  to the  Class  I-A-PO
Certificates  in respect of such losses and not  distributed to the Class I-A-PO
Certificates on prior Distribution Dates.

         Class I-A-PO Percentage: (a) With respect to any Discount Mortgage Loan
in Pool I, the fraction,  expressed as a percentage,  equal to (5.50% - Adjusted
Net Mortgage  Rate) divided by 5.50%,  and (b) with respect to any  Non-Discount
Mortgage Loan in Pool I, 0%.

         Class  II-A PO  Deferred  Amount:  With  respect  to the Class  II-A-PO
Certificates and any  Distribution  Date through the Cross-over Date, the sum of
(1) the Class II-A-PO  Percentage of the principal  portion of Non-Excess Losses
on a  Discount  Mortgage  Loan  in  Pool  II  allocated  to  the  Class  II-A-PO
Certificates on such date, and (2) all amounts previously allocated to the Class
II-A-PO  Certificates in respect of such losses and not distributed to the Class
II-A-PO Certificates on prior Distribution Dates.

         Class  II-A-PO  Percentage:  (a) With respect to any Discount  Mortgage
Loan in Pool II, the  fraction,  expressed  as a  percentage,  equal to (5.00% -
Adjusted  Net  Mortgage  Rate)  divided  by 5.00%,  and (b) with  respect to any
Non-Discount Mortgage Loan in Pool II, 0%.

         Class PO Certificates: The Class I-A-PO and Class II-A-PO Certificates.

                                       10
<PAGE>

         Class  PO  Deferred  Amount:  (a)  With  respect  to the  Class  I-A-PO
Certificates,  the Class  I-A-PO  Deferred  Amount;  and (b) with respect to the
Class II-A-PO Certificates, the Class II-A-PO Deferred Amount.

         Class PO Deferred Payment Writedown  Amount:  For any Distribution Date
and any class of Class PO Certificates,  the amount, if any, distributed on such
date in respect of the  related  Class PO  Deferred  Amount  pursuant to Section
4.2(a)(iv) herein. The Subordinated  Certificate  Writedown Amount and the Class
PO  Deferred  Payment  Writedown  Amount  will be  allocated  to the  Classes of
Subordinated  Certificates  in  inverse  order  of  priority,  until  the  Class
Certificate Balance of each such Class has been reduced to zero.

         Class  PO  Principal   Distribution   Amount:   With  respect  to  each
Distribution Date and any class of Class PO Certificates, an amount equal to the
sum of:

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

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

                  (3) the applicable PO Percentage of the sum of (i) all partial
         prepayments of principal for each Mortgage Loan in the related Mortgage
         Pool  received by the Master  Servicer  during the  related  Prepayment
         Period  and  (ii)  all  Unanticipated  Recoveries  in  respect  of each
         Mortgage Loan in the related Mortgage Pool received during the calendar
         month preceding such Distribution Date;

                  (4)  the  applicable  PO  Percentage  of the  sum  of (a)  the
         Liquidation  Proceeds  allocable to principal on each  Mortgage Loan in
         the related  Mortgage  Pool which  became a  Liquidated  Mortgage  Loan
         during  the  related  Prepayment  Period,  other  than  Mortgage  Loans
         described in clause (b), and (b) the principal balance of each Mortgage
         Loan in the  related  Mortgage  Pool  that was  purchased  by a private
         mortgage insurer during the related Prepayment Period as an alternative
         to paying a claim under the related mortgage insurance policy; and

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

                                       11
<PAGE>

         For purposes of clauses (2) and (5) above, the Stated Principal Balance
of a Mortgage Loan will be reduced by the amount of any Deficient Valuation that
occurred prior to the reduction of the Bankruptcy Loss Coverage Amount to zero.

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

         Closing Date:  June 30, 2005.

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

         COFI:  Not applicable.

         COFI Certificates:  Not applicable.

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

         Component:  Not applicable.

         Component Balance:  Not applicable.

         Component Certificates:  Not applicable.

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

                                       12
<PAGE>

         Coop Shares:  Shares issued by a Cooperative Corporation.

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

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

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

         Corporate  Trust Office:  The  designated  office of the Trustee in the
State of New York at which at any particular  time its corporate  trust business
with respect to this Agreement shall be  administered,  which office at the date
of the  execution  of this  Agreement  is located  at The Bank of New York,  101
Barclay   Street,   8W,  New  York,  New  York  10286  (Attn:   Corporate  Trust
Mortgage-Backed  Securities  Group,  First Horizon Asset  Securities Inc. Series
2005-FA5),  facsimile  no.  (212)  815-3986,  and which is the  address to which
notices to and correspondence with the Trustee should be directed.

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

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

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

         Custodial Agreement:  The Custodial Agreement dated as of June 30, 2005
by and among the Trustee, the Master Servicer and the Custodian.

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

         Cut-off Date:  June 1, 2005.

         Cut-off  Date  Pool  Principal   Balance:   With  respect  to  Pool  I,
$352,679,580.50,  with  respect to Pool II,  $25,012,025.79  and with respect to
Pool III, $87,369,763.38.

         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.

                                       13
<PAGE>

         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 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.

         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.

         Designated  Mortgage Pool Rates:  With respect to Pool I, 5.500%,  with
respect to Pool II, 5.000% and with respect to Pool III, 5.500%.

         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.

         Discount  Mortgage  Loan:  Any Mortgage Loan in Pool I with an Adjusted
Net Mortgage  Rate of less than 5.50% and any  Mortgage  Loan in Pool II with an
Adjusted Net Mortgage Rate of less than 5.00%.

                                       14
<PAGE>

         Distribution   Account:  The  separate  Eligible  Account  created  and
maintained by the Trustee pursuant to Section 3.5 in the name of the Trustee for
the benefit of the  Certificateholders  and designated "The Bank of New York, in
trust for registered  Holders of First Horizon Asset  Securities  Inc.  Mortgage
Pass-Through  Certificates,  Series 2005-FA5." 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 July 2005.

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

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

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

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

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

         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.

                                       15
<PAGE>

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

         Excess  Proceeds:  With respect to any  Liquidated  Mortgage  Loan, the
amount, if any, by which the sum of any Liquidation Proceeds, 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.

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

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

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

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

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

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

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

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

         Fraud 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.

                                       16
<PAGE>

         Fraud Loss Coverage Amount: As of the Closing Date,  $9,301,227.  As of
any Distribution  Date from the first  anniversary of the Cut-off Date and prior
to the fifth  anniversary  of the Cut-off Date,  the Fraud Loss Coverage  Amount
will equal $4,650,614 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.

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

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

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

         Group  Subordinate  Amount:  For a Mortgage  Pool and any  Distribution
Date, the excess of (a) the Pool Principal Balance of such Mortgage Pool for the
immediately   preceding   Distribution   Date,  over  (b)  the  aggregate  Class
Certificate  Balance of the Senior Certificates of the related Certificate Group
immediately prior to that Distribution Date.

         Index:  LIBOR.

         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.

         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.

                                       17
<PAGE>

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

         Lender PMI Mortgage Loan:  Not applicable.

         LIBOR:  The London  interbank  offered rate for one month United States
dollar deposits calculated in the manner described in Section 4.9.

         LIBOR  Business Day: Any day on which banks in London,  England and The
City of New York are open and conducting  transactions  in foreign  currency and
exchange.

          LIBOR Certificates:  As specified in the Preliminary Statement.

         LIBOR Determination Date: For the LIBOR Certificates,  the second LIBOR
Business Day immediately  preceding the  commencement  of each Interest  Accrual
Period for each LIBOR Certificate.

         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 of 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.

                                       18
<PAGE>

         Lower REMIC: The segregated pool of assets consisting of the Trust Fund
but excluding the Retained Yield,  the Middle REMIC  Interests,  the Lower REMIC
Interests, the RL Interest, the RM Interest, and the RU Interest.

         Lower REMIC Interests: The REMIC regular interests,  within the meaning
of the REMIC Provisions, issued by the Lower REMIC as set forth in Section 2.7.

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

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

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

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

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

         Master  Servicing  Fee Rate:  For each  Mortgage  Loan a per annum rate
equal to 0.369%.

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

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

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

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

         Middle REMIC Interests: The REMIC regular interests, within the meaning
of the REMIC Provisions, issued by the Middle REMIC as set forth in Section 2.7.

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

         MLPA: The Mortgage Loan Purchase  Agreement  dated as of June 30, 2005,
by and between First Horizon Home Loan Corporation, as seller, and First Horizon
Asset  Securities  Inc.,  as  purchaser,  as related to the  transfer,  sale and
conveyance of the Mortgage Loans.

                                       19
<PAGE>

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

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

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

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

         Mortgage File: The mortgage  documents  listed in Section 2.1(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;

                  (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;

                                       20
<PAGE>

                  (11)  the Mortgage Rate;

                  (12)  the purpose for the Mortgage Loan;

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

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

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

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

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

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

         Mortgage Pool:  Any of Pool I, Pool II or Pool III.

         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.

         NAS Certificates:  As specified in the Preliminary Statement.

         NAS Distribution  Percentage:  0% through the Distribution Date in June
2010; 30% of the applicable NAS Percentage  thereafter  through the Distribution
Date in June 2011; 40% of the applicable NAS Percentage  thereafter  through the
Distribution Date in June 2012; 60% of the applicable NAS Percentage  thereafter
through the Distribution Date in June 2013; 80% of the applicable NAS Percentage
thereafter  through  the  Distribution  Date  in  June  2014;  and  100%  of the
applicable NAS Percentage thereafter.

                                       21
<PAGE>

         NAS Percentage:  For any Distribution  Date, the lesser of (x) 100% and
(y) the  percentage  (carried to six places rounded up) obtained by dividing (1)
the aggregate Class  Certificate  Balances of the NAS  Certificates  immediately
preceding such  Distribution  Date by (2) the Pool  Principal  Balance of Pool I
(excluding  the  applicable  PO  Percentage  of the  principal  balance  of each
Discount Mortgage Loan included therein) for such Distribution Date.

         NAS Principal Distribution Amount: For any Distribution Date, the total
of the amounts  described in clauses (1) through (5) of the definition of Senior
Optimal  Principal Amount for Pool I (determined  without the application of the
related Senior Percentage and Senior Prepayment  Percentage,  as applicable) for
such date multiplied by the NAS Distribution Percentage for such date.

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

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

         Non-Class I-A-PO  Percentage:  (a) With respect to a Discount  Mortgage
Loan in Pool I, the fraction,  expressed as a percentage,  equal to the Adjusted
Net Mortgage  Rate divided by 5.50%,  and (b) with respect to each  Non-Discount
Mortgage Loan in Pool I, 100%.

         Non-Class II-A-PO  Percentage:  (a) With respect to a Discount Mortgage
Loan in Pool II, the fraction,  expressed as a percentage, equal to the Adjusted
Net Mortgage  Rate divided by 5.00%,  and (b) with respect to each  Non-Discount
Mortgage Loan in Pool II, 100%.

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

         Non-Discount  Mortgage  Loan:  Any  Mortgage  Loan  in  Pool I with  an
Adjusted Net Mortgage  Rate that is equal to or greater than 5.50% per annum and
any Mortgage Loan in Pool II with an Adjusted Net Mortgage Rate that is equal to
or greater than 5.00% per annum.

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

         Non-PO  Percentage:  (a) With respect to Pool I, the  Non-Class  I-A-PO
Percentage, and (b) with respect to Pool II, the Non-Class II-A-PO Percentage.

         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.

                                       22
<PAGE>

         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:  As specified in the Preliminary Statement.

         Notional Amount Component: Not applicable.

         Notional   Amount   Certificates:   As  specified  in  the  Preliminary
Statement.

         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.

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

         Original Group Subordinate Amount: With respect to a Mortgage Pool, the
related Group Subordinate Amount as of the 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.

                                       23
<PAGE>

         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 interest bearing 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.

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

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

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

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

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

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

                                       24
<PAGE>

                  (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

                  (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.

                                       25
<PAGE>

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

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

         Physical Certificates:  As specified in the Preliminary Statement.

         Planned Principal Classes:  Not applicable.

         PO Percentage: (a) With respect to Pool I, the Class I-A-PO Percentage,
and (b) with respect to Pool II, the Class II-A-PO Percentage.

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

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

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

         Pool Principal  Balance:  For each Mortgage  Pool,  with respect to any
Distribution  Date,  the  aggregate  of the  Stated  Principal  Balances  of the
Mortgage  Loans in such Mortgage Pool 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.

                                       26
<PAGE>

         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 Only Certificates: As specified in the Preliminary Statement.

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

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

         Private Certificates:  As specified in the Preliminary Statement.

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

         PUD:  Planned Unit Development.

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

                                       27
<PAGE>

         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.

         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.

                                       28
<PAGE>

         Reference Bank: A leading bank with an established place of business in
London  engaged in  transactions  in  Eurodollar  deposits in the  international
Eurocurrency  market,  not  controlled by, or under the common control with, the
Trustee.

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

         Regular Certificates:  As specified in the Preliminary Statement.

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

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

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

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

         REMIC Pool: Either of the Lower REMIC, Middle REMIC or Upper REMIC.

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

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

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

         Required Coupon: With respect to Pool I, 5.750% per annum, with respect
to Pool II, 5.250% per annum, and with respect to Pool III, 5.750% per annum.

         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.

                                       29
<PAGE>

         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.

         Retail/Lottery Certificates:  Not applicable.

         Retained Yield: As to each Mortgage Loan and any Distribution Date, (i)
an  amount  payable  to First  Horizon  Home Loan  Corporation  out of each full
payment of interest  received on such Mortgage Loan and equal to  one-twelfth of
the  Retained  Yield 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) and (ii) each prepayment penalty received, if any.

         Retained  Yield Rate: For any  Non-Discount  Mortgage Loan, a per annum
rate  equal to the  excess  of (a) the  applicable  Mortgage  Rate  over (b) the
Required Coupon. For any Discount Mortgage Loan, 0%.

         RL Interest:  The REMIC  residual  interest,  within the meaning of the
REMIC Provisions,  issued by the Lower REMIC,  which shall be represented by the
Class I-A-R Certificate.

         RM Interest:  The REMIC  residual  interest,  within the meaning of the
REMIC Provisions,  issued by the Middle REMIC, which shall be represented by the
Class I-A-R Certificate.

         RU Interest:  The REMIC  residual  interest,  within the meaning of the
REMIC Provisions,  issued by the Upper REMIC,  which shall be represented by the
Class I-A-R Certificate.

         Scheduled Balances:  Not applicable.

         Scheduled Certificates:  Not applicable.

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

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

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

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

         Senior Certificates:  As specified in the Preliminary Statement.

                                       30
<PAGE>

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

         Senior  Mezzanine   Certificates:   As  specified  in  the  Preliminary
Statement.

         Senior Optimal Principal Amount: As to a Mortgage Pool and with respect
to each Distribution Date, an amount equal to the sum of:

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

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

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

                  (4) the lesser of:

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

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

                                       31
<PAGE>

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

         Senior  Percentage:  On any Distribution Date for a Certificate  Group,
the  lesser  of 100% and the  percentage  (carried  to six  places  rounded  up)
obtained by dividing the aggregate Class Certificate  Balances of all Classes of
Senior  Certificates of such  Certificate  Group (other than the Notional Amount
Certificates  and  the  Class  PO  Certificates)   immediately   preceding  such
Distribution  Date by the Pool  Principal  Balance of the related  Mortgage Pool
(excluding  the  aggregate of the  applicable  PO  Percentage  of the  principal
balance of each  Discount  Mortgage  Loan in the related  Mortgage Pool included
therein) for the immediately preceding Distribution Date.

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

-------------------------------------------------------------------------------
Period (Dates Inclusive)      Senior Prepayment Percentage
-------------------------------------------------------------------------------
July 2005 - June 2010         100%
-------------------------------------------------------------------------------
July 2010 - June 2011         the related Senior Percentage plus 70% of the
                              related Subordinated Percentage

-------------------------------------------------------------------------------
July 2011 - June 2012         the related Senior Percentage plus 60% of the
                              related Subordinated Percentage

-------------------------------------------------------------------------------
July 2012 - June 2013         the related Senior Percentage plus 40% of the
                              related Subordinated Percentage

-------------------------------------------------------------------------------
July 2013 - June 2014         the related Senior Percentage plus 20% of the
                              related Subordinated Percentage

-------------------------------------------------------------------------------
July 2014 and thereafter      the related Senior Percentage
-------------------------------------------------------------------------------

         Notwithstanding   the  foregoing,   if  the  Senior  Percentage  for  a
Certificate Group on any Distribution Date exceeds the initial Senior Percentage
for  that  Certificate   Group,  the  Senior  Prepayment   Percentage  for  each
Certificate Group for that Distribution Date will equal 100%.

         In addition,  no reduction of the Senior Prepayment  Percentage for any
Certificate  Group  below the level in effect for the most recent  prior  period
specified in the table above shall be effective on any Distribution  Date unless
both of the following  step down  conditions  are satisfied with respect to each
Mortgage Pool, as of the last day of the month preceding such Distribution Date:

                                       32
<PAGE>

                  (1) the aggregate Stated  Principal  Balance of Mortgage Loans
in a Mortgage Pool  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)  does not exceed 50% of the related
Group Subordinate Amount as of such date; and

                  (2)  cumulative  Realized  Losses in each Mortgage Pool do not
exceed:

                       (a)  30% of the related Original Group Subordinate Amount
                            if  such   Distribution   Date  occurs  between  and
                            including July 2010 and June 2011;

                       (b)  35% of the related Original Group Subordinate Amount
                            if  such   Distribution   Date  occurs  between  and
                            including July 2011 and June 2012;

                       (c)  40% of the related Original Group Subordinate Amount
                            if  such   Distribution   Date  occurs  between  and
                            including July 2012 and June 2013;

                       (d)  45% of the related Original Group Subordinate Amount
                            if  such   Distribution   Date  occurs  between  and
                            including July 2013 and June 2014; and

                       (e)  50% of the related Original Group Subordinate Amount
                            if such  Distribution  Date  occurs  during or after
                            July 2014.

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

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

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

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

                                       33
<PAGE>

         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;

                  (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,  $4,650,614.  As of any Distribution Date, the Special Hazard Loss
Coverage Amount will equal the greater of

                                       34
<PAGE>

                  (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 will be zero.

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

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

         Startup Day:  The Closing Date.

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

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

         Subordinated Certificates:  As specified in the Preliminary Statement.

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

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

                                       35
<PAGE>

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

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

                  (3) the  related  Subordinated  Prepayment  Percentage  of the
applicable Non-PO Percentage of the sum of (a) all partial Principal Prepayments
received in respect of each  Mortgage  Loan in the related  Mortgage Pool during
the related  Prepayment  Period,  (b) all Unanticipated  Recoveries  received in
respect of each Mortgage  Loan in the related  Mortgage Pool 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 applicable
Non-PO  Percentage  of the  net  Liquidation  Proceeds  allocable  to  principal
received  during the  related  Prepayment  Period in respect of each  Liquidated
Mortgage Loan in the related  Mortgage Pool, other than Mortgage Loans described
in clause (b), and (b) the applicable Non-PO Percentage of the principal balance
of each  Mortgage  Loan in the related  Mortgage  Pool that was  purchased  by a
private mortgage insurer during the related  Prepayment Period as an alternative
to paying a claim under the related  Insurance Policy exceeds (c) the sum of the
amounts distributable to the Senior  Certificateholders  (other than the holders
of the Class PO  Certificates)  under clause (4) of the definition of applicable
Senior Optimal Principal Amount on such Distribution Date; and

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

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

                                       36
<PAGE>

         Subordinated  Prepayment  Percentage:  For any Distribution  Date, 100%
minus the related 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 lower of (a)
the Adjusted Net Mortgage Rate of the Deleted  Mortgage Loan or (b) 5.50% in the
case of a Deleted Mortgage Loan from Pool I or Pool III, or 5.00% in the case of
a Deleted Mortgage Loan from Pool II, 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) 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; (v)
have a remaining  term to  maturity no greater  than (and not more than one year
less than that of) the Deleted  Mortgage  Loan;  (vi) not be a Cooperative  Loan
unless the Deleted  Mortgage Loan was a  Cooperative  Loan and (vii) comply with
each representation and warranty set forth in Section 2.3 hereof.

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

         Super Senior Certificates:  As specified in the Preliminary Statement.

         Support Classes:  Not Applicable.

         Targeted Principal Classes:  Not applicable..

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

         Tax Matters Person  Certificate:  The Class I-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;
provided that the Trust Fund shall exclude the Retained Yield.

                                       37
<PAGE>

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

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

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

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

         Undercollateralized  Group: With respect to any Distribution  Date, the
Senior   Certificates  of  any  Certificate  Group  (other  than  the  Class  PO
Certificates) as to which the aggregate  Certificate  Principal Balance thereof,
after giving effect to distributions pursuant to Section 4.2(a) on such date, is
greater than the applicable  Non-PO  Percentage of the Pool Principal Balance of
the related Mortgage Pool for such Distribution Date.

         Underwriter:  As specified in the Preliminary Statement.

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

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

         Voting  Rights:  The  portion  of  the  voting  rights  of  all  of the
Certificates  which  is  allocated  to  any  Certificate.  As  of  any  date  of
determination,  (a) 98% of all Voting Rights will be allocated among all Holders
of the Certificates, other than the Class I-A-3 and Class I-A-R Certificates, in
proportion to their then outstanding Class Certificate  Balance; (b) 1.0% of all
Voting  Rights will be  allocated to the Class I-A-3  Certificates  (such Voting
Rights to be  allocated  among the  Holders  of  Certificates  of such  Class in
proportion to their Notional Amount);  and (c) 1.0% of all Voting Rights will be
allocated to the Class I-A-R  Certificates  (such Voting  Rights to be allocated
among the  Holders  of  Certificates  of such  Class in  accordance  with  their
respective Percentage Interests).

                                       38
<PAGE>

                                   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

                    (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,
                    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  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;

              (iii) in  the  case  of  each  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;

                                       39
<PAGE>

              (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 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).

                                       40
<PAGE>

         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.

         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.

                                       41
<PAGE>

         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 2005-FA5, The Bank of New York, as trustee for the holders
of the  Certificates",  (ii)  cause  such  assignment  to be in proper  form for
recording in the appropriate  public office for real property  records and (iii)
cause to be delivered  for recording in the  appropriate  public office for real
property  records the assignments of the Mortgages to the Trustee,  except that,
with respect to any  assignments of Mortgage as to which the Master Servicer has
not received the  information  required to prepare such assignment in recordable
form, the Master Servicer's obligation to do so and to deliver the same for such
recording shall be as soon as practicable  after receipt of such information and
in any event within thirty (30) days after receipt thereof.  Notwithstanding the
foregoing,  the Master  Servicer  need not cause to be recorded  any  assignment
which  relates  to a  Mortgage  Loan  in  any  state  other  than  the  Required
Recordation States.

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

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

                                       42
<PAGE>

         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.

         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.

                                       43
<PAGE>

         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,  the Trustee  shall cause the Custodian
to release the related Mortgage File to the Seller and shall execute and deliver
at the Seller's request such  instruments of transfer or assignment  prepared by
the Seller, in each case without recourse,  as shall be necessary to vest in the
Seller,  or a designee,  the  Trustee's  interest in any Mortgage  Loan released
pursuant hereto. If pursuant to the foregoing  provisions the Seller repurchases
a Mortgage Loan that is a MERS Mortgage Loan,  the Master  Servicer shall either
(i)  cause  MERS to  execute  and  deliver  an  assignment  of the  Mortgage  in
recordable form to transfer the Mortgage from MERS to the Seller and shall cause
such  Mortgage  to be  removed  from  registration  on  the  MERS(R)  System  in
accordance  with MERS' rules and  regulations or (ii) cause MERS to designate on
the MERS(R) System the Seller as the beneficial holder of such Mortgage Loan.

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

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

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

                                       44
<PAGE>

         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 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.

                                       45
<PAGE>

         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 release or shall cause the Custodian to release the
Mortgage  File held for the benefit of the  Certificateholders  relating to such
Deleted  Mortgage  Loan to the  Seller  and shall  execute  and  deliver  at the
Seller's  direction such  instruments of transfer or assignment  prepared by the
Seller,  in each case without  recourse,  as shall be necessary to vest title in
the Seller, or its designee, the Trustee's interest in any Deleted Mortgage Loan
substituted for pursuant to this Section 2.3.

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

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

                                       46
<PAGE>

         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.

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

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

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

                                       47
<PAGE>

         (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.

         SECTION 2.7   REMIC Matters.

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

         The assets of the Lower REMIC  shall be as set forth in the  definition
thereof.  Each  interest  identified  in the first table below by a  designation
beginning with "L" shall be a "regular  interest" in the Lower REMIC and a Lower
REMIC Interest, and the RL Interest shall be the sole class of residual interest
in the Lower REMIC. The Lower REMIC Interests shall be uncertificated  and shall
be held by the Trustee as assets of the Middle REMIC.

         The assets of the Middle REMIC shall be as set forth in the  definition
thereof.  Each  interest  identified  in the second table below by a designation
beginning  with "M" shall be a  "regular  interest"  in the  Middle  REMIC and a
Middle REMIC  Interest,  and the RM Interest shall be the sole class of residual
interest in the Middle REMIC. The Middle REMIC Interests shall be uncertificated
and shall be held by the Trustee as assets of the Upper REMIC.

         The assets of the Upper REMIC  shall be as set forth in the  definition
thereof.  The Regular  Certificates shall represent  "regular  interests" in the
Upper REMIC. The RU Interest shall be the sole class of residual interest in the
Upper REMIC.  The Class I-A-R  Certificate  shall represent  ownership of the RL
Interest, RM Interest and RU Interest.

                                       48
<PAGE>

         The "Startup Day" for purposes of the REMIC  Provisions  for each REMIC
hereunder shall be the Closing Date. The Tax Matters Person with respect to each
REMIC  hereunder shall be the Trustee and the Trustee shall hold the Tax Matters
Person Certificate. Each REMIC's taxable year shall be the calendar year and its
accounts shall be maintained using the accrual method.

                                       29
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                       Corresponding Class of Middle REMIC
   Lower REMIC                                                                        Interests
   Interest or     Lower REMIC Interest                                --------------------------------------
    Residual              Balance         Lower REMIC Interest Rate         Interest            Principal
-------------------------------------------------------------------------------------------------------------
<S>                <C>                              <C>                        <C>                 <C>
L-I-A-1            $       134,909.60               5.50%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-I-A-2            $        14,989.96               5.50%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-I-ZZZ            $   351,824,156.12               5.50%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-I-PO             $       705,524.82                N/A                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
RL                 $             0.00                N/A                       N/A                 N/A
-------------------------------------------------------------------------------------------------------------
L-II-A-1           $         9,565.79               5.00%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-II-A-2           $         1,062.87               5.00%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-II-PO            $        29,160.33                N/A                       (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-II-ZZZ           $    24,972,236.80               5.00%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-III-A-1          $        33,414.87               5.50%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-III-A-2          $         3,712.76               5.50%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
L-III-ZZZ          $    87,332,635.75               5.50%                      (1)                 (1)
-------------------------------------------------------------------------------------------------------------
                   $   465,061,369.67
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Lower REMIC Interest  L-I-A-1,  Lower REMIC  Interest  L-I-A-2 and Lower
REMIC Interest L-I-ZZZ shall be Corresponding Classes to these classes of Middle
REMIC Interests:  M-I-A-1, M-I-A-2, M-I-A-4, M-I-A-5, M-I-A-6, M-I-A-7, M-I-A-8,
M-I-A-RU,  M-B-1,  M-B-2,  M-B-3,  M-B-4,  M-B-5 and M-B-6  (provided  that with
respect  to M-B-1,  M-B-2,  M-B-3,  M-B-4,  M-B-5 and M-B-6,  such  Lower  REMIC
Interests shall only  correspond to the portion  supported by Pool I). The Lower
REMIC Interest L-I-PO corresponds to the Middle REMIC Interest M-I-PO. The Lower
REMIC Interest L-II-A-1,  Lower REMIC L-II-A-2 and Lower REMIC Interest L-II-ZZZ
shall be  Corresponding  Classes  to these  classes of Middle  REMIC  Interests:
M-II-A-1,  M-B-1,  M-B-2,  M-B-3,  M-B-4,  M-B-5 and M-B-6  (provided  that with
respect  to M-B-1,  M-B-2,  M-B-3,  M-B-4,  M-B-5 and M-B-6,  such  Lower  REMIC
Interests shall only correspond to the portion  supported by Pool II). The Lower
REMIC Interest  L-II-PO  corresponds to the Middle REMIC  Interest  M-I-PO.  The
Lower REMIC Interest  L-III-A-1,  Lower REMIC L-III-A-2 and Lower REMIC Interest
L-III-ZZZ  shall be  Corresponding  Classes  to these  classes  of Middle  REMIC
Interests:  M-III-A-1,  M-III-A-2,  M-B-1,  M-B-2, M-B-3, M-B-4, M-B-5 and M-B-6
(provided that with respect to M-B-1, M-B-2, M-B-3, M-B-4, M-B-5 and M-B-6, such
Lower REMIC  Interests  shall only  correspond to the portion  supported by Pool
III).

         "L1 Interests" refers to the L-I-A-1 Lower REMIC Interest, the L-II-A-1
Lower REMIC  Interests and the L-III-A-1 Lower REMIC  Interests.  "L2 Interests"
refers to the L-I-A-2 Lower REMIC  Interest,  the L-II-A-2  Lower REMIC Interest
and the L-III-A-2 Lower REMIC Interest.  "LZZZ Interests"  refers to the L-I-ZZZ
Lower REMIC Interest,  the L-II-ZZZ Lower REMIC Interest and the L-III-ZZZ Lower
REMIC Interest. "LPO Interests" refer to the L-I-PO Lower REMIC Interest and the
L-II-PO Lower REMIC  Interest.  Each L1 Interest shall have a principal  balance
initially  equal to 0.9% of the Group  Subordinate  Amount of its  corresponding
Mortgage Pool. Each L2 Interest shall have a principal  balance  initially equal
to 0.1% of the Group Subordinate Amount of its corresponding  Mortgage Pool. The
initial  principal  balance of each LZZZ Interest  shall equal the excess of the
Pool Principal  Balance of its  corresponding  Mortgage Pool over the sum of (i)
the  initial   principal   balances  of  the  L1  Interests   and  L2  Interests
corresponding  to such Mortgage  Pool, and (ii) the portion of the LPO Interest,
if any.  attributable  to the  Discount  Mortgage  Loans  in the  Mortgage  Pool
corresponding to such LZZZ Interest.

                                       50
<PAGE>

         Unless a Cross-over Situation (as defined below) exists,  principal and
Realized  Losses  arising with respect to each  Mortgage Pool shall be allocated
first to cause the L1 and L2 Interests  corresponding  to such  Mortgage Pool to
equal 0.9% and 0.1% of the Group Subordinate  Amount of such Mortgage Pool as of
such  Distribution  Date (after  distributions  of principal  and  allocation of
Realized Losses are made) and all excess  principal and Realized Losses shall be
allocated to the LZZZ Interest  corresponding to such Mortgage Pool. A L1, L2 or
LZZZ Interest that is allocated principal on any Distribution Date shall receive
such  principal,  and have its principal  balance  reduced by the amount of such
principal,  on such Distribution Date. Similarly, a L1, L2 or LZZZ Interest that
is allocated a Realized Loss on any  Distribution  Date shall have its principal
balance reduced by the amount of such Realized Loss on such Distribution Date.

         A  "Cross-over  Situation"  exists if on any  Distribution  Date (after
taking into account  distributions  of  principal  and  allocations  of Realized
Losses on such Distribution  Date) the L1 and L2 Interests  corresponding to any
Mortgage Pool are in the aggregate less than 1% of the Group Subordinate  Amount
of the  corresponding  Mortgage  Pool. If a Cross-over  Situation  exists on any
Distribution  Date, and the weighted average interest rate of the outstanding L1
and L2 Interests is less than the Pass-Through Rate for any Class of Subordinate
Certificates  for the  following  Distribution  Date,  a Principal  Reallocation
Payment (as defined below) shall be made  proportionately  to the outstanding L1
Interests prior to any other  distributions of principal from each such Mortgage
Pool so that the Calculation Rate equals the Pass-Through Rate for each Class of
Subordinate  Certificates.  If a Cross-over Situation exists on any Distribution
Date,  and the weighted  average rate of the  outstanding L1 and L2 Interests is
greater than the Pass-Through Rate for any Class of Subordinate Certificates for
the following  Distribution Date, a Principal Reallocation Payment shall be made
proportionately to the outstanding L2 Interests prior to any other distributions
of principal  from each such Mortgage Pool so that the  Calculation  Rate equals
the Pass-Through Rate for each Class of Subordinate  Certificates.  A "Principal
Reallocation  Payment" is a distribution of the minimum amount of principal that
causes the  Calculation  Rate (as defined below) with respect to the outstanding
L1 and L2 Interests to equal the Pass-Through Rate for each Class of Subordinate
Certificates.  The "Calculation Rate" shall equal the product of (i) 10 and (ii)
the weighted  average  interest  rate of the  outstanding  L1 and L2  Interests,
treating each L1 Interest as capped at zero or reduced by a fixed  percentage of
100% of the interest  accruing on such class.  Principal  Reallocation  Payments
shall be made from principal received on the Mortgage Loans from a Mortgage Pool
and shall also consist of a proportionate allocation of Realized Losses from the
Mortgage Loans of a Mortgage Pool. For purposes of making Principal Reallocation
Payments,  to the extent  that the  principal  received  during  the  applicable
collection  period from the related  Mortgage Pool or Mortgage Pools and related
Realized Losses are  insufficient to make the necessary  reduction of principal,
then  interest  shall accrue on the LZZZ Interest (and be added to its principal
balance) of the related  Mortgage Pool or Mortgage  Pools to allow the necessary
Principal  Reallocation  Payment to be made. The Calculation Rate is designed to
always equal the Pass-Through Rate of each Class of Subordinated Certificates.

         If a Cross-over  Situation exists, the aggregate  principal balances of
the  outstanding  L1 and L2 Interests of all of the Mortgage  Pools shall not be
reduced below one percent of the aggregate Pool Principal  Balance of all of the
Mortgage  Pools for the  following  Distribution  Date in  excess of the  Senior
Certificates  as of the related  Distribution  Date (after  taking into  account
distributions   of  principal  and   allocations  of  Realized  Losses  on  such
Distribution  Date). To the extent this limitation  prevents the distribution of
principal  to the L1 and L2  Interests  of a Mortgage  Pool and the related LZZZ
Interest  has already  been  reduced to zero,  such excess  principal  from such
Mortgage  Pool  shall  be paid  proportionately  to the  LZZZ  Interests  of the
Mortgage  Pool or Mortgage  Pools whose  aggregate L1 and L2 Interests  are less
than one percent of the related Group Subordinate  Amount. Any such shortfall as
a result of the Mortgage  Pool or Mortgage  Pools  receiving  the extra  payment
having a  Designated  Mortgage  Pool  Rate (as  defined  below)  lower  than the
Designated  Mortgage Pool Rate of the Mortgage Pool or Mortgage Pools from which
the payment was  reallocated  shall be treated as a Realized  Loss and if excess
arises as a result of the Mortgage Pool  receiving  the extra  payment  having a
Designated  Mortgage  Pool Rate  higher  than the  Mortgage  Pool from which the
payment was  reallocated it shall  reimburse the Middle REMIC for prior Realized
Losses.

                                       51
<PAGE>

The Class  L-I-PO  Interest  shall be entitled to receive the Class PO Principal
Distribution Amount for Pool I.

The Class L-II-PO  Interest  shall be entitled to receive the Class PO Principal
Distribution Amount for Pool II.

<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
     Middle                                                              Corresponding Class or Interest
 REMIC Interest        Middle REMIC         Middle REMIC Interest      -----------------------------------
   or Residual       Interest Balance               Rate                    Interest            Principal
-------------------------------------------------------------------------------------------------------------
<S>                <C>                              <C>                   <C>                  <C>
M-I-A-1            $   222,772,000.00               5.00%                     I-A-1               I-A-1
-------------------------------------------------------------------------------------------------------------
M-I-A-2            $    55,693,000.00               7.50%                 I-A-2, I-A-3            I-A-2
-------------------------------------------------------------------------------------------------------------
M-I-A-4            $    31,205,000.00               5.50%                     I-A-4               I-A-4
-------------------------------------------------------------------------------------------------------------
M-I-A-5            $     4,369,000.00               5.50%                     I-A-5               I-A-5
-------------------------------------------------------------------------------------------------------------
M-I-A-6            $    20,000,000.00               5.50%                     I-A-6               I-A-6
-------------------------------------------------------------------------------------------------------------
M-I-A-7            $     1,150,000.00               5.50%                     I-A-7               I-A-7
-------------------------------------------------------------------------------------------------------------
M-I-A-8            $     1,795,000.00               5.50%                     I-A-8               I-A-8
-------------------------------------------------------------------------------------------------------------
M-I-A-RU           $           100.00               5.50%                  RU Interest         RU Interest
-------------------------------------------------------------------------------------------------------------
M-I-PO             $       705,524.82                N/A                       N/A                I-A-PO
-------------------------------------------------------------------------------------------------------------
M-II-A-1           $    23,920,000.00               5.00%                    II-A-1               II-A-1
-------------------------------------------------------------------------------------------------------------
M-II-PO            $        29,160.33                N/A                       N/A               II-A-PO
-------------------------------------------------------------------------------------------------------------
M-III-A-1          $    79,108,000.00               5.50%                    III-A-1             III-A-1
-------------------------------------------------------------------------------------------------------------
M-III-A-2          $     4,549,000.00               5.50%                    III-A-2             III-A-2
-------------------------------------------------------------------------------------------------------------
M-B-1              $     8,603,000.00                (1)                       B-1                 B-1
-------------------------------------------------------------------------------------------------------------
M-B-2              $     4,186,000.00                (1)                       B-2                 B-2
-------------------------------------------------------------------------------------------------------------
M-B-3              $     2,325,000.00                (1)                       B-3                 B-3
-------------------------------------------------------------------------------------------------------------
M-B-4              $     1,861,000.00                (1)                       B-4                 B-4
-------------------------------------------------------------------------------------------------------------
M-B-5              $     1,627,000.00                (1)                       B-5                 B-5
-------------------------------------------------------------------------------------------------------------
M-B-6              $     1,163,584.52                (1)                       B-6                 B-6
-------------------------------------------------------------------------------------------------------------
RM                 $             0.00                N/A                       N/A                 N/A
-------------------------------------------------------------------------------------------------------------
Total              $   465,061,369.67
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Middle REMIC Interest Rate for the Middle REMIC Interest  M-B-1,  Middle
REMIC Interest M-B-2,  Middle REMIC Interest M-B-3, Middle REMIC Interest M-B-4,
Middle  REMIC  Interest  M-B-5,  Middle  REMIC  Interest  M-B-6  shall equal the
Calculation Rate as defined in this Section 2.7. The  Pass-Through  Rate on each
Class of Subordinated Certificates is variable and will be equal to the weighted
average of the Middle  REMIC  Interest  Rates on Middle  REMIC  Interest  M-B-1,
Middle REMIC Interest M-B-2,  Middle REMIC Interest M-B-3, Middle REMIC Interest
M-B-4, Middle REMIC Interest M-B-5, Middle REMIC Interest M-B-6, weighted on the
basis of the principal balance of each such Middle REMIC Interest.

         On each  Distribution  Date Available  Funds shall be distributed  with
respect to the Middle REMIC Interests in a manner such that:

         (a)  interest  accrued,  if  any,  on each  Middle  REMIC  Interest  is
              distributed with respect to each such Middle REMIC Interest in the
              same manner that Accrued Certificate  Interest is distributed with
              respect to the  Corresponding  Class or  Classes  of  Certificates
              pursuant to Section 4.2; and

                                       53
<PAGE>

         (b)  principal is distributed  (and Realized Losses shall be allocated)
              with respect to each such Middle REMIC Interest in the same manner
              that principal is distributed  (and Realized  Losses is allocated)
              with respect to the Corresponding Class or Classes of Certificates
              pursuant to Section 4.2 and Section 4.4.

         The foregoing REMIC structure is intended to cause all of the cash from
the  Mortgage  Loans to flow  through to the Upper REMIC as cash flow on a REMIC
regular interest, without creating any shortfall-actual or potential (other than
for  credit  losses)  to any REMIC  regular  interest.  To the  extent  that the
structure is believed to diverge from such  intention  the Trustee shall resolve
ambiguities to accomplish such result and shall to the extent necessary  rectify
any  drafting   errors  or  seek   clarification   to  the   structure   without
Certificateholder  approval (but with  guidance of counsel) to  accomplish  such
intention.

          SECTION 2.8  Covenants of the Master Servicer.

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

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

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

                                  ARTICLE III
                 ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

          SECTION 3.1  Master Servicer to Service Mortgage Loans.

         For and on behalf of the Certificateholders,  the Master Servicer shall
service and administer  the Mortgage  Loans in accordance  with the terms of (i)
the Servicing  Rights  Transfer and  Subservicing  Agreement,  pursuant to which
First  Tennessee  Mortgage  Services,   Inc.  engaged  the  Master  Servicer  to
subservice the Mortgage  Loans,  (ii) this Agreement and (iii) the customary and
usual standards of practice of prudent mortgage loan servicers; provided that if
there is a  conflict  between  the  terms  of the  Servicing  Agreement  and the
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

                                       54
<PAGE>

other  conversion  of the  ownership  of the  Mortgaged  Property  securing  any
Mortgage Loan;  provided that the Master Servicer shall not take any action that
is  inconsistent  with or  prejudices  the  interests  of the Trust  Fund or the
Certificateholders  in any  Mortgage  Loan or the  rights and  interests  of the
Depositor,  the Trustee and the  Certificateholders  under this  Agreement.  The
Master  Servicer shall  represent and protect the interests of the Trust Fund in
the same manner as it protects its own  interests  in mortgage  loans in its own
portfolio in any claim,  proceeding or litigation regarding a Mortgage Loan, and
shall not make or permit any  modification,  waiver or amendment of any Mortgage
Loan which would cause any REMIC created hereunder to fail to qualify as a REMIC
or result in the imposition of any tax under Section  860F(a) or Section 860G(d)
of the Code.  Without  limiting  the  generality  of the  foregoing,  the Master
Servicer,  in its own name or in the name of the Depositor  and the Trustee,  is
hereby  authorized  and  empowered by the  Depositor  and the Trustee,  when the
Master Servicer believes it appropriate in its reasonable  judgment,  to execute
and deliver, on behalf of the Trustee, the Depositor,  the Certificateholders or
any of them, any and all  instruments of  satisfaction  or  cancellation,  or of
partial or full release or discharge and all other comparable instruments,  with
respect to the Mortgage Loans, and with respect to the Mortgaged Properties held
for the benefit of the Certificateholders. The Master Servicer shall prepare and
deliver to the Depositor and/or the Trustee such documents  requiring  execution
and delivery by either or both of them as are necessary or appropriate to enable
the Master  Servicer to service and  administer the Mortgage Loans to the extent
that the Master  Servicer is not permitted to execute and deliver such documents
pursuant  to the  preceding  sentence.  Upon  receipt  of  such  documents,  the
Depositor  and/or the Trustee shall  execute such  documents and deliver them to
the Master Servicer.  The Master Servicer further is authorized and empowered by
the Trustee,  on behalf of the  Certificateholders  and the Trustee,  in its own
name  or in the  name  of 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(R) System,  or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Trustee and the  Certificateholders or any of them, any and all
instruments of assignment and other comparable  instruments with respect to such
assignment or re-recording of a Mortgage in the name of MERS,  solely as nominee
for the Trustee and its successors and assigns.

         In accordance with the standards of the preceding paragraph, the Master
Servicer  shall  advance  or cause to be  advanced  funds as  necessary  for the
purpose of  effecting  the  payment of taxes and  assessments  on the  Mortgaged
Properties,  which  advances  shall be  reimbursable  in the first instance from
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.

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

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

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

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

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

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<PAGE>

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

              (ii)    all payments on account of interest on the Mortgage  Loans
                      in the related  Mortgage  Pool,  net of the related Master
                      Servicing Fee, any Prepayment  Interest Excess and, for so
                      long as First Horizon is the Master Servicer, any Retained
                      Yield;

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

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

              (v)     any  amounts  required  to  be  deposited  by  the  Master
                      Servicer in respect of the related  Mortgage Pool pursuant
                      to Section 3.9(b) and 3.9(d);

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

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

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

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

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

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         (c)  The  Trustee  shall  establish  and  maintain,  on  behalf  of the
              Certificateholders,  the  Distribution  Account.  The Distribution
              Account shall consist of three separate subaccounts, each of which
              shall relate to a particular  Mortgage  Pool.  The Trustee  shall,
              promptly upon  receipt,  deposit in the  Distribution  Account and
              retain therein the following:

              (i)     the aggregate  amount  remitted by the Master  Servicer to
                      the  Trustee in respect of a  Mortgage  Pool  pursuant  to
                      Section 3.8(a)(ix);

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

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

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

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

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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.

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<PAGE>

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

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

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

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

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

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

              (i)     to the  extent  not  previously  retained  by  the  Master
                      Servicer,  to pay to First Horizon the Retained  Yield and
                      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 in respect of the related
                      Mortgage  Pool,  such right of  reimbursement  pursuant to
                      this subclause  (ii) being limited to amounts  received on
                      the Mortgage  Loan(s) in respect of which any such Advance
                      was made;

              (iii)   to reimburse  the Master  Servicer for any  Nonrecoverable
                      Advance previously made in respect of the related Mortgage
                      Pool;

              (iv)    to reimburse the Master Servicer for Insured Expenses from
                      the related  Insurance  Proceeds in respect of the related
                      Mortgage Pool;

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<PAGE>

              (v)     to  reimburse  the Master  Servicer  for (a)  unreimbursed
                      Servicing  Advances  in  respect of the  related  Mortgage
                      Pool,  the  Master   Servicer's   right  to  reimbursement
                      pursuant to this clause (a) with  respect to any  Mortgage
                      Loan being  limited to amounts  received on such  Mortgage
                      Loan(s) which  represent  late  recoveries of the payments
                      for which such  advances were made pursuant to Section 3.1
                      or Section 3.6 and (b) for unpaid Master Servicing Fees as
                      provided in Section 3.11 hereof;

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

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

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

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

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

              The Master Servicer  shall keep and maintain  separate accounting,
         on a Mortgage  Loan-by-Mortgage Loan basis  and on a Mortgage  Pool-by-
         Mortgage Pool  basis,  for  the  purpose  of  justifying any withdrawal
         from the  Certificate  Account  pursuant to such subclauses (i),  (ii),
         (iv), (v) and (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.

                  The Master  Servicer shall  distribute the Retained  Yield, if
         any, to First Horizon on each Distribution  Account Deposit Date during
         the term of this Agreement.

         (b)  The Trustee shall withdraw funds from the applicable subaccount of
              the  Distribution   Account  for   distributions  to  the  related
              Certificateholders  in the manner specified in this Agreement (and
              to withhold from the amounts so withdrawn, the amount of any taxes
              that it is authorized to withhold  pursuant to the last  paragraph
              of Section 8.11).  In addition,  the Trustee may (and with respect
              to clause (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:

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

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

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

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

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

         (a)  The  Master  Servicer  shall  cause  to be  maintained,  for  each
              Mortgage  Loan,  hazard  insurance  with  extended  coverage in an
              amount  that is at least  equal to the  lesser of (i) the  maximum
              insurable value of the improvements securing such Mortgage Loan or
              (ii) the greater of (y) the outstanding  principal  balance of the
              Mortgage  Loan and (z) an amount  such that the  proceeds  of such
              policy shall be  sufficient  to prevent the  Mortgagor  and/or the
              mortgagee from becoming a co-insurer. Each such policy of standard
              hazard   insurance   shall  contain,   or  have  an   accompanying
              endorsement  that  contains,  a  standard  mortgagee  clause.  Any
              amounts  collected by the Master  Servicer under any such policies
              (other than the amounts to be applied to the restoration or repair
              of the  related  Mortgaged  Property  or amounts  released  to the
              Mortgagor  in  accordance  with  the  Master   Servicer's   normal
              servicing   procedures)  shall  be  deposited  in  the  applicable
              subaccount of the  Certificate  Account.  Any cost incurred by the
              Master  Servicer in maintaining  any such insurance 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
              applicable  subaccount of the  Certificate  Account the amount not
              otherwise  payable  under  the  blanket  policy  because  of  such
              deductible  clause.  In connection  with its  activities as Master
              Servicer of the  Mortgage  Loans,  the Master  Servicer  agrees to
              present,  on behalf of itself, the Depositor,  and the Trustee for
              the  benefit  of the  Certificateholders,  claims  under  any such
              blanket policy.

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

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

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

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

                                       64
<PAGE>

         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.

         (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.

                                       65
<PAGE>

         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.

         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.

                                       66
<PAGE>

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

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

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

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<PAGE>

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

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

         SECTION 3.12  Trustee to Cooperate; Release of Mortgage Files.

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

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<PAGE>

         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.

                                       69
<PAGE>

         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) Retained Yield,
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;  provided that in the
event the Master  Servicer is  terminated  pursuant to Section 7.1, the Retained
Yield shall be payable to First Horizon Home Loan  Corporation in its individual
capacity and shall not be payable to the Trustee or any  successor to the Master
Servicer.  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.

         SECTION 3.16  Annual Statement as to Compliance.

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

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

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

         SECTION 3.18  Errors and Omissions Insurance; Fidelity Bonds.

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

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

         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 Distribution.

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

              (i)     to the  Classes  of  Senior  Certificates  of the  related
                      Certificate  Group entitled to  distributions of interest,
                      the  Accrued  Certificate  Interest on each such Class for
                      such Distribution Date, any shortfall in available amounts
                      being  allocated  among such Classes in  proportion to the
                      amount   of   Accrued   Certificate   Interest   otherwise
                      distributable  thereon;  provided,  however,  that on each
                      Distribution Date through the Accretion  Termination Date,
                      such amounts with respect to the Accrual Certificates will
                      not be distributed to such Certificates  under this clause
                      (i) but will  instead  be added to the  Class  Certificate
                      Balance  thereof and  distributed  in accordance  with the
                      priorities set forth below in Section 4.2(b);

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              (ii)    to the  Classes  of  Senior  Certificates  of the  related
                      Certificate  Group entitled to  distributions of interest,
                      any  Accrued   Certificate   Interest  thereon   remaining
                      undistributed  from previous  Distribution  Dates,  to the
                      extent  of  remaining  Available  Funds  from the  related
                      Mortgage  Pool,  any shortfall in available  amounts being
                      allocated  among such Classes in  proportion to the amount
                      of   such   Accrued    Certificate    Interest   remaining
                      undistributed  for each such  Class for such  Distribution
                      Date;  provided,  however,  that on each Distribution Date
                      through the Accretion  Termination Date, such amounts with
                      respect   to  the   Accrual   Certificates   will  not  be
                      distributed  to such  Certificates  under this clause (ii)
                      but will instead be added to the Class Certificate Balance
                      thereof,  to the extent not  previously  added pursuant to
                      clause (i) above,  and  distributed in accordance with the
                      priorities set forth below in Section 4.2(b);

              (iii)   (1) to the  Classes  of Senior Certificates of the related
                      Certificate  Group entitled to distributions of principal,
                      other than the Class PO Certificates,  in reduction of the
                      Class  Certificate  Balances  thereof,  to the  extent  of
                      remaining  Available Funds from the related Mortgage Pool,
                      the  related  Senior  Optimal  Principal  Amount  for such
                      Distribution  Date,  in the  order of  priority  set forth
                      below in Sections 4.2(c) and (d), as applicable, until the
                      respective  Class  Certificate  Balances thereof have been
                      reduced  to zero,  and (2)  concurrently  with the Group I
                      Senior Certificates,  from the Available Funds for Pool I,
                      to the Class I-A-PO  Certificates,  and concurrently  with
                      the Group II Senior Certificates, from the Available Funds
                      for  Pool  II,  to the  Class  II-A-PO  Certificates,  the
                      applicable Class PO Principal Distribution Amount for such
                      Distribution Date;

              (iv)    to the  Class PO  Certificates,  the  applicable  Class PO
                      Deferred  Amount  for such  Distribution  Date,  until the
                      Class  Certificate  Balance  thereof  has been  reduced to
                      zero;   provided  that,  (1)  on  any  Distribution  Date,
                      distributions  pursuant to this Section  4.2(a)(iv)  shall
                      not  exceed the  related  Subordinated  Optimal  Principal
                      Amount for the Mortgage Pools for such Distribution  Date,
                      (2)  such   distributions   shall  not  reduce  the  Class
                      Certificate  Balances of the Class PO Certificates and (3)
                      no distribution  will be made in respect of the applicable
                      Class PO Deferred Amount after the Cross-over Date;

              (v)     to the Class B-1 Certificates,  to the extent of remaining
                      Available Funds for the Mortgage Pools, but subject to the
                      prior payment of amounts  described  under Section 4.2(i),
                      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-2 Certificates,  to the extent of remaining
                      Available Funds for the Mortgage Pools, but subject to the
                      prior payment of amounts  described  under Section 4.2(i),
                      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;

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<PAGE>

              (vii)   to the Class B-3 Certificates, to the  extent of remaining
                      Available Funds for the Mortgage Pools, but subject to the
                      prior payment of amounts  described  under Section 4.2(i),
                      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-4 Certificates, to the extent of  remaining
                      Available Funds for the Mortgage Pools, but subject to the
                      prior payment of amounts  described  under Section 4.2(i),
                      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;

              (ix)    to the Class B-5 Certificates,  to the extent of remaining
                      Available Funds for the Mortgage Pools, but subject to the
                      prior payment of amounts  described  under Section 4.2(i),
                      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

              (x)     to the Class B-6 Certificates,  to the extent of remaining
                      Available Funds for the Mortgage Pools, but subject to the
                      prior payment of amounts  described  under Section 4.2(i),
                      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)  On each Distribution Date prior to the Accretion  Termination Date
              for  the  Accrual  Certificates,  before  distributions  are  made
              pursuant  to the  following  paragraphs,  an  amount  equal to the
              Accrual Amount for the Accrual  Certificates  will be added to the
              Class  Certificate  Balance thereof and will be distributed to the
              following  Classes of Certificates  (prior to giving effect to the
              distributions  in Section  4.2(a))  in  reduction  of their  Class
              Certificate  Balances,  sequentially,  in the  following  order of
              priority:

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<PAGE>

              (i)     concurrently,   to  the  Class   I-A-1  and  Class   I-A-2
                      Certificates,   pro  rata,   until  the  respective  Class
                      Certificate  Balances  thereof  have each been  reduced to
                      zero; and

              (ii)    to  the  Class   I-A-5   Certificates,   until  the  Class
                      Certificate Balance thereof has been reduced to zero.

         (c)  Amounts allocated to the Group I Senior Certificates  pursuant  to
              Section 4.2(a)(iii) above will be distributed sequentially, in the
              following order of priority:

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

              (ii)    concurrently as follows:

                      (1) 6.2762623745%   of  the   remaining   Senior   Optimal
                          Principal  Amount  for  Pool I for  such  Distribution
                          Date, concurrently, to the Class I-A-6 and Class I-A-7
                          Certificates,  pro rata,  until their respective Class
                          Certificate  Balances  have each been reduced to zero;
                          and

                      (2) 93.7237376255%   of  the  remaining   Senior   Optimal
                          Principal  Amount  for  Pool I for  such  Distribution
                          Date,  to the Class I-A-1,  Class I-A-2,  Class I-A-4,
                          Class  I-A-5  and  Class  I-A-8  Certificates,  in the
                          following order of priority;

                              (A)  concurrently,  to the  Class  I-A-4 and Class
                          I-A-8 Certificates, pro rata, in an amount up to their
                          NAS   Principal    Distribution    Amount   for   such
                          Distribution   Date,   until  their  respective  Class
                          Certificate Balances have each been reduced to zero;

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

                              (C) to the  Class  I-A-5  Certificates,  until the
                          Class Certificate  Balance thereof has been reduced to
                          zero; and

                              (D)  concurrently,  to the  Class  I-A-4 and Class
                          I-A-8 Certificates,  pro rata, without regard to their
                          NAS   Principal    Distribution    Amount   for   such
                          Distribution   Date,   until  their  respective  Class
                          Certificate Balances have each been reduced to zero.

         (d)  Amounts  allocated  to the Group III Senior Certificates  pursuant
              to Section  4.2(a)(iii) above will be distributed  concurrently to
              the Class III-A-1 and Class III-A-2 Certificates,  pro rata, until
              their  respective  Class  Certificate  Balances  have   each  been
              reduced to zero.

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<PAGE>

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

         (f)  On and after the Cross-Over Date, the amount  distributable to the
              Senior  Certificates of the related  Certificate Group pursuant to
              Section  4.2(a)(iii)  for the related  Distribution  Date shall be
              allocated among the related Classes of Senior  Certificates (other
              than the related Class PO 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 Sections 4.2(c) and (d).

         (g)  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  (v)
              through (x) 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)(iii).

         (h)  In the  event  that in any  calendar  month  the  Master  Servicer
              recovers  an amount (an  "Unanticipated  Recovery")  in respect of
              principal of a Mortgage Loan which had  previously  been allocated
              as a  Realized  Loss to any  Class  of  Certificates  pursuant  to
              Section  4.4,  on the  Distribution  Date in the  next  succeeding
              calendar  month,  the Trustee  shall  withdraw  the  Unanticipated
              Recovery from the Distribution Account and sequentially  increase,
              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
              (h).  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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<PAGE>

              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 (i) with  respect to the Class PO
         Certificates,  based on the  applicable  PO Percentage of the principal
         portion of the Realized Loss previously  allocated thereto with respect
         to such Mortgage  Loan (or all Mortgage  Loans for purposes of the next
         to last sentence of the preceding paragraph),  and (ii) with respect to
         any  other  Class of  Certificates,  based on its pro  rata  share  (in
         proportion to the Class  Certificate  Balances  thereof with respect to
         such  Distribution  Date) of the  applicable  Non-PO  Percentage of the
         principal  portion of any such Realized Loss previously  allocated with
         respect to such Mortgage Loan (or Loans);  provided  however,  that (i)
         the share of an  Unanticipated  Recovery  allocable to a Principal Only
         Certificate  with  respect to any  Mortgage  Loan (or  Loans)  shall be
         reduced  by  the  applicable  PO  Percentage  of the  aggregate  amount
         previously  distributed  to such Class in respect of such Mortgage Loan
         (or Loans) and (ii) the amount by which the  distributions to the Class
         PO  Certificates  have  been so  reduced  shall be  distributed  to the
         Classes  of  Certificates  described  in clause  (ii) of the  preceding
         paragraph in the same  proportion as described in such clause (ii). For
         purposes  of the  preceding  sentence,  any  Class PO  Deferred  Amount
         distributable to a Class PO Certificate on previous  Distribution Dates
         shall be deemed to have been allocated in respect of the Mortgage Loans
         as to which the  applicable PO  Percentage of the principal  portion of
         Realized  Losses has  previously  been allocated to such Class on a pro
         rata basis (based on the amount of Realized Losses so allocated).

              (i)     On any  Distribution  Date on which any Certificate  Group
                      constitutes  an  Undercollateralized  Group,  all  amounts
                      otherwise  distributable  as principal on the Subordinated
                      Certificates,  in reverse order of priority (or, following
                      the Cross-over  Date, such other amounts  described in the
                      immediately  following  sentence),  will be distributed as
                      principal   to   the   Senior    Certificates    of   such
                      Undercollateralized   Group   (other  than  the  Class  PO
                      Certificates)  in accordance with the priorities set forth
                      in Section 4.2(a)(iii),  until the total Class Certificate
                      Balance  of  such  Senior  Certificates  equals  the  Pool
                      Principal  Balance  of the  related  Mortgage  Pool  (such
                      distribution,  an "Undercollateralization  Distribution").
                      If the Senior  Certificates of a Certificate  Group (other
                      than   the   Class   PO   Certificates)    constitute   an
                      Undercollateralized   Group  on  any   Distribution   Date
                      following  the  Cross-over  Date,   Undercollateralization
                      Distributions   will  be  made  from  the  excess  of  the
                      Available  Funds for the other  Mortgage Pool (or Mortgage
                      Pools)  remaining  after  all  required  amounts  for that

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<PAGE>

                      Distribution  Date have  been  distributed  to the  Senior
                      Certificates   of  the   other   Certificate   Group   (or
                      Certificate    Groups)    (other   than   the   Class   PO
                      Certificates).  In  addition,  the  amount  of any  unpaid
                      Accrued   Certificate   Interest   with   respect   to  an
                      Undercollateralized   Group  on  any   Distribution   Date
                      (including  any  Accrued  Certificate   Interest  for  the
                      related  Distribution  Date)  will be  distributed  to the
                      Senior  Certificates  of  the  Undercollateralized   Group
                      (other  than  the  Class  PO  Certificates)  prior  to the
                      payment of any  Undercollateralization  Distributions from
                      amounts  otherwise   distributable  as  principal  on  the
                      Subordinated  Certificates,  in reverse  order of priority
                      (or,  following  the  Cross-over  Date, as provided in the
                      preceding sentence).  Except as provided otherwise in this
                      Section 4.2(i),  no distribution of principal will be made
                      to any  Class  of  Subordinated  Certificates  until  each
                      Undercollateralized      Group      is      no      longer
                      undercollateralized.  If more than one Undercollateralized
                      Group  on  any   Distribution   Date  is  entitled  to  an
                      Undercollateralization          Distribution,         such
                      Undercollateralization  Distribution  shall  be  allocated
                      among the  Undercollateralized  Groups,  pro rata,  on the
                      basis  of  the  amount  by  which  the   aggregate   Class
                      Certificate  Balance of the related Senior Certificates is
                      greater than the aggregate Stated Principal Balance of the
                      Mortgage Loans in the related Mortgage Pools. If more than
                      one Certificate Group on any Distribution Date is required
                      to  make  an  Undercollateralization  Distribution  to  an
                      Undercollateralized    Group,    the   payment   of   such
                      Undercollateralization  Distributions  shall be  allocated
                      among such Certificate  Groups,  pro rata, on the basis of
                      the  aggregate  Class  Certificate  Balance of the related
                      Senior Certificates.

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

         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.

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<PAGE>

         (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.

         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)  The  principal  portion of each  Realized  Loss with  respect to a
              Mortgage Pool shall be allocated as follows:

              (i)     with respect to any  Distribution  Date, the applicable PO
                      Percentage of the  principal  portion of any such Realized
                      Loss on a Discount  Mortgage  Loan in such  Mortgage  Pool
                      shall be allocated to the applicable Class PO Certificates
                      until  the  Class  Certificate  Balance  thereof  has been
                      reduced to zero; and

              (ii)    prior  the  Cross-over   Date,   the   applicable   Non-PO
                      Percentage of the  principal  portion of any such Realized
                      Loss  (except   Excess   Losses)  (or  the  applicable  PO
                      Percentage  thereof,  in the case of the related  Class PO
                      Certificates) shall be allocated in the following order of
                      priority:

                      first,  to the  Class  B-6  Certificates  until  the Class
                      Certificate Balance thereof has been reduced to zero;

                      second,  to the  Class  B-5  Certificates  until the Class
                      Certificate Balance thereof has been reduced to zero;

                      third,  to the  Class  B-4  Certificates  until  the Class
                      Certificate Balance thereof has been reduced to zero;

                      fourth,  to the  Class  B-3  Certificates  until the Class
                      Certificate Balance thereof has been reduced to zero;

                      fifth,  to the  Class  B-2  Certificates  until  the Class
                      Certificate Balance thereof has been reduced to zero;

                      sixth,  to the  Class  B-1  Certificates  until  the Class
                      Certificate Balance thereof has been reduced to zero; and

                      seventh,  to the  Classes  of Senior  Certificates  of the
                      related   Certificate  Group  (other  than  the  Class  PO
                      Certificates),  pro rata, in  accordance  with their Class
                      Certificate Balances.

         (c)  Commencing  on  the  Cross-over   Date,   the  applicable   Non-PO
              Percentage  of the  principal  portion of any Realized  Loss for a
              Mortgage Pool will be allocated among the  outstanding  classes of
              Senior  Certificates of the related  Certificate Group entitled to
              principal   distributions   (other   than  (i)  the  Class   I-A-4
              Certificates,   as  long  as  the  Class  I-A-8  Certificates  are
              outstanding,  (ii) the Class  I-A-6  Certificates,  as long as the
              Class I-A-7  Certificates are outstanding,  and (iii) the Class PO
              Certificates),  pro  rata,  based  upon  their  Class  Certificate
              Balances.

         (d)  After the  Cross-over  Date,  the  principal  portion of  Realized
              Losses (other than Excess Losses) on the Mortgage Loans  allocable
              to the Class I-A-4 Certificates will instead be borne first by the
              Class I-A-8  Certificates  until its Class Certificate  Balance is
              reduced to zero (in addition to other Realized Losses allocated to
              the  Class  I-A-8  Certificates),  and  not  by  the  Class  I-A-4
              Certificates,  for so long as the Class Certificate Balance of the
              Class I-A-8 Certificates is greater than zero. In addition,  after
              the  Cross-over  Date,  the principal  portion of Realized  Losses
              (other than Excess Losses) on the Mortgage Loans  allocable to the
              Class I-A-6  Certificates will instead be borne first by the Class
              I-A-7 Certificates until its Class Certificate  Balance is reduced
              to zero (in  addition to other  Realized  Losses  allocated to the
              Class   I-A-7   Certificates),   and  not  by  the   Class   I-A-6
              Certificates,  for so long as the Class Certificate Balance of the
              Class I-A-7 Certificates is greater than zero.

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<PAGE>

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

         (f)  Any Realized Losses allocated to a Class of Certificates  pursuant
              to  Section  4.4(b),  (c) or (d)  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 (f) shall be  accomplished  by reducing
              the Certificate  Principal Balances of the related Certificates on
              the related Distribution Date in accordance with Section 4.4(g).

         (g)  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. The aggregate amount
              of Realized Losses to be allocated to the Class PO Certificates on
              such  Distribution  Date will be taken into account in determining
              distributions  in respect of any Class PO Deferred Amount for such
              Distribution Date.

         (h)  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.

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

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<PAGE>

         SECTION 4.5  Reserved.

         SECTION 4.6  Monthly Statements to Certificateholders.

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

              (xiv)   the  aggregate  amount  of  Realized  Losses  incurred  in
                      respect  of  each   Mortgage  Pool  during  the  preceding
                      calendar month;

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

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

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

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

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

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<PAGE>

         (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.

         SECTION 4.7  [RESERVED]

         SECTION 4.8  [RESERVED]

         SECTION 4.9 Determination of Pass-Through Rates for LIBOR Certificates.

         (a)  On  each  Interest   Determination  Date  so  long  as  any  LIBOR
              Certificates are outstanding,  the Trustee will determine LIBOR on
              the basis of the British Bankers'  Association  ("BBA")  "Interest
              Settlement  Rate" for one-month  deposits in U.S. dollars as found
              on Telerate  page 3750 as of 11:00 a.m.  London time on each LIBOR
              Determination  Date.  "Telerate  Page 3750" means the display page
              currently so designated on the Bridge Telerate  Service  (formerly
              the Dow Jones  Markets)  (or such other page as may  replace  that
              page on that  service  for the  purpose of  displaying  comparable
              rates or prices).

         (b)  If LIBOR cannot be determined as provided in paragraph (a) of this
              Section 4.9, the Trustee  shall either (i) request each  Reference
              Bank inform the Trustee of the quotation offered by such Reference
              Bank's  principal London office for making one-month United States
              dollar deposits in leading banks in the London  interbank  market,
              as of 11:00 a.m. (London time) on such Interest Determination Date
              or (ii) in lieu of making any such request, rely on such Reference
              Bank  quotations  that appear at such time on the  Reuters  Screen
              LIBO  Page  (as  defined  in  the   International   Swap   Dealers
              Association  Inc.  Code  of  Standard  Wording,   Assumptions  and
              Provisions for Swaps, 1986 Edition) to the extent available.  With
              respect to Section 4.9(b)(i),  LIBOR for the next Interest Accrual
              Period  will  be  established  by the  Trustee  on  each  Interest
              Determination Date as follows:

              (i)     If  on  any  Interest   Determination  Date  two  or  more
                      Reference Banks provide such offered quotations, LIBOR for
                      the next Interest  Accrual  Period shall be the arithmetic
                      mean of such offered quotations  (rounding such arithmetic
                      mean upwards if necessary to the nearest whole multiple of
                      1/32%).

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<PAGE>

              (ii)    If on any Interest  Determination Date only one or none of
                      the  Reference  Banks  provides  such offered  quotations,
                      LIBOR  for the  next  Interest  Accrual  Period  shall  be
                      whichever is the higher of (i) LIBOR as  determined on the
                      previous Interest  Determination  Date or (ii) the Reserve
                      Interest  Rate.  The "Reserve  Interest Rate" shall be the
                      rate per annum which the Trustee  determines  to be either
                      (i) the arithmetic  mean (rounded  upwards if necessary to
                      the  nearest  whole  multiple  of 1/32%) of the  one-month
                      United  States  dollar  lending  rates  that New York City
                      banks selected by the Trustee are quoting, on the relevant
                      Interest  Determination  Date,  to  the  principal  London
                      offices  of at least two of the  Reference  Banks to which
                      such quotations are, in the opinion of the Trustee,  being
                      so  made,  or (ii)  in the  event  that  the  Trustee  can
                      determine no such  arithmetic  mean, the lowest  one-month
                      United  States  dollar  lending  rate  which New York City
                      banks selected by the Trustee are quoting on such Interest
                      Determination Date to leading European banks.

              (iii)   If on any  Interest  Determination  Date  the  trustee  is
                      required but is unable to determine  the Reserve  Interest
                      Rate in the manner provided in paragraph (b) above,  LIBOR
                      shall be LIBOR as  determined  on the  preceding  Interest
                      Determination Date.

         The Master  Servicer  shall  designate at least four  Reference  Banks.
Until all of the LIBOR  Certificates are paid in full, the Trustee will refer to
the four Reference  Banks  designated by the Master  Servicer to determine LIBOR
with respect to each Interest Determination Date. Each "Reference Bank" shall be
a  leading  bank  engaged  in  transactions   in  Eurodollar   deposits  in  the
international  Eurocurrency  market,  shall not control, be controlled by, or be
under common control with,  the Trustee and shall have an  established  place of
business in London.  If any such Reference Bank should be unwilling or unable to
act as such, the Master Servicer shall promptly appoint or cause to be appointed
another Reference Bank. The Trustee shall have no liability or responsibility to
any  Person  for (i)  the  selection  of any  Reference  Bank  for  purposes  of
determining  LIBOR or (ii) any inability of the Master  Servicer to designate at
least four Reference Banks.

         (c)  The  Pass-Through  Rate for each Class of LIBOR  Certificates  for
              each Interest Accrual Period shall be determined by the Trustee on
              each Interest Determination Date so long as the LIBOR Certificates
              are outstanding on the basis of LIBOR and the respective  formulae
              appearing in footnotes  corresponding to the LIBOR Certificates in
              the  table  relating  to  the   Certificates  in  the  Preliminary
              Statement.

         In determining LIBOR, any Pass-Through Rate for the LIBOR Certificates,
any Interest  Settlement  Rate, or any Reserve  Interest  Rate,  the Trustee may
conclusively rely and shall be protected in relying upon the offered  quotations
(whether  written,  oral or on the Dow Jones  Markets)  from the BBA  designated
banks,  the Reference Banks or the New York City banks as to LIBOR, the Interest
Settlement  Rate or the Reserve  Interest Rate, as  appropriate,  in effect from
time to time. The Trustee shall not have any liability or  responsibility to any
Person for (i) the  Trustee's  selection  of New York City banks for purposes of
determining  any  Reserve  Interest  Rate or (ii)  its  inability,  following  a
good-faith reasonable effort, to obtain such quotations from, the BBA designated
banks,  the  Reference  Banks or the New York City  banks or to  determine  such
arithmetic mean, all as provided for in this Section 4.9.

                                       85
<PAGE>

         (d)  The  establishment  of LIBOR  and each  Pass-Through  Rate for the
              LIBOR  Certificates  by the  Trustee  shall  (in  the  absence  of
              manifest error) be final,  conclusive and binding upon each Holder
              of a Certificate and the Trustee.

                                    ARTICLE V
                                THE CERTIFICATES

         SECTION 5.1  The Certificates.

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

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

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

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

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

         (a)  The  Trustee  shall  maintain,   or  cause  to  be  maintained  in
              accordance   with  the   provisions  of  Section  5.6  hereof,   a
              Certificate  Register for the Trust Fund in which,  subject to the
              provisions of 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.

                                       86
<PAGE>

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

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

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

         (b)  No  transfer  of a Private  Certificate  shall be made unless such
              transfer is made pursuant to an effective  registration  statement
              under the Securities Act and any applicable  state securities laws
              or is exempt from the registration requirements under said Act and
              such state  securities laws. In the event that a transfer is to be
              made in reliance  upon an exemption  from the  Securities  Act and
              such laws, in order to assure  compliance  with the Securities Act
              and such  laws,  the  Certificateholder  desiring  to effect  such
              transfer and such Certificateholder's prospective transferee shall
              each certify to the Trustee in writing the facts  surrounding  the
              transfer  in  substantially  the forms set forth in Exhibit I (the
              "Transferor   Certificate")   and  (i)   deliver   a   letter   in
              substantially  the  form  of  either  Exhibit  J (the  "Investment
              Letter") or Exhibit K (the "Rule 144A Letter") or (ii) there shall
              be  delivered to the Trustee at the expense of the  transferor  an
              Opinion of Counsel that such  transfer may be made  pursuant to an
              exemption from the Securities  Act. The Depositor shall provide to
              any Holder of a Private Certificate and any prospective transferee
              designated by any such Holder,  information  regarding the related
              Certificates and the Mortgage Loans and such other  information as
              shall be necessary to satisfy the  condition  to  eligibility  set
              forth in Rule  144A(d)(4)  for  transfer  of any such  Certificate
              without  registration thereof under the Securities Act pursuant to
              the registration  exemption provided by Rule 144A. The Trustee and
              the  Master   Servicer  shall  cooperate  with  the  Depositor  in
              providing  the Rule 144A  information  referenced in the preceding
              sentence,  including  providing to the Depositor such  information
              regarding the  Certificates,  the Mortgage Loans and other matters
              regarding the Trust Fund as the Depositor shall reasonably request
              to meet its obligation under the preceding  sentence.  Each Holder
              of a Private  Certificate  desiring to effect such transfer shall,
              and does hereby agree to, indemnify the Trustee and the Depositor,
              the Seller and the Master Servicer  against any liability that may
              result  if the  transfer  is  not so  exempt  or is  not  made  in
              accordance with such federal and state laws.

                                       87
<PAGE>

                  No transfer of any of the Class PO Certificates  shall be made
         unless  the  transferee  of  such  Certificate  (i) 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 or
         arrangement,  nor using the assets of any such plan or  arrangement  to
         effect  such  transfer,  (ii) any of the  Class PO  Certificates  being
         transferred have been subject to an  ERISA-Qualified  Underwriting,  or
         (iii) in the case of any Class PO  Certificates  being  transferred not
         satisfying clause (ii) and 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 or the Trust Fund,  addressed  to the Trustee to the effect
         that the purchase or holding of any such Class PO Certificates 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.

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

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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.

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

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

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

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

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              (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.

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

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         (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.

              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.

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         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.

         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.

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         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.

         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

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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  applicable  subaccount of the
Certificate Account.

         SECTION 6.4  Limitation on Resignation of Master Servicer.

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

                                  ARTICLE VII
                                     DEFAULT

         SECTION 7.1  Events of Default.

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

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

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

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

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

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

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

         If an Event of Default  described in clauses (i) to (v) of this Section
shall  occur,  then,  and in each and every such case,  so long as such Event of
Default  shall not have been  remedied,  the Trustee may, or at the direction of
the  Holders  of  Certificates  evidencing  not less than 66 2/3% of the  Voting
Rights evidenced by the Certificates,  the Trustee shall by notice in writing to
the Master  Servicer (with a copy to each Rating  Agency),  terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to
the  Mortgage  Loans  and the  proceeds  thereof,  other  than its  rights  as a
Certificateholder  hereunder. If an Event of Default described in clause (vi) of

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this Section shall occur, the Trustee shall immediately, by notice in writing to
the Master  Servicer (with a copy to each Rating  Agency),  terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to
the  Mortgage  Loans  and  proceeds   thereof,   other  than  its  rights  as  a
Certificateholder  hereunder. On and after the receipt by the Master Servicer of
such written notice,  all authority and power of the Master Servicer  hereunder,
whether with respect to the Mortgage  Loans or  otherwise,  shall pass to and be
vested in the Trustee or another  successor to the Master Servicer  appointed by
the Trustee  pursuant to Section 7.2. The Trustee,  in its capacity as successor
to the  Master  Servicer,  shall  thereupon  make any  Advance  which the Master
Servicer  failed to make  subject to Section 4.1  hereof.  The Trustee is hereby
authorized  and  empowered  to  execute  and  deliver,  on behalf of the  Master
Servicer,  as  attorney-in-fact  or  otherwise,  any and all documents and other
instruments,  and to do or  accomplish  all other  acts or things  necessary  or
appropriate  to effect the  purposes of such notice of  termination,  whether to
complete the transfer and  endorsement  or assignment of the Mortgage  Loans and
related  documents,  or  otherwise.  Unless  expressly  provided in such written
notice,  no such termination  shall affect any obligation of the Master Servicer
to pay amounts owed  pursuant to Article  VIII.  The Master  Servicer  agrees to
cooperate with the Trustee in effecting the termination of the Master Servicer's
responsibilities  and  rights  hereunder,  including,  without  limitation,  the
transfer to the Trustee of all cash amounts  which shall at the time be credited
to the  Certificate  Account,  or  thereafter  be received  with  respect to the
Mortgage  Loans.  All expenses  incurred in the  transferring  of the  servicing
duties from the Master  Servicer to a  Successor  Servicer  shall be paid by the
Master  Servicer,  and if not paid by the  Master  Servicer,  shall be paid from
amounts on deposit in the Certificate Account.

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

         SECTION 7.2  Trustee to Act; Appointment of Successor.

         On and  after  the time  the  Master  Servicer  receives  a  notice  of
termination pursuant to Section 7.1 hereof, the Trustee shall, subject to and to
the extent  provided in Section  3.4, be the  successor  to the Master  Servicer
under this Agreement and the  transactions  set forth or provided for herein and
shall be subject to all the  responsibilities,  duties and liabilities  relating
thereto  placed on the Master  Servicer by the terms and  provisions  hereof and
applicable  law  including the  obligation to make Advances  pursuant to Section
4.1.  As  compensation  therefor,  the  Trustee  shall be  entitled to all funds
relating to the Mortgage Loans that the Master Servicer would have been entitled
to charge to the  Certificate  Account  or  Distribution  Account  if the Master
Servicer had continued to act hereunder.  Notwithstanding the foregoing,  if the
Trustee  has become the  successor  to the Master  Servicer in  accordance  with
Section 7.1  hereof,  the Trustee  may, if it shall be  unwilling  to so act, or

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shall,  if it is prohibited by applicable law from making  Advances  pursuant to
Section 4.1 hereof or if it is otherwise unable to so act, appoint,  or petition
a court of competent  jurisdiction  to appoint,  any  established  mortgage loan
servicing  institution  the  appointment of which does not adversely  affect the
then current rating of the  Certificates  by each Rating Agency as the successor
to the Master  Servicer  hereunder in the  assumption  of all or any part of the
responsibilities,  duties or liabilities of the Master Servicer  hereunder.  Any
successor to the Master  Servicer  shall be an  institution  which is a FNMA and
FHLMC approved  seller/servicer  in good  standing,  which has a net worth of at
least  $10,000,000,  and which is  willing  to service  the  Mortgage  Loans and
executes and delivers to the  Depositor  and the Trustee an agreement  accepting
such delegation and  assignment,  which contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than liabilities of the Master Servicer under Section 6.3
hereof  incurred prior to termination of the Master Servicer under Section 7.1),
with  like  effect  as if  originally  named as a party to this  Agreement;  and
provided  further that each Rating  Agency  acknowledges  that its rating of the
Certificates in effect  immediately prior to such assignment and delegation will
not be  qualified or reduced,  as a result of such  assignment  and  delegation.
Pending  appointment  of a  successor  to the  Master  Servicer  hereunder,  the
Trustee,  unless the Trustee is prohibited by law from so acting, shall, subject
to Section 3.4 hereof,  act in such  capacity as provided  above.  In connection
with such appointment and assumption, the Trustee may make such arrangements for
the  compensation  of such successor out of payments on Mortgage Loans as it and
such successor shall agree;  provided,  however, that no such compensation shall
be in  excess  of  the  Master  Servicing  Fee  permitted  the  Master  Servicer
hereunder.  The Trustee and such  successor  shall take such action,  consistent
with this  Agreement,  as shall be necessary to effectuate any such  succession.
Neither the Trustee nor any other  successor  master servicer shall be deemed to
be in  default  hereunder  by reason  of any  failure  to make,  or any delay in
making,  any  distribution  hereunder  or any portion  thereof or any failure to
perform, or any delay in performing,  any duties or responsibilities  hereunder,
in either  case  caused by the  failure  of the  Master  Servicer  to deliver or
provide,  or any  delay in  delivering  or  providing,  any  cash,  information,
documents or records to it.

         Any  successor  to the Master  Servicer as master  servicer  shall give
notice to the  Mortgagors of such change of servicer and shall,  during the term
of its service as master servicer  maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to Section 3.18.

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

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         SECTION 7.3   Notification to Certificateholders.

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

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

                                  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:

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

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

              (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.

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<PAGE>

         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;

              (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;

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<PAGE>

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

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

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

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

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

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

         SECTION 8.3  Trustee Not Liable for Certificates or Mortgage Loans.

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

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         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.

         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.

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         SECTION 8.7   Resignation and Removal of Trustee.

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

         If at any time the Trustee  shall  cease to be  eligible in  accordance
with the provisions of Section 8.6 hereof and shall fail to resign after written
request  thereto by the  Depositor,  or if at any time the Trustee  shall become
incapable  of acting,  or shall be  adjudged  as  bankrupt  or  insolvent,  or a
receiver of the Trustee or of its  property  shall be  appointed,  or any public
officer  shall  take  charge or control of the  Trustee  or of its  property  or
affairs for the purpose of rehabilitation, conservation or liquidation, or a tax
is imposed  with  respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different  trustee,  then the Depositor or the Master  Servicer
may remove the Trustee and appoint a successor trustee by written instrument, in
triplicate,  one copy of which instrument shall be delivered to the Trustee, one
copy of which  shall be  delivered  to the Master  Servicer  and one copy to the
successor trustee.

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

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

         SECTION 8.8   Successor Trustee.

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

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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.

         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.

                                      104
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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.

         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.

                                      105
<PAGE>

         SECTION 8.11   Tax Matters.

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

                                      106
<PAGE>

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

         SECTION 8.12   Periodic Filings.

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

                                      107
<PAGE>

                                   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 aggregate of the Pool Principal Balances
of all the Mortgage Pools, at the time of any such  repurchase,  being less than
ten percent (10%) of the aggregate  Cut-off Date  Principal  Balances of all the
Mortgage Pools.

         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.

                                      108
<PAGE>

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

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

         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 I-A-R  Certificates  shall be entitled  to all  unclaimed  funds and other
assets of the Trust  Fund,  held for  distribution  to such  Certificateholders,
which remain subject hereto.

         SECTION 9.3   Additional Termination Requirements.

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

                                      109
<PAGE>

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

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

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

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

                                    ARTICLE X
                                   [RESERVED]

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

         SECTION 11.1   Amendment.

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

                                      110
<PAGE>

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

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

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

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

                                      111
<PAGE>

         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.

         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.

                                      112
<PAGE>

         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.

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

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

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

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

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

                                      113
<PAGE>

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

         SECTION 11.6  Severability of Provisions.

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

         SECTION 11.7   Assignment.

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

         SECTION 11.8   Limitation on Rights of Certificateholders.

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

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

                                      114
<PAGE>

         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.

         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.

                                      115
<PAGE>

         (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.

                                   * * * * * *

                                      116
<PAGE>

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

                                  FIRST HORIZON ASSET SECURITIES INC.,
                                  as Depositor

                                  By:  _________________________________________

                                          Alfred Chang
                                          Vice President

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

                                  By:  _________________________________________

                                          Diane Pickett
                                          Vice President

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

                                  By:  _________________________________________

                                          Terry McCoy
                                          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 McCoy
         Executive Vice President

<PAGE>

                                   SCHEDULE I

                       First Horizon Asset Securities Inc.
               Mortgage Pass-Through Certificates Series 2005-FA5

                             Mortgage Loan Schedule

                      [Available Upon Request from Trustee]

                                      I-1
<PAGE>

                                   SCHEDULE II

                       First Horizon Asset Securities Inc.
               Mortgage Pass-Through Certificates Series 2005-FA5

              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
<PAGE>

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

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

                                      II-2
<PAGE>

                                  SCHEDULE III

                       First Horizon Asset Securities Inc.
               Mortgage Pass-Through Certificates Series 2005-FA5

                     Form of Monthly Master Servicer Report

                              [Begins on Next Page]

                                     III-1
<PAGE>

                                      IV-1
<PAGE>

                                   EXHIBIT A-1

                          [FORM OF SENIOR CERTIFICATE]

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

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

                                      A-1
<PAGE>

Certificate No.                   :

Cut-off Date                      :

First Distribution Date           :

Initial Certificate Balance of
this Certificate ("Denominations"):  $
Initial Certificate Balances of
all Certificate of this Class     :  $
CUSIP                             :

          First Horizon Alternative Mortgage Securities Trust 2005-FA5
               Mortgage Pass-Through Certificates, Series 2005-FA5
                                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.

                                      A-1
<PAGE>

         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.

         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-2
<PAGE>

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

Dated:  June __, 2005

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

                                      By: ______________________________________
                                          Authorized Signatory of
                                          THE BANK OF NEW YORK
                                          not in its individual capacity,
                                          but solely as Trustee

Countersigned:

By ___________________________
      Authorized Signatory of
      THE BANK OF NEW YORK,
      not in its individual
      capacity, but solely
      as Trustee

                                      A-3
<PAGE>

                                   EXHIBIT A-2

                           [FORM OF SENIOR CERTIFICATE

                      [CLASS [I-A-PO][II-A-PO] CERTIFICATE]

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").

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 SUBJECT TO SECTION 406 OF THE EMPLOYEE  RETIREMENT  INCOME SECURITY
ACT OF 1974,  AS AMENDED  ("ERISA"),  OR A PLAN  SUBJECT TO SECTION  4975 OF THE
CODE,  OR,  IF  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.

THIS CLASS  [I-A-PO][II-A-PO]  CERTIFICATE SHALL NOT BE ENTITLED TO ANY PAYMENTS
IN RESPECT OF INTEREST.

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                              :

                                      A-4
<PAGE>

          First Horizon Alternative Mortgage Securities Trust 2005-FA2
               Mortgage Pass-Through Certificates, Series 2005-FA2

                             Class [I-A-PO][II-A-PO]

         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.

         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-5
<PAGE>

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

Dated:  June ___, 2005

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

                                      By:  _____________________________________
                                           Authorized Signatory of
                                           THE BANK OF NEW YORK
                                           not in its individual capacity,
                                           but solely as Trustee

Countersigned:

By ___________________________
    Authorized Signatory of
    THE BANK OF NEW YORK,
    not in its individual
    capacity, but solely as
    Trustee

                                      A-6
<PAGE>

                                    EXHIBIT B

                       [FORM OF SUBORDINATED CERTIFICATE]

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

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

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

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

                                      B-1
<PAGE>

[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-2
<PAGE>

Certificate No.                   :

Cut-off Date                      :

First Distribution Date           :

Initial Certificate Balance of
this Certificate ("Denominations"): $

Initial Certificate
Balances of all
Certificate of this Class         : $
CUSIP                             :

          First Horizon Alternative Mortgage Securities Trust 2005-FA5
               Mortgage Pass-Through Certificates, Series 2005-FA5

                                   Class [___]

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

                First Horizon Asset Securities Inc., as Depositor

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

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

                                      B-3
<PAGE>

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

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

                                      B-4
<PAGE>

         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.

         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.

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

Dated:  June __, 2005

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

                                      By:  _____________________________________
                                           Authorized Signatory of
                                           THE BANK OF NEW YORK
                                           not in its individual capacity,
                                           but solely as Trustee

Countersigned:

By ___________________________
    Authorized Signatory of
    THE BANK OF NEW YORK,
    not in its individual
    capacity, but solely as
    Trustee

                                      B-5
<PAGE>

                                    EXHIBIT C

                         [FORM OF RESIDUAL CERTIFICATE]

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

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

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

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

                                      C-1
<PAGE>

Certificate No.                   :

Cut-off Date                      :

First Distribution Date           :

Initial Certificate Balance of
this Certificate ("Denominations"):  $
Initial Certificate
Balances of all
Certificate of this
Class                             :  $

CUSIP                             :

          First Horizon Alternative Mortgage Securities Trust 2005-FA5
               Mortgage Pass-Through Certificates, Series 2005-FA5

                  evidencing  the  distributions  allocable to the [Class I-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.

                                      C-2
<PAGE>

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

         No transfer  of a [Class  I-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 I-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 I-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 I-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  I-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  I-A-R]  Certificate  must  be a  Permitted
Transferee,  (ii) no Ownership Interest in this [Class I-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 I-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 I-A-R] Certificate must agree
not to transfer an Ownership  Interest in this [Class I-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 I-A-R]  Certificate in violation of such  restrictions will be absolutely
null and void and will vest no rights in the purported transferee.

                                      C-3
<PAGE>

         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.

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

                                      C-4
<PAGE>

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

Dated:  June __, 2005

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

                                      By:  _____________________________________
                                           Authorized Signatory of
                                           THE BANK OF NEW YORK
                                           not in its individual capacity,
                                           but solely as Trustee

Countersigned:

By ___________________________
     Authorized Signatory of
     THE BANK OF NEW YORK,
     not in its individual
     capacity, but solely
     as Trustee

                                      C-5
<PAGE>

                                    EXHIBIT D

                        [Form of Reverse of Certificates]

          First Horizon Alternative Mortgage Securities Trust 2005-FA5
                       Mortgage Pass-Through Certificates

         This  Certificate  is one of a duly  authorized  issue of  Certificates
designated as First  Horizon  Alternative  Mortgage  Securities  Trust  2005-FA5
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
<PAGE>

         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 aggregate of the Pool Principal
Balances of the Mortgage  Pools is less than 10% of the  aggregate  Cut-off Date
Pool Principal  Balance of the Mortgage Pools, the Master Servicer will have the
option to repurchase, in whole, from the Trust Fund all remaining Mortgage Loans
and all property acquired in respect of the Mortgage Loans in the Mortgage Pools
at a purchase price  determined as provided in the Agreement.  In the event that
no such  optional  termination  occurs,  the  obligations  and  responsibilities
created by the Agreement  will terminate upon the later of the maturity or other
liquidation  (or any advance with  respect  thereto) of the last  Mortgage  Loan
remaining  in the Trust  Fund or the  disposition  of all  property  in  respect
thereof and the distribution to Certificateholders of all amounts required to be
distributed  pursuant to the  Agreement.  In no event,  however,  will the trust
created by the  Agreement  continue  beyond the  expiration of 21 years from the
death  of the  last  survivor  of the  descendants  living  at the  date  of the
Agreement of a certain person named in the Agreement.

         Any term used  herein that is defined in the  Agreement  shall have the
meaning  assigned  in  the  Agreement,   and  nothing  herein  shall  be  deemed
inconsistent with that meaning.

                                      D-2
<PAGE>

                                   ASSIGNMENT

         FOR VALUE  RECEIVED,  the  undersigned  hereby  sell(s),  assign(s) and
transfer(s) unto

                         ------------------------------
                        (Please insert social security or
                      other identifying number of assignee)

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

    ----------------------------------------------------------------------------
                   (Please print or typewrite name and address
                     including postal zip code of assignee)

--------------------------------------------------------------------------------
the  Percentage   Interest  evidenced  by  the  within  Certificate  and  hereby
authorizes the transfer of registration of such Percentage  Interest to assignee
on the Certificate Register of the Trust Fund.

         I (We) further direct the Trustee to issue a new  Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:

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

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

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

Dated:   __________________

                                           -------------------------------------
                                           Signature by or on behalf of assignor

                            DISTRIBUTION INSTRUCTIONS

         The assignee should include the following for purposes of distribution:

         Distributions  shall  be  made,  by  wire  transfer  or  otherwise,  in
immediately available funds to  ______________________________________,  for the
account of _____________________,  account number ___________,  or, if mailed by
check, to ___________________________. Applicable statements should be mailed to
__________________________.

         This  information is provided by  ____________________________________,
the assignee named above,  or _________________, as its agent.

                                      D-3
<PAGE>

                                    EXHIBIT E

                   FORM OF INITIAL CERTIFICATION OF CUSTODIAN

                                     [date]

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

The Bank of New York
101 Barclay Street, 8W
New York, New York  10286

         Re:  Custodial  Agreement  dated as of June 30,  2005 by and among the
              Bank of New York, as Trustee, First Horizon Home Loan Corporation,
              as  Servicer and First  Tennessee  Bank  National  Association, as
              Custodian

Gentlemen:

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

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

         (ii) a duly executed assignment, 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
<PAGE>

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

                                  FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
                                  as Custodian

                                  By:      _____________________________________
                                  Name:    _____________________________________
                                  Title:   _____________________________________

                                      E-2
<PAGE>

                                    EXHIBIT F

                      FORM OF DELAY DELIVERY CERTIFICATION

                                     [date]

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

The Bank of New York
101 Barclay Street, 8W
New York, New York  10286

         Re:    Custodial Agreement dated as of June 30,  2005 by and  among the
                Bank  of New  York,  as  Trustee,   First  Horizon   Home   Loan
                Corporation, as Servicer,  and  First  Tennessee  Bank  National
                Association, as Custodian

Ladies and Gentlemen:

         In accordance with Section 3 of the above-captioned Custodial Agreement
(the "Custodial  Agreement"),  the undersigned,  as Custodian,  hereby certifies
that,  as to each Delay  Delivery  Mortgage  Loan  listed in the  Mortgage  Loan
Schedule  (other than any Delay  Delivery  Mortgage  Loan listed in the attached
schedule), it has received:

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

         (ii) in the case of each Mortgage Loan, 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.

                                      F-1
<PAGE>

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

         Capitalized  words and phrases  used herein  shall have the  respective
meanings assigned to them in the above-captioned Custodial Agreement.

                                  FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
                                  as Custodian

                                  By:      _____________________________________
                                  Name:    _____________________________________
                                  Title:   _____________________________________

                                      F-2
<PAGE>

                                    EXHIBIT G

                  FORM OF SUBSEQUENT CERTIFICATION OF CUSTODIAN

                                     [date]

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

The Bank of New York
101 Barclay Street, 8W
New York, New York  10286

         Re:   Custodial  Agreement  dated as of June 30,  2005 by and among the
               Bank  of  New   York,  as  Trustee,  First  Horizon   Home   Loan
               Corporation, as  Servicer,  and  First  Tennessee  Bank  National
               Association, as Custodian

Ladies and Gentlemen:

               In  accordance  with Section 3 of the  above-captioned  Custodial
Agreement (the "Custodial  Agreement"),  the  undersigned,  as Custodian  hereby
certifies  that as to each  Mortgage  Loan listed in the Mortgage  Loan Schedule
(other than any Mortgage  Loan paid in full or listed on the attached  exception
report) it has received, unless otherwise provided in Section 2 of the Custodial
Agreement:

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

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

               (ii)   except  as  provided  in  Section  2(c)  of the  Custodial
                      Agreement,  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  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;

                                      G-1
<PAGE>

               (iii)  in the  case  of  each  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 in Section  2(c) of the  Custodial  Agreement,
                      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
<PAGE>

                           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
<PAGE>

                                    EXHIBIT H

                               TRANSFER AFFIDAVIT

          First Horizon Alternative Mortgage Securities Trust 2005-FA5

                       Mortgage Pass-Through Certificates

                                 Series 2005-FA5

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  I-A-R]  Certificate  (the  "Certificate")
issued  pursuant to the  Pooling and  Servicing  Agreement,  (the  "Agreement"),
relating  to the  above-referenced  Series,  by and among  First  Horizon  Asset
Securities  Inc.,  as  depositor  (the  "Depositor"),  First  Horizon  Home Loan
Corporation,  as  master  servicer,  and  The  Bank  of New  York,  as  trustee.
Capitalized  terms used,  but not defined  herein or in Exhibit 1 hereto,  shall
have the meanings  ascribed to such terms in the  Agreement.  The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.

         2. The  Transferee  is, as of the date  hereof,  and will be, as of the
date of the Transfer,  a Permitted  Transferee.  The Transferee is acquiring its
Ownership  Interest in the Certificate either (i) for its own account or (ii) as
nominee,  trustee  or agent  for  another  Person  and has  attached  hereto  an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.

         3. The Transferee has been advised of, and  understands  that (i) a tax
may be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees;  (ii)  such tax will be  imposed  on the  transferor,  or,  if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee,  on the agent; and (iii) the Person
otherwise  liable for the tax shall be relieved of liability  for the tax if the
subsequent transferee furnished to such Person an affidavit that such subsequent
transferee is a Permitted  Transferee and, at the time of Transfer,  such Person
does not have actual knowledge that the affidavit is false.

         4. The Transferee has been advised of, and  understands  that a tax may
be imposed on a  "pass-through  entity"  holding the  Certificate if at any time
during  the  taxable  year of the  pass-through  entity a  Person  that is not a
Permitted  Transferee  is the record  holder of an interest in such entity.  The
Transferee  understands  that such tax will not be imposed  for any period  with
respect to which the  record  holder  furnishes  to the  pass-through  entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual  knowledge that such  affidavit is false.  (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate  investment  trust or common trust fund, a partnership,  trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons  holding  interests  in  pass-through  entities as a nominee for another
Person.)

                                      H-1
<PAGE>

         5. The  Transferee has reviewed the provisions of Section 5.2(c) of the
Agreement  (attached hereto as Exhibit 2 and  incorporated  herein by reference)
and  understands  the legal  consequences  of the  acquisition  of an  Ownership
Interest in the Certificate including,  without limitation,  the restrictions on
subsequent  Transfers  and the  provisions  regarding  voiding the  Transfer and
mandatory sales. The Transferee  expressly agrees to be bound by and to abide by
the provisions of Section 5.2(c) of the Agreement and the restrictions  noted on
the face of the  Certificate.  The  Transferee  understands  and agrees that any
breach of any of the  representations  included herein shall render the Transfer
to the Transferee contemplated hereby null and void.

         6. The  Transferee  agrees to  require a  Transfer  Affidavit  from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate,  and in  connection  with any  Transfer  by a  Person  for whom the
Transferee is acting as nominee,  trustee or agent,  and the Transferee will not
Transfer  its  Ownership   Interest  or  cause  any  Ownership  Interest  to  be
Transferred  to  any  Person  that  the  Transferee  knows  is  not a  Permitted
Transferee.  In  connection  with  any  such  Transfer  by the  Transferee,  the
Transferee  agrees to deliver to the Trustee a certificate  substantially in the
form set forth as Exhibit I to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.

         7. The Transferee  does not have the intention to impede the assessment
or  collection  of any tax  legally  required  to be paid  with  respect  to the
Certificate.

         8. The Transferee's taxpayer identification number is ______.

         9. The  Transferee  is either a U.S.  Person as defined in Code Section
7701(a)(30) or the Transferee has furnished the Transferor a properly  completed
Internal Revenue Service Form W-8ECI..

         10. The Transferee is aware that the  Certificate may be 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
<PAGE>

         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
<PAGE>

                             EXHIBIT 1 to EXHIBIT H

                               Certain Definitions

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

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

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

         "Transfer":  Any direct or indirect  transfer or sale of any  Ownership
Interest in a  Certificate,  including the  acquisition  of a Certificate by the
Depositor.

                                      H-4
<PAGE>

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

                                      H-5
<PAGE>

                                                          EXHIBIT 2 to EXHIBIT H

                         Section 5.2(c) of the Agreement

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

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

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

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

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

                                      H-6
<PAGE>

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

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

                                      H-7
<PAGE>

                                    EXHIBIT I

                         FORM OF TRANSFEROR CERTIFICATE

                                                          _______________, 20___

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

The Bank of New York
101 Barclay Street, 8W
New York, New York  10286

         Re:    First  Horizon  Alternative Mortgage  Securities  Trust 2005-FA5
                Mortgage Pass-Through Certificates, Series 2005-FA5, 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 June 1, 2005, by and
among First Horizon Asset Securities Inc., as depositor, First Horizon Home Loan
Corporation,  as master servicer, and The Bank of New York, as trustee, pursuant
to which the Residual Certificates were issued.

                                            Very truly yours,

                                            ____________________________________
                                            Print Name of Transferor

                                            By:_________________________________
                                               Authorized Officer

                                      I-1
<PAGE>

                                    EXHIBIT J

                    FORM OF INVESTMENT LETTER (NON-RULE 144A)

                                                            _____________, 20___

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

The Bank of New York
101 Barclay Street, 8W
New York, New York  10286

Attention:  Mortgage-Backed Securities Group

         Re:    First Horizon  Alternative  Mortgage  Securities Trust  2005-FA5
                Mortgage Pass-Through Certificates, Series 2005-FA5, 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
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

                                      J-1
<PAGE>

an opinion of counsel  satisfactory to the addressees of this  Certificate  that
such sale,  transfer or other  disposition  may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such  Certificate  has executed
and  delivered to you a  certificate  to  substantially  the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.

                                         Very truly yours,

                                         _______________________________________
                                         Print Name of Transferee

                                         By:____________________________________
                                         Authorized Officer

                                      J-2
<PAGE>

                                    EXHIBIT K

                            FORM OF RULE 144A LETTER

                                                               ___________, 20__

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

The Bank of New York
101 Barclay Street, 8W
New York, New York  10286

Attention:  Mortgage-Backed Securities Group

         Re:    First Horizon  Alternative  Mortgage Securities Trust 2005-FA5
                Mortgage Pass-Through Certificates, Series 2005-FA5, Class ___

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificates we certify
that (a) we understand that the  Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are  being  transferred  to  us  in  a  transaction  that  is  exempt  from  the
registration  requirements  of the Act  and  any  such  laws,  (b) we have  such
knowledge and  experience in financial and business  matters that we are capable
of evaluating the merits and risks of investments  in the  Certificates,  (c) we
have had the  opportunity  to ask  questions  of and  receive  answers  from the
Depositor  concerning the purchase of the  Certificates and all matters relating
thereto or any  additional  information  deemed  necessary  to our  decision  to
purchase  the  Certificates,  (d)  we  are  not  an  employee  benefit  plan  or
arrangement  that is subject to the Employee  Retirement  Income Security Act of
1974, as amended,  or a plan or  arrangement  that is subject to Section 4975 of
the Internal  Revenue Code of 1986,  as amended,  nor are we acting on behalf of
any  such  plan  or  arrangement  nor  using  the  assets  of any  such  plan or
arrangement to effect such acquisition, (e) if an insurance company, in the case
of   ERISA-restricted   Certificates   that   have  been  the   subject   of  an
ERISA-Qualifying  Underwriting,  we are purchasing the  Certificates  with funds
contained in an "insurance  company general account" (as defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and our purchase
and holding of the  Certificates  are covered  under  Sections I and III of PTCE
95-60,  (f)  we  have  not,  nor  has  anyone  acting  on  our  behalf  offered,
transferred,  pledged,  sold or  otherwise  disposed  of the  Certificates,  any
interest in the  Certificates or any other similar security to, or solicited any
offer  to  buy  or  accept  a  transfer,  pledge  or  other  disposition  of the
Certificates,  any interest in the  Certificates  or any other similar  security
from, or otherwise  approached or negotiated  with respect to the  Certificates,
any interest in the  Certificates or any other similar security with, any person
in any manner, or made any general  solicitation by means of general advertising

                                      K-1
<PAGE>

or in any other  manner,  or taken any other  action,  that would  constitute  a
distribution  of the  Certificates  under  the  Act or  that  would  render  the
disposition  of the  Certificates a violation of Section 5 of the Act or require
registration  pursuant  thereto,  nor  will  act,  nor  has  authorized  or will
authorize  any person to act, in such manner with  respect to the  Certificates,
(g) we are a  "qualified  institutional  buyer" as that term is  defined in Rule
144A  under the Act  ("Rule  144A")  and have  completed  either of the forms of
certification  to that effect  attached hereto as Annex 1 or Annex 2, (h) we are
aware that the sale to us is being made in reliance on Rule 144A, and (i) we are
acquiring the  Certificates  for our own account or for resale  pursuant to Rule
144A and further,  understand that such  Certificates may be resold,  pledged or
transferred  only  (A)  to a  person  reasonably  believed  to  be  a  qualified
institutional  buyer that  purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer  is being made in  reliance  on Rule 144A,  or (B)  pursuant to another
exemption from registration under the Act.

                                         Very truly yours,

                                         _______________________________________
                                         Print Name of Transferee

                                         By:____________________________________
                                            Authorized Officer

                                      K-2
<PAGE>

                                                            ANNEX 1 TO EXHIBIT K

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

         The  undersigned  (the  "Buyer")  hereby  certifies  as  follows to the
parties  listed  in  the  Rule  144A   Transferee   Certificate  to  which  this
certification relates with respect to the Certificates described therein:

         1.  As  indicated  below,  the  undersigned  is  the  President,  Chief
Financial  Officer,  Senior Vice  President  or other  executive  officer of the
Buyer.

         2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional  buyer" as that term is defined in Rule 144A under the  Securities
Act of 1933,  as  amended  ("Rule  144A")  because  (i) the Buyer  owned  and/or
invested on a  discretionary  basis $ ______(1)  in  securities  (except for the
excluded  securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being  calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

                  ___ Corporation, etc. The Buyer is a corporation (other than a
         bank,   savings   and  loan   association   or  similar   institution),
         Massachusetts  or similar  business trust,  partnership,  or charitable
         organization  described in Section  501(c)(3)  of the Internal  Revenue
         Code of 1986, as amended.

                  ___ Bank.  The  Buyer  (a)  is a   national  bank  or  banking
         institution  organized  under the laws of any State,  territory  or the
         District of Columbia,  the business of which is substantially  confined
         to  banking  and is  supervised  by the  State or  territorial  banking
         commission  or  similar  official  or is a foreign  bank or  equivalent
         institution,  and (b) has an audited net worth of at least  $25,000,000
         as demonstrated in its latest annual  financial  statements,  a copy of
         which is attached hereto.

                  ___ Savings  and Loan.  The  Buyer (a) is a  savings  and loan
         association, building and loan association, cooperative bank, homestead
         association or similar institution, which is supervised and examined by
         a  State  or  Federal  authority  having   supervision  over  any  such
         institutions or is a foreign savings and loan association or equivalent
         institution and (b) has an audited net worth of at least $25,000,000 as
         demonstrated in its latest annual financial statements, a copy of which
         is attached hereto.

                  ___ Broker-dealer.  The  Buyer is a dealer registered pursuant
         to Section 15 of the Securities Exchange Act of 1934.

--------
(1) Buyer must own and/or invest on a discretionary  basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.

                                      K-3
<PAGE>

                  ___ 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.

                  ___ 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.

                                      K-4
<PAGE>

         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-5
<PAGE>

                                                            ANNEX 2 TO EXHIBIT K

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

         The  undersigned  (the  "Buyer")  hereby  certifies  as  follows to the
parties  listed  in  the  Rule  144A   Transferee   Certificate  to  which  this
certification relates with respect to the Certificates described therein:

         1.  As  indicated  below,  the  undersigned  is  the  President,  Chief
Financial  Officer or Senior Vice  President  of the Buyer or, if the Buyer is a
"qualified  institutional  buyer" as that term is defined in Rule 144A under the
Securities  Act of 1933,  as amended  ("Rule  144A")  because Buyer is part of a
Family of  Investment  Companies (as defined  below),  is such an officer of the
Adviser.

         2. In  connection  with  purchases by Buyer,  the Buyer is a "qualified
institutional  buyer" as  defined in SEC Rule 144A  because  (i) the Buyer is an
investment  company  registered  under the  Investment  Company Act of 1940,  as
amended and (ii) as marked  below,  the Buyer  alone,  or the Buyer's  Family of
Investment Companies,  owned at least $100,000,000 in securities (other than the
excluded  securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining  the amount of securities  owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was  used,  except  (i)  where the  Buyer or the  Buyer's  Family of  Investment
Companies  reports its  securities  holdings in its financial  statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those  securities  has been  published.  If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

                  ___ The Buyer owned $ in  securities  (other than the excluded
         securities  referred to below) as of the end of the Buyer's most recent
         fiscal year (such  amount  being  calculated  in  accordance  with Rule
         144A).

                  ___ The  Buyer is part of a  Family  of  Investment  Companies
         which owned in the aggregate $ in  securities  (other than the excluded
         securities  referred to below) as of the end of the Buyer's most recent
         fiscal year (such  amount  being  calculated  in  accordance  with Rule
         144A).

         3. The term "Family of  Investment  Companies" as used herein means two
or more registered  investment  companies (or series thereof) that have the same
investment  adviser or  investment  advisers that are  affiliated  (by virtue of
being majority owned  subsidiaries  of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

         4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated  with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality  thereof,  (iii) bank deposit notes and certificates of deposit,
(iv) loan participations,  (v) repurchase agreements,  (vi) securities owned but
subject  to a  repurchase  agreement  and  (vii)  currency,  interest  rate  and
commodity swaps.

                                      K-6
<PAGE>

         5. The  Buyer is  familiar  with  Rule  144A and  understands  that the
parties  listed  in  the  Rule  144A   Transferee   Certificate  to  which  this
certification  relates are relying and will  continue to rely on the  statements
made  herein  because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.

         6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee  Certificate to which this
certification  relates of any changes in the information and conclusions herein.
Until such  notice is given,  the  Buyer's  purchase  of the  Certificates  will
constitute a reaffirmation  of this  certification  by the undersigned as of the
date of such purchase.

                                       _________________________________________
                                       Print Name of Transferee

                                       By:______________________________________
                                       Name:____________________________________
                                       Title:___________________________________

                                       IF AN ADVISER:

                                       _________________________________________
                                       Print Name of Buyer

                                       Date:____________________________________

                                      K-7
<PAGE>

                                    EXHIBIT L

                               REQUEST FOR RELEASE

                     [Substitution of Deleted Mortgage Loans

                                       or

                          Mortgage Loans Paid in Full]

            ____________________________________ Mortgage Loan Files

_____________________   hereby   certifies   that   he/she  is  an   officer  of
_____________________,  holding the office set forth beneath his/her  signature,
and hereby further certifies as follows:

(Check One)

|_|      With respect to the mortgage loans described in the attached  schedule,
         each such mortgage loan  constitutes a "Substitute  Mortgage  Loan" (as
         the term is defined in the Pooling and Servicing Agreement).

|_|      With  respect  to the  "Mortgage  Loans" (as the term is defined in the
         custodial agreement) described in the attached schedule:

         All payments of  principal,  premium (if any),  and interest  have been
         made with respect to the following:

         Loan Number:_______________________________________

         Borrower's Name: ______________________________

         County: ______________________________________

         We hereby  certify that all amounts to be received in  connection  with
such payments have been received.

______________________________

Dated: ______________________

/  / Vice President

/  / Assistant Vice President

                                      L-1
<PAGE>

                                    EXHIBIT M

                         REQUEST FOR RELEASE AND RECEIPT

                         [For Servicing and Foreclosure]

            _____________________________________ Mortgage Loan Files

LOAN INFORMATION

         Name of Mortgagor:  __________________________________

         Loan No.:           __________________________________

         The  undersigned  hereby  acknowledges  that it has received from FIRST
TENNESSEE  BANK  NATIONAL  ASSOCIATION,  as Custodian  for  ____________________
Mortgage Loan Files,  the  documents  referred to below (the  "Documents").  All
capitalized  terms not otherwise defined in this Request for Release and Receipt
shall have the meanings ascribed to them in the Custodial  Agreement dated as of
__________________  among  ___________________ and FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, as Custodian (the "Custodial Agreement").

                             [complete as necessary]

         The undersigned hereby acknowledges an agrees as follows:

         (1) The undersigned  shall hold and retain  possession of the Documents
in trust for the benefit of __________________, solely for the purposes provided
in the Custodial Agreement.

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

         (3) The  undersigned  shall return each and every  Document  previously
requested  from the Mortgage  File to the  Custodian  when the need  therefor no
longer  exists,  unless the Mortgage  Loan  relating to the  Documents  has been
liquidated.

Date:    _____________________

                                      NAME

                                      By:      _________________________________
                                      Name:    _________________________________
                                      Title:   _________________________________

                                      M-1

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