Document:

FIRST 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 August 1, 2003

      _____________________________________________________

       FIRST HORIZON MORTGAGE PASS-THROUGH TRUST 2003-AR3

       MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2003-AR3

<PAGE>

                        TABLE OF CONTENTS

ARTICLE I DEFINITIONS.......................................   5

ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
            REPRESENTATIONS AND WARRANTIES..................  32
 SECTION 2.1 Conveyance of Mortgage Loans...................  32
 SECTION 2.2 Acceptance by Trustee of the Mortgage Loans....  36
 SECTION 2.3 Representations and Warranties of the Master
              Servicer; Covenants of the Seller.............  38
 SECTION 2.4 Representations and Warranties of the
              Depositor as to the Mortgage Loans............  40
 SECTION 2.5 Delivery of Opinion of Counsel in
              Connection with Substitutions.................  40
 SECTION 2.6 Execution and Delivery of Certificates.........  41
 SECTION 2.7 REMIC Matters..................................  41
 SECTION 2.8 Covenants of the Master Servicer...............  41

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..  42
 SECTION 3.1 Master Servicer to Service Mortgage Loans......  42
 SECTION 3.2 Subservicing; Enforcement of the
              Obligations of Servicers.....................   43
 SECTION 3.3 Rights of the Depositor and the Trustee
              in Respect of the Master Servicer............   43
 SECTION 3.4 Trustee to Act as Master Servicer.............   44
 SECTION 3.5 Collection of Mortgage Loan Payments;
              Certificate Account; Distribution Account....   44
 SECTION 3.6 Collection of Taxes, Assessments
              and Similar Items; Escrow Accounts...........   47
 SECTION 3.7 Access to Certain Documentation and
              Information Regarding the Mortgage Loans.....   48
 SECTION 3.8 Permitted Withdrawals from the
               Certificate Account and Distribution
               Account......................................  48
 SECTION 3.9 Maintenance of Hazard Insurance;
               Maintenance of Primary Insurance Policies....  50
 SECTION 3.10 Enforcement of Due-on-Sale Clauses;
               Assumption Agreements........................  52
 SECTION 3.11 Realization Upon Defaulted Mortgage Loans;
               Repurchase of Certain Mortgage Loans.........  53
 SECTION 3.12 Trustee to Cooperate; Release of
               Mortgage Files...............................  56
 SECTION 3.13 Documents Records and Funds in Possession of
               Master Servicer to be Held for the Trustee...  57
 SECTION 3.14 Master Servicing Compensation.................  57
 SECTION 3.15 Access to Certain Documentation...............  58
 SECTION 3.16 Annual Statement as to Compliance.............  58
 SECTION 3.17 Annual Independent Public Accountants'
               Servicing Statement; Financial Statements....  58
 SECTION 3.18 Errors and Omissions Insurance; Fidelity
               Bonds........................................  59
 SECTION 3.19 Notification of Adjustments...................  59

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE MASTER
            SERVICER........................................  59
 SECTION 4.1 Advances.......................................  59
 SECTION 4.2 Priorities of Distribution.....................  60

                               -i-

<PAGE>

 SECTION 4.3 Method of Distribution.........................  64
 SECTION 4.4 Allocation of Losses...........................  65
 SECTION 4.5 Reserved.......................................  67
 SECTION 4.6 Monthly Statements to Certificateholders.......  67
 SECTION 4.7 Reserved.......................................  69

ARTICLE V THE CERTIFICATES..................................  69
 SECTION 5.1 The Certificates...............................  69
 SECTION 5.2 Certificate Register; Registration of
              Transfer and Exchange of Certificates.........  70
 SECTION 5.3 Mutilated, Destroyed, Lost or Stolen
              Certificates..................................  75
 SECTION 5.4 Persons Deemed Owners..........................  75
 SECTION 5.5 Access to List of Certificateholders' Names
              and Addresses.................................  75
 SECTION 5.6 Maintenance of Office or Agency................  75

ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER............  76
 SECTION 6.1 Respective Liabilities of the Depositor
              and the Master Servicer.......................  76
 SECTION 6.2 Merger or Consolidation of the Depositor
              or the Master Servicer........................  76
 SECTION 6.3 Limitation on Liability of the Depositor,
              the Master Servicer and Others................  76
 SECTION 6.4 Limitation on Resignation of Master Servicer...  77

ARTICLE VII DEFAULT.........................................  77
 SECTION 7.1 Events of Default..............................  77
 SECTION 7.2 Trustee to Act; Appointment of Successor.......  79
 SECTION 7.3 Notification to Certificateholders.............  80

ARTICLE VIII CONCERNING THE TRUSTEE.........................  80
 SECTION 8.1 Duties of Trustee..............................  80
 SECTION 8.2 Certain Matters Affecting the Trustee..........  82
 SECTION 8.3 Trustee Not Liable for Certificates or
              Mortgage Loans................................  84
 SECTION 8.4 Trustee May Own Certificates...................  84
 SECTION 8.5 Trustee's Fees and Expenses....................  84
 SECTION 8.6 Eligibility Requirements for Trustee...........  85
 SECTION 8.7 Resignation and Removal of Trustee.............  85
 SECTION 8.8 Successor Trustee..............................  86
 SECTION 8.9 Merger or Consolidation of Trustee.............  86
 SECTION 8.10 Appointment of Co-Trustee or Separate
               Trustee. ....................................  86
 SECTION 8.11 Tax Matters...................................  88
 SECTION 8.12 Periodic Filings..............................  90

ARTICLE IX TERMINATION......................................  90
 SECTION 9.1 Termination upon Liquidation or Purchase
               of all Mortgage Loans........................  90
 SECTION 9.2 Final Distribution on the Certificates.........  91
 SECTION 9.3 Additional Termination Requirements............  92

ARTICLE X [RESERVED]........................................  93

                              -ii-

<PAGE>

ARTICLE XI MISCELLANEOUS PROVISIONS.........................  93
 SECTION 11.1 Amendment.....................................  93
 SECTION 11.2 Recordation of Agreement; Counterparts........  94
 SECTION 11.3 Governing Law.................................  94
 SECTION 11.4 Intention of Parties..........................  95
 SECTION 11.5 Notices.......................................  95
 SECTION 11.6 Severability of Provisions....................  96
 SECTION 11.7 Assignment....................................  97
 SECTION 11.8 Limitation on Rights of Certificateholders....  97
 SECTION 11.9 Inspection and Audit Rights...................  97
 SECTION 11.10 Certificates Nonassessable and Fully Paid....  98
 SECTION 11.11 Limitations on Actions; No Proceedings.......  98
 SECTION 11.12 Acknowledgment of Seller.....................  98

                            SCHEDULES

Schedule I: Mortgage Loan Schedule..........................  S-I-1
Schedule II:Representations and Warranties of the
             Master Servicer................................  S-II-1
Schedule III:Form of Monthly Master Servicer Report.........  S-III-1

                            EXHIBITS

Exhibit A:  Form of Senior Certificate......................  A-1
Exhibit B:  Form of Subordinated Certificate................  B-1
Exhibit C:  Form of Residual Certificate....................  C-1
Exhibit D:  Form of Reverse of Certificates.................  D-1
Exhibit E:  Form of Initial Certification...................  E-1
Exhibit F:  Form of Delay Delivery Certification............  F-1
Exhibit G:  Form of Final 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

                              -iii-

<PAGE>

     THIS POOLING AND SERVICING AGREEMENT, dated as of August 1,
2003, among FIRST HORIZON ASSET SECURITIES INC., a Delaware
corporation, as depositor (the "Depositor"), FIRST HORIZON HOME
LOAN CORPORATION, a Kansas corporation, as master servicer (the
"Master Servicer"), and THE BANK OF NEW YORK, a banking
corporation organized under the laws of the State of New York, as
trustee (the "Trustee").

                         WITNESSETH THAT

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

                      PRELIMINARY STATEMENT

     The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. The Trust
Fund for federal income tax purposes will consist of a single
REMIC.  The Certificates will represent the entire beneficial
ownership interest in the Trust Fund. The Regular Certificates
will represent "regular interests" in a single REMIC.  The Class
II-A-R Certificates will represent the sole class of residual
interests in the REMIC, as described in Section 2.7.  The "latest
possible maturity date" for federal income tax purposes of all
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          Initial            Minimum       Integral Multiples
  Class Designation   Certificate Balance  Pass Through Rate    Denomination     in Excess Minimum
--------------------  -------------------  -----------------  ----------------  --------------------
                   <c>                      <c>            <c>               <c>
Class I-A-1           $   19,463,00.00         4.200%(1)      $      25,000     $         1,000
Class II-A-1          $ 286,928,000.00         4.500%(1)      $      25,000     $         1,000
Class II-A-R          $         100.00         4.500%(1)      $         100     $           N/A
Class III-A-1         $  63,232,000.00         4.650%(1)      $      25,000     $         1,000
Class B-1             $   5,511,000.00         4.510%(2)      $     100,000     $         1,000
Class B-2             $   1,901,000.00        4.510% (2)      $     100,000     $         1,000
Class B-3             $   1,330,000.00        4.510% (2)      $     100,000     $         1,000
Class B-4             $     570,000.00        4.510% (2)      $     100,000     $         1,000
Class B-5             $     570,000.00        4.510% (2)      $     100,000     $         1,000
Class B-6             $     570,870.09        4.510% (2)      $     100,000     $         1,000

</TABLE>

(1) The Pass-Through Rates for the Senior Certificates for each
subsequent Distribution Date will equal the Weighted Average
Adjusted Net Mortgage Rate for the related Mortgage Pool, as of
the first day of the month immediately prior to the month in
which the relevant Distribution Date occurs, after taking into
account scheduled payments of principal on that date.

(2) The Pass-Through Rates for the Subordinated Certificates for
each subsequent Distribution Date will equal the weighted average
of the Weighted Average Adjusted Net Mortgage Rates for each
Mortgage Pool, weighted on the basis of the Group Subordinate
Amount for each Mortgage Pool, as of the first day of the month
immediately prior to the month in which the relevant Distribution
Date occurs, after taking into account scheduled payments of
principal on that date.

                               -2-

<PAGE>

<TABLE>
<CAPTION>

                                   <c>
Accretion Directed Certificates       None.

Accrual Certificates                  None.

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 the Mortgage
                                      Pools.

COFI Certificates                     None.

Component Certificates                None.

Components                            For purposes of calculating distributions, the Component
                                      Certificates will be comprised of multiple payment components
                                      having the designations, Initial Component Balances and Pass-
                                      Through Rates set forth below:

                                                       Initial
                                                      Component
                                      Designation      Balance    Pass-Through Rate
                                      -----------     ----------  -----------------
                                       N/A               N/A             N/A

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

ERISA-Restricted Certificates         The Residual Certificates and the Private Certificates.

Floating Rate Certificates            None.

Group I Senior Certificates           The Class I-A-1 Certificates.

Group II Senior Certificates          The Class II-A-1 and Class II-A-R Certificates.

Group III Senior Certificates         The Class III-A-1 Certificates.

Insured Retail Certificates           None.

Interest Only Certificates            None.

Inverse Floating Rate Certificates    None.

LIBOR Certificates                    None.

Non-Delay Certificates                None.

Notional Amount Components            None.

Offered Certificates                  All Classes of the Certificates other than the Private
                                      Certificates.

Physical Certificates                 The Private Certificates and the Residual Certificates.

Planned Principal Classes             None.

Principal Only Certificates           None.

                               -3-

<PAGE>

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

Rating Agencies                       S&P and Fitch; except that, for the purposes of the Class B-
                                      1, Class B-2, Class B-3, Class B-4 and Class B-5
                                      Certificates, S&P shall be the sole Rating Agency.

Regular Certificates                  All Classes of Certificates, other than the Residual
                                      Certificates.

Residual Certificates                 The Class II-A-R Certificates.

Scheduled Principal Classes           None.

Senior Certificates                   The Group I Senior Certificates, the Group II Senior
                                      Certificates and the Group III Senior Certificates,
                                      collectively.

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

Support Classes                       None.

Targeted Principal Classes            None.

Underwriter                           FTN Financial Capital Markets, a division of First Tennessee
                                      Bank National Association

</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.

                               -4-

<PAGE>

                            ARTICLE I
                           DEFINITIONS

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

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

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

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

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

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

     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.

                               -5-

<PAGE>

     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.

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

       *  all scheduled installments of interest, net of the
          Master Servicing Fee and the Trustee Fee, 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;

       *  all Insurance Proceeds and all Liquidation Proceeds
          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;

       *  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;

       *  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; and

                               -6-

<PAGE>

       *  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.

     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
2003-AR3."

                               -7-

<PAGE>

     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; and
          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.

     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 Mortgage Pools
with respect to such Distribution Date, equals or exceeds such
percentage calculated as of the Closing Date.

                               -8-

<PAGE>

     Closing Date:  August 29, 2003.

     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
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 after the first of the month following the month of
receipt, no additional payment is required for such Principal
Prepayment.

     Component:  Not applicable.

     Component Certificates:  Not applicable.

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

     Coop Shares:  Shares issued by a Cooperative Corporation.

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

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

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

     Corporate Trust Office:  The designated office of the
Trustee in the State of New York at which at any particular time
its corporate trust business with respect to this Agreement shall
be administered, which office at the date of the execution of
this Agreement is located at The Bank of New York, 101 Barclay
Street, 8W, New York, New York 10286 (Attn: Corporate Trust
Mortgage-Backed Securities Group, First Horizon Asset Securities
Inc. Series 2003-AR3), facsimile no. (212) 815-3986, and which is
the address to which notices to and correspondence with the
Trustee should be directed.

                               -9-

<PAGE>

     Corresponding Classes of Certificates:  Not applicable.

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

     Custodial Agreement:  The Custodial Agreement dated as of
August 29, 2003 by and among the Trustee, the Master Servicer and
the Custodian.

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

     Cut-off Date:  August 1, 2003.

     Cut-off Date Pool Principal Balance:  With respect to Pool
I, $20,013,353.27; with respect to Pool II, $295,042,135.06; and
with respect to Pool III, $65,020,481.76.

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

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

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

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

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

     Delay Certificates:  As specified in the Preliminary
Statement.

     Delay Delivery Mortgage Loans:  The Mortgage Loans for which
all or a portion of a related Mortgage File is not delivered to
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.

                              -10-

<PAGE>

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

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

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

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

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

     Distribution Account:  The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.5 in the name
of the Trustee for the benefit of the Certificateholders and
designated "The Bank of New York, in trust for registered Holders
of First Horizon Asset Securities Inc. Mortgage Pass-Through
Certificates, Series 2003-AR3." 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 September 2003.

     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)

                              -11-

<PAGE>

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-Restricted Certificate:  As specified in the
Preliminary Statement.

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

     Event of Default:  As defined in Section 7.1 hereof.

     Excess Loss:  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 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 Tennessee National Corporation, a Tennessee corporation.

                              -12-

<PAGE>

     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 Loss Coverage Amount:  As of the Closing Date,
$3,800,760.  As of any Distribution Date from the first
anniversary of the Cut-off Date and prior to the third
anniversary of the Cut-off Date, the Fraud Loss Coverage Amount
will equal $3,800,760 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 from the third to the
fifth anniversary of the Cut-off Date, the Fraud Loss Coverage
Amount will equal (1) the lesser of (a) the Fraud Loss Coverage
Amount as of the most recent anniversary of the Cut-off Date and
(b) 0.50% of the aggregate outstanding principal balance of all
of the Mortgage Loans as of the most recent anniversary of the
Cut-off Date minus (2) the Fraud Losses that would have been
allocated to the Subordinated Certificates in the absence of the
Loss Allocation Limitations since the most recent anniversary of
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 point in time at
which the Fraud Loss Coverage Amount is reduced to zero.

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

     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:  Not applicable.

                              -13-

<PAGE>

     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:  $100,000.

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

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

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

     Insured Retail Certificates:  Not applicable.

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

     Interest Determination Date:  With respect to any Interest
Accrual Period for any LIBOR Certificates, the second Business
Day prior to the first day of such Interest Accrual Period.

     Interest Only Certificates:  Not applicable.

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

     Lender PMI Mortgage Loan:  Not applicable.

     LIBOR:  Not applicable.

     LIBOR Certificates:  As specified in the Preliminary
Statement.

     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.

                              -14-

<PAGE>

     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 and any other proceeds received in connection
with an REO Property, less the sum of related unreimbursed Master
Servicing Fees, Servicing Advances and Advances.

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

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

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

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

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

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

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

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

     Master Servicing Fee Rate:  For each Mortgage Loan in (i)
Pool I, a per annum rate equal to 0.248%, (ii) Pool II, a per
annum rate equal to 0.246% and (iii) Pool III, a per annum rate
equal to 0.304%.

     MLPA I:  The Mortgage Loan Purchase Agreement, dated as of
August 29, 2003, by and between First Horizon Home Loan
Corporation, as seller, and First Tennessee Bank National
Association, as purchaser, as related to the transfer, sale and
conveyance of the Mortgage Loans.

     MLPA II: The Mortgage Loan Purchase Agreement, dated as of
August 29, 2003, by and between First Tennessee Bank National
Association, as seller, and First Horizon Asset Securities Inc.,
as purchaser, as related to the transfer, sale and conveyance of
the Mortgage Loans.

                              -15-

<PAGE>

     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 deminimis PUD, (c) a condominium unit or PUD (other
                    than a deminimis PUD), (d) a two-to-four unit residential
                    property or (e) a Cooperative Unit;

                              -16-

<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; and

               (14) the Master Servicing Fee for the 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.

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

     Net Interest Shortfall:  For any Distribution Date 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
or 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.

                              -17-

<PAGE>

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

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

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

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

     Notional Amount: Not applicable.

     Notional Amount Components:  Not applicable.

     Offered Certificates:  As specified in the Preliminary
Statement.

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

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

     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 Cut-
off 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.

                              -18-

<PAGE>

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

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

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

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

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

     Pass-Through Rate:  For any 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;

                              -19-

<PAGE>

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

               (vi) guaranteed reinvestment agreements issued by
          any bank, insurance company or other corporation
          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.

                              -20-

<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 the REMIC created
hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding; provided, however, that if a person
is classified as a partnership under the Code, such person shall
only be a Permitted Transferee if all of its beneficial owners
are described in subclauses (a), (b), (c) or (d) of clause (vi)
and the governing documents of such person prohibits a transfer
of any interest in such person to any person described in clause
(vi). The terms "United States," "State" and "International
Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be
treated as an instrumentality of the United States or of any
State or political subdivision thereof for these purposes if all
of its activities are subject to tax and, with the exception of
the Federal Home Loan Mortgage Corporation, a majority of its
board of directors is not selected by such government unit.

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

     Physical Certificate:  As specified in the Preliminary
Statement.

     Planned Balance:  Not applicable.

     Planned Principal Classes:  Not applicable.

     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.

                              -21-

<PAGE>

     Pool Principal Balance:  For each Mortgage Pool, with
respect to any Distribution Date, the aggregate of the Stated
Principal Balances of the Mortgage Loans which were Outstanding
Mortgage Loans on the Due Date in the month preceding the month
of such Distribution Date.

     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 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 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 Certificate:  As specified in the Preliminary
Statement.

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

     PUD:  Planned Unit Development.

                              -22-

<PAGE>

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

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

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

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

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

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

     Reference Bank:  Not applicable.

                              -23-

<PAGE>

     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 Soldiers' and Sailors' Civil Relief Act of
1940, as amended, 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 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 Insurance Policy:  With respect to any Mortgage
Loan, any insurance policy that is required to be maintained from
time to time under this Agreement.

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

     Residual Certificates:  As specified in the Preliminary
Statement.

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

                              -24-

<PAGE>

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

     Scheduled Principal Classes:  Not applicable.

     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 MLPA I.

     Senior Certificates:  As specified in the Preliminary
Statement.

     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 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 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
Stated Principal Balance of each Mortgage Loan in such Mortgage
Pool which was the subject of a prepayment in full received by
the Master Servicer during the applicable Prepayment Period;

          (3)  the related Senior Prepayment Percentage of all
partial prepayments of principal in respect of each Mortgage Loan
in such Mortgage Pool received during the applicable Prepayment
Period;

          (4)  the lesser of:

               (a)  the related Senior Prepayment Percentage of
          the sum of (x) 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 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

                              -25-

<PAGE>

                (b)(i) the related Senior Percentage of the sum
          of (x) 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 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 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

          (5)  the related Senior Prepayment Percentage of the
sum of (a) 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 Stated Principal Balance of a Mortgage Loan in
such Mortgage Pool that has been replaced by the seller with a
Substitute Mortgage Loan pursuant to the 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 immediately preceding such Distribution
Date by the Pool Principal Balance of the related Mortgage Pool
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
------------------------   ----------------------------
September 2003 - August    100%
2008

September 2008 - August    The related Senior Percentage
2009                       plus 70% of the related
                           Subordinated Percentage

September 2009 - August    The related Senior Percentage
2010                       plus 60% of the related
                           Subordinated Percentage

September 2010 - August    The related Senior Percentage
2011                       plus 40% of the related
                           Subordinated Percentage

September 2011 - August    The related Senior Percentage
2012                       plus 20% of the related
                           Subordinated Percentage

September 2012 and         The related Senior Percentage
thereafter

provided however, (i) if on any Distribution Date the Senior
Percentage for a Certificate Group exceeds the initial Senior
Percentage for such Certificate Group, the Senior Prepayment
Percentage for each Certificate Croup for such Distribution Date
will equal 100%, (ii) if on any Distribution Date before the

                              -26-

<PAGE>

Distribution Date in September 2006, prior to giving effect to
any distributions on such Distribution Date, the Subordinated
Percentage for such Certificate Group for such Distribution Date
is greater than twice the initial Subordinated Percentage for
such Certificate Group, then the Senior Prepayment Percentage for
such Certificate Group for such Distribution Date will equal the
Senior Percentage for such Certificate Group plus 50% of the
Subordinated Percentage for such Certificate Group and (iii) if
on any Distribution Date on or after the Distribution Date in
September 2006, prior to giving effect to any distributions on
such Distribution Date, the Subordinated Percentage for such
Certificate Group for such Distribution Date is greater than
twice the initial Subordinated Percentage for such Certificate
Group, then the Senior Prepayment Percentage for such Certificate
Group for such Distribution Date will equal the Senior Percentage
for such Certificate Group.

     The reductions in the Senior Prepayment Percentage for each
Certificate Group described above will not occur, and the Senior
Prepayment Percentage or each Certificate Group for such prior
period will be calculated without regard to clause (ii) or (iii)
of the paragraph above, unless, as of the last day of the month
preceding the Distribution Date:

     (1)  the aggregate Stated Principal Balance of Mortgage
          Loans in any 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 Fund) does not exceed 50% of the
          aggregate Certificate Principal Balances of the
          Subordinated Certificates as of that date; and

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

          (a)  20% of the related Original Group Subordinate
               Amount if such Distribution Date occurs between and
               including September 2003 and August 2006; and

          (b)  30% of the related Original Group Subordinate
               Amount if such Distribution Date occurs on or after
              September 2006.

     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 Tennessee Bank National
Association 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.

                              -27-

<PAGE>

     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.

     Special Hazard Coverage Termination Date:  The point in time
at 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.

                              -28-

<PAGE>

     Special Hazard Loss Coverage Amount:  Upon the initial
issuance of the Certificates, $12,195,792.59.  As of any
Distribution Date, the Special Hazard Loss Coverage Amount will
equal the greater of

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

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

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

                              -29-

<PAGE>

     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):

          (1)  the related Subordinated 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 Stated Principal Balance of each Mortgage Loan in the related
Mortgage Pool which was the subject of a prepayment in full
received by the Master Servicer during the related Prepayment
Period;

          (3)  the related Subordinated Prepayment Percentage of
all partial prepayments of principal received in respect of each
Mortgage Loan in the related Mortgage Pool during the related
Prepayment Period, plus, on the Senior Final Distribution Date,
100% of any related Senior Optimal Principal Amount remaining
undistributed on such date;

          (4)  the amount, if any, by which the sum of (a) the
net Liquidation Proceeds allocable to principal received during
the related Prepayment Period in respect of each Liquidated
Mortgage Loan in the related Mortgage Pool, 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 Insurance Policy exceeds (c) the sum of the amounts
distributable to the Senior Certificateholders under clause (4)
of the definition of applicable Senior Optimal Principal Amount
on such Distribution Date; and

          (5)  the related Subordinated Prepayment 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 the 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.

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

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

                              -30-

<PAGE>

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

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

     Targeted Principal Classes:  Not applicable.

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

     Tax Matters Person Certificate:  The Class II-A-R
Certificate, 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 MLPA II; (iii) the Certificate Account and the
Distribution Account and all amounts deposited therein pursuant
to the applicable provisions of this Agreement; (iv) property
that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; and (v)
all proceeds of the conversion, voluntary or involuntary, of any
of the foregoing.

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

                              -31-

<PAGE>

     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.

     Two Times Test:  A test that is satisfied with respect to a
Certificate Group and any Distribution Date if the related Senior
Prepayment Percentage for such Distribution Date is determined in
accordance with clause (ii) or (iii) of the proviso in the
definition of "Senior Prepayment Percentage."

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

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

     Undercollateralized Group: With respect to any Distribution
Date, the Senior Certificates of any Certificate Group 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 Pool Principal Balance of the related
Mortgage Pool for such Distribution Date.

     Underwriter:  As specified in the Preliminary Statement.

     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 II-A-R Certificates, in proportion to their then
outstanding Class Certificate Balance; and (b) 2% of all Voting
Rights will be allocated to the Class II-A-R Certificates (such
Voting Rights to be allocated among the Holders of Certificates
of such Class in accordance with their respective Percentage
Interests).

     Weighted Average Adjusted Net Mortgage Rate:  For a Mortgage
Pool, the average of the Adjusted Net Mortgage Rates of the
Mortgage Loans in the related Loan Group, weighted on the basis
of the Stated Principal Balances thereof.

                           ARTICLE II
                  CONVEYANCE OF MORTGAGE LOANS;
                 REPRESENTATIONS AND WARRANTIES

          SECTION 2.1    Conveyance of Mortgage Loans.

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

                              -32-

<PAGE>

     (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, the original recorded Mortgage or
               a copy of such Mortgage certified by the Seller as being a true
               and complete copy of the Mortgage;

         (iii) 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;

          (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
               (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, and

                              -33-

<PAGE>

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

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

               (B)  The executed Security Agreement;

               (C)  The executed Proprietary Lease;

               (D)  The executed Recognition Agreement;

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

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

     In the event that in connection with any Mortgage Loan 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

                              -34-

<PAGE>

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.  Notwithstanding the preceding, in
connection with any Mortgage Loan for which either the original
or duplicate original title policy has not been delivered to the
Trust, if at any time during the term of this Agreement the
parent company of the Seller does not have a long term senior
debt rating of A- or higher from S&P and A- or higher from Fitch
(if rated by Fitch), then the Depositor shall within 30 days
deliver or cause to be delivered to the Trustee or the Custodian
on its behalf (if it has not previously done so) a written
commitment or interim binder or preliminary report of the title
issued by the title insurance or escrow company with respect to
the Mortgaged Property.

     Subject to the immediately following sentence, as promptly
as practicable subsequent to such transfer and assignment, and in
any event, within thirty (30) days thereafter, the Master
Servicer shall (i) complete each assignment of Mortgage, as
follows: "First Horizon Mortgage Pass-Through Certificates,
Series 2003-AR3, 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.

                              -35-

<PAGE>

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

          SECTION 2.2    Acceptance by Trustee of the Mortgage Loans.

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

                              -36-

<PAGE>

     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 Final Certification in the
form annexed hereto as Exhibit G, with any applicable exceptions
noted thereon.

     If, in the course of such review, the Trustee or the
Custodian, on behalf of the Trustee, finds any document
constituting a part of a Mortgage File which does not meet the
requirements of Section 2.1, the Trustee shall list or shall
cause the Custodian to list such as an exception in the Final
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 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.

     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.

                              -37-

<PAGE>

     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.

          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 MLPA I
          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 MLPA I 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.

                              -38-

<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 MLPA I 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.

                              -39-

<PAGE>

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

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

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

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

     The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the date hereof or such
other date set forth herein that as of the Closing Date,
following the transfer of the Mortgage Loans to it pursuant to
MLPA II 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 the REMIC
          created hereunder to fail to qualify as a REMIC at any time that
          any Certificates are outstanding.

                              -40-

<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 MLPA I 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 designations and
"latest possible maturity date" for federal income tax purposes
of all REMIC regular interests created hereby.  The Class II-A-R
Certificates shall be the sole class of residual interest in the
REMIC created hereunder.  The "Startup Day" for purposes of the
REMIC Provisions shall be the Closing Date.  The Tax Matters
Person with respect to the REMIC hereunder shall be the Trustee
and the Trustee shall hold the Tax Matters Person Certificate.
The REMIC's taxable year shall be the calendar year and its
accounts shall be maintained using the accrual method.

          SECTION 2.8    Covenants of the Master Servicer.

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

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

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

                              -41-

<PAGE>

                           ARTICLE III
         ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

          SECTION 3.1    Master Servicer to Service Mortgage Loans.

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

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

          SECTION 3.2    Subservicing; Enforcement of the Obligations of
     Servicers.

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

     (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.

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          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.

     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.

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     (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:

          (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 and any Prepayment Interest Excess;

        (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), 3.9(d), and in respect of net monthly rental income from
               any related REO Property pursuant to Section 3.11 hereof;

         (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.

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          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.

     (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.

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          (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.

          (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

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          advances by the Master Servicer) for the payment of
          taxes, assessments, hazard insurance premiums or
          comparable items for the account of the Mortgagors.
          Nothing herein shall require the Master Servicer to
          compel a Mortgagor to establish an Escrow Account in
          violation of applicable law.

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

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

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

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

     Upon reasonable advance notice in writing, the Master
Servicer will provide to each Certificateholder 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 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 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:

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

          (ii) to the extent not previously retained by the Master
               Servicer, to reimburse the Master Servicer for unreimbursed
               Advances made by it 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;

          (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, 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.

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          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.

     (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
          prior to making the distribution pursuant to Section 4.2 from
          time to time make withdrawals from the Distribution Account for
          the following purposes:

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

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

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

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

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

     (a)  The Master Servicer shall cause to be maintained, for each
          Mortgage Loan, hazard insurance with extended coverage in an
          amount that is at least equal to the lesser of (i) the maximum
          insurable value of the improvements securing such Mortgage Loan
          or (ii) the greater of (y) the outstanding principal balance of
          the Mortgage Loan and (z) an amount such that the proceeds of
          such policy shall be sufficient to prevent the Mortgagor and/or
          the mortgagee from becoming a co-insurer. Each such policy of
          standard hazard insurance shall contain, or have an accompanying
          endorsement that contains, a standard mortgagee clause. Any
          amounts collected by the Master Servicer under any such policies
          (other than the amounts to be applied to the restoration or
          repair of the related Mortgaged Property or amounts released to
          the Mortgagor in accordance with the Master Servicer's normal
          servicing procedures) shall be deposited in the 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

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          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.

     (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.

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

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

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

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

                              -52-

<PAGE>

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

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

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

                              -53-

<PAGE>

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 and may, incident to its conservation and
protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Master Servicer deems to be in
the best interest of the Certificateholders for the period prior
to the sale of such REO Property. The Master Servicer shall
prepare for and deliver to the Trustee a statement with respect
to each REO Property that has been rented showing the aggregate
rental income received and all expenses incurred in connection
with the management and maintenance of such REO Property at such
times as is necessary to enable the Trustee to comply with the
reporting requirements of the REMIC Provisions. The net monthly
rental income, if any, from such REO Property shall be deposited
in the Certificate Account no later than the close of business on
each Determination Date. The Master Servicer shall perform the
tax reporting and withholding required by Sections 1445 and 6050J
of the Code with respect to foreclosures and abandonments, the
tax reporting required by Section 6050H of the Code with respect
to the receipt of mortgage interest from individuals and any tax
reporting required by Section 6050P of the Code with respect to
the cancellation of indebtedness by certain financial entities,
by preparing such tax and information returns as may be required,
in the form required, and delivering the same to the Trustee for
filing.

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

                              -54-

<PAGE>

     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.

     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

                              -55-

<PAGE>

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.

     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.

                              -56-

<PAGE>

          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.

          SECTION 3.14   Master Servicing Compensation.

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

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

                              -57-

<PAGE>

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

          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 2003 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.

          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 2003 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

                              -58-

<PAGE>

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 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.

          SECTION 3.19   Notification of Adjustments.

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

                           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

                              -59-

<PAGE>

in the applicable subaccount of the Certificate Account no later
than the close of business on the Business Day preceding the next
Master Servicer Advance Date. The Master Servicer shall be
entitled to be reimbursed from the 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 of 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, the Accrued Certificate Interest on each such
               Class for such Distribution Date;

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

         (iii) to the Classes of Senior Certificates of the related
               Certificate Group, to the extent of remaining Available Funds
               from the related Mortgage Pool, the related Senior Optimal
               Principal Amount for such Distribution Date and, in the case of
               the Group II Senior Certificates, in the order of priority set
               forth below in Section 4.2(b), until the respective Class
               Certificate Balances thereof have been reduced to zero;

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

                              -60-

<PAGE>

          (v)  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(g), in the
               following order: (1) the Accrued Certificate Interest thereon for
               such Distribution Date, (2) any Accrued Certificate Interest
               thereon remaining undistributed from previous Distribution Dates
               and (3) such Class' Allocable Share for such Distribution Date;

          (vi) to the Class B-3 Certificates, to the extent of remaining
               Available Funds for the Mortgage Pools, but subject to the prior
               payment of amounts described under Section 4.2(g), in the
               following order: (1) the Accrued Certificate Interest thereon for
               such Distribution Date, (2) any Accrued Certificate Interest
               thereon remaining undistributed from previous Distribution Dates
               and (3) such Class' Allocable Share for such Distribution Date;

        (vii)  to the Class B-4 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools, but subject to
               the prior payment of amounts described under Section 4.2(g) in
               the following order: (1) the Accrued Certificate Interest thereon
               for such Distribution Date, (2) any Accrued Certificate Interest
               thereon remaining undistributed from previous Distribution Dates
               and (3) such Class' Allocable Share for such Distribution Date;

       (viii)  to the Class B-5 Certificates, to the extent of
               remaining Available Funds for the Mortgage Pools, but subject to
               the prior payment of amounts described under Section 4.2(g) in
               the following order: (1) the Accrued Certificate Interest thereon
               for such Distribution Date, (2) any Accrued Certificate Interest
               thereon remaining undistributed from previous Distribution Dates
               and (3) such Class' Allocable Share for such Distribution Date;
               and

          (ix) to the Class B-6 Certificates, to the extent of remaining
               Available Funds for each Mortgage Pool, but subject to the prior
               payment of amounts described under Section 4.2(g) in the
               following order: (1) the Accrued Certificate Interest thereon for
               such Distribution Date, (2) any Accrued Certificate Interest
               thereon remaining undistributed from previous Distribution Dates
               and (3) such Class' Allocable Share for such Distribution Date.

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

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

         (ii)  to the Class II-A-1 Certificates, until the Class
               Certificate Balance thereof has been reduced to zero.

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<PAGE>

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

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

     (e)  If (i) on any Distribution Date 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 amounts distributable to such Class or Classes of
          Subordinated Certificates pursuant to clauses (2), (3) and (5) of
          the applicable Subordinated Optimal Principal Amount remain
          undistributed on such Distribution Date after all amounts
          otherwise distributable on such date pursuant to clauses (iv)
          through (ix) of Section 4.2(a) have been distributed, such
          amounts, to the extent of such Class' remaining Allocable Share,
          shall be distributed on such Distribution Date to the remaining
          Classes of Subordinated Certificates in order of priority, such
          that no such distribution shall be made to any Class of
          Subordinated Certificates while a Class of Subordinated
          Certificates having a distribution priority higher than such
          Class is outstanding; and (ii) notwithstanding the priorities and
          allocations contained in Section 4.2(a) and (b), with respect to
          any Certificate Group, the Two Times Test is not satisfied, each
          Class of Subordinated Certificates will be entitled to receive,
          in respect of clauses (2), (3) and (5) of the definition of
          Subordinated Optimal Principal Amount for each mortgage pool, an
          amount equal to the product of (x) their Allocable Share and (y)
          the percentages set forth in the following table:

Distribution Date occurring in                 Percentage
----------------------------------             -----------
September 2003 through August 2008             0%

September 2008 through August 2009             30%

September 2009 through August 2010             40%

September 2010 through August 2011             60%

September 2011 through August 2012             80%

September 2012 and thereafter                  100%

                              -62-

<PAGE>

     (f)  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 from the Distribution
          Account and distribute to the Holders of each outstanding Class
          to which such Realized Loss had previously been allocated its
          share (determined as described in the succeeding paragraph) of
          such Unanticipated Recovery in an amount not to exceed the amount
          of such Realized Loss previously allocated to such Class.  When
          the Class Certificate Balance of a Class of Certificates has been
          reduced to zero, the Holders of such Class shall not be entitled
          to any share of an Unanticipated Recovery, and such Unanticipated
          Recovery shall be allocated among all outstanding Classes of
          Certificates entitled thereto in accordance with the preceding
          sentence, subject to the remainder of this subsection (f).  In
          the event that (i) any Unanticipated Recovery remains
          undistributed in accordance with the preceding sentence or (ii)
          the amount of an Unanticipated Recovery exceeds the amount of the
          Realized Loss previously allocated to any outstanding Classes
          with respect to the related Mortgage Loan, on the applicable
          Distribution Date the Trustee shall distribute to the Holders of
          all outstanding Classes of the related Certificates to which
          Realized Losses had previously been allocated and not reimbursed
          their pro rata share (determined as described below) of such
          excess in an amount not to exceed the aggregate amount of any
          Realized Loss previously allocated to such Class with respect to
          any other Mortgage Loan that has not been recovered in accordance
          with this subsection (f).  Any distributions made pursuant to
          this subsection (f) shall not be deemed to be a distribution of
          principal in reduction of the Class Certificate Balance of the
          related Certificate.

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

     (g)  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 in accordance with
          the priorities set forth in Section 4.2(b), 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 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 Mortgage Pool
          not related to an Undercollateralized Group remaining after all
          required amounts for that Distribution Date have been distributed
          to the Senior Certificates of  such other Certificate Group.  In
          addition, the amount of any unpaid Net Interest Shortfalls with
          respect to any Undercollateralized Group on any Distribution Date
          (including any Net

                              -63-

<PAGE>

          Interest Shortfalls for the related Distribution Date)
          will be distributed to the Senior Certificates of such
          Undercollateralized Group 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(g), 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
          Undercollateralized Groups.  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
          a Certificate Group (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 Groups
          pro rata, on the basis of the aggregate Class
          Certificate Balance of the related Senior 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, 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%.  Except as
          provided otherwise in this Section 4.2(g), all
          distributions described above will be made in
          accordance with the priorities set forth in Section
          4.2(a) and 4.2(b).

          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

                              -64-

<PAGE>

          made by the Trustee to the Certificateholders of record
          on the related Record Date by check or money order
          mailed to a Certificateholder at the address appearing
          in the Certificate Register, or upon written request by
          such Certificateholder to the Trustee made not later
          than the applicable Record Date, by wire transfer to a
          U.S. depository institution acceptable to the Trustee,
          or by such other means of payment as such
          Certificateholder and the Trustee shall agree.

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

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

          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.

                              -65-

<PAGE>

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

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

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

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

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

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

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

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

     (c)  With respect to any Distribution Date, 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).

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

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

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

                              -66-

<PAGE>

     (g)  Notwithstanding the foregoing, no such allocation of any
          Realized Loss shall be made on a Distribution Date to a Class of
          Certificates to the extent that such allocation would result in
          the reduction of the aggregate Certificate Principal 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").

          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.mbsreporting.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;

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<PAGE>

        (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;

          (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
               in each Mortgage Pool 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.

                              -68-

<PAGE>

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

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

          SECTION 4.7    Reserved.

                            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

                              -69-

<PAGE>

evidence, that such Certificate has been duly executed and
delivered hereunder. All Certificates shall be dated the date of
their countersignature. On the Closing Date, the Trustee shall
countersign the Certificates to be issued at the direction of the
Depositor, or any affiliate thereof.

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

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

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

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

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

          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

                              -70-

<PAGE>

          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.

          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 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 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

                              -71-

<PAGE>

     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.

          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.

          (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

                              -72-

<PAGE>

               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 the REMIC created hereunder to
     fail to qualify as a REMIC at any time that the Certificates
     are outstanding or result in the imposition of any tax on
     the Trust Fund, a Certificateholder or another Person. Each
     Person holding or acquiring any Ownership Interest in a
     Residual Certificate hereby consents to any amendment of
     this Agreement which, based on an Opinion of Counsel
     furnished to the Trustee, is reasonably necessary (a) to
     ensure that the record ownership of, or any beneficial
     interest in, a Residual Certificate is not transferred,
     directly or indirectly, to a Person that is not a Permitted
     Transferee and (b) to provide for a means to compel the
     Transfer of a Residual Certificate which is held by a Person
     that is not a Permitted Transferee to a Holder that is a
     Permitted Transferee.

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

                              -73-

<PAGE>

     (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

                              -74-

<PAGE>

     recognize the Holders of the Definitive Certificates as
     Certificateholders hereunder; provided that the Trustee
     shall not by virtue of its assumption of such obligations
     become liable to any party for any act or failure to act of
     the Depository.

          SECTION 5.3    Mutilated, Destroyed, Lost or Stolen Certificates.

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

          SECTION 5.4    Persons Deemed Owners.

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

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

     If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such
Certificateholders 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 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 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, by
receiving and holding a Certificate, agree that the Trustee shall
not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder,
regardless of the source from which such information was derived.

          SECTION 5.6    Maintenance of Office or Agency.

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

                              -75-

<PAGE>

                           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 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

                              -76-

<PAGE>

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

          (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

                              -77-

<PAGE>

               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 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

                              -78-

<PAGE>

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
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

                              -79-

<PAGE>

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 6.5.

          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.

                              -80-

<PAGE>

     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.

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

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

          (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

                              -81-

<PAGE>

               contained in this Agreement shall in any event
               require the Trustee to perform, or be responsible
               for the manner of performance of, any of the
               obligations of the Master Servicer under this
               Agreement except during such time, if any, as the
               Trustee shall be the successor to, and be vested
               with the rights, duties, powers and privileges of,
               the Master Servicer; and

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

          SECTION 8.2    Certain Matters Affecting the Trustee.

     Except as otherwise provided in Section 8.1:

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

          (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;

                              -82-

<PAGE>

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

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

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

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

        (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

                              -83-

<PAGE>

          (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 other than with respect to the Trustee's
execution and counter-signature of the Certificates.  The Trustee
shall not be accountable for the use or application by the
Depositor or the Master Servicer of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans
or deposited in or withdrawn from the Certificate Account by the
Depositor or the Master Servicer.

          SECTION 8.4    Trustee May Own Certificates.

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

          SECTION 8.5    Trustee's Fees and Expenses.

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

                              -84-

<PAGE>

          SECTION 8.6    Eligibility Requirements for Trustee.

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

          SECTION 8.7    Resignation and Removal of Trustee.

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

     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.

                              -85-

<PAGE>

     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.

     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.

                              -86-

<PAGE>

          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.

     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

                              -87-

<PAGE>

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.

          SECTION 8.11   Tax Matters.

     It is intended that the assets with respect to which the
REMIC election is to be made, as set forth in the preliminary
statement shall constitute, and that the conduct of matters
relating to such assets shall be such as to qualify such assets
as, a "real estate mortgage investment conduit" as defined in and
in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall act as
agent (and the Trustee is hereby appointed to act as agent) on
behalf of 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);

                              -88-

<PAGE>

(f) to the extent that they are under its control conduct matters
relating to such assets at all times that any Certificates are
outstanding so as to maintain the status as a REMIC under the
REMIC Provisions; (g) not knowingly or intentionally take any
action or omit to take any action that would cause the
termination of the REMIC status; (h) pay, from the sources
specified in the last paragraph of this Section 8.11, the amount
of any federal or state tax, including prohibited transaction
taxes as described below, imposed on 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.

     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).

                              -89-

<PAGE>

          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.

                           ARTICLE IX
                           TERMINATION

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

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

                              -90-

<PAGE>

          SECTION 9.2    Final Distribution on the Certificates.

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

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

     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

                              -91-

<PAGE>

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

          SECTION 9.3    Additional Termination Requirements.

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

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

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

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

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

                              -92-

<PAGE>

                            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 the REMIC established hereunder as
a REMIC under the Code, (ii) avoid or minimize the risk of the
imposition of any tax on the REMIC established hereunder pursuant
to the Code that would be a claim at any time prior to the final
redemption of the Certificates or (iii) comply with any other
requirements of the Code, provided that the Trustee has been
provided an Opinion of Counsel, which opinion shall be an expense
of the party requesting such opinion but in any case shall not be
an expense of the Trustee or the Trust Fund, to the effect that
such action is necessary or helpful to, as applicable, (i)
maintain such qualification, (ii) avoid or minimize the risk of
the imposition of such a tax or (iii) comply with any such
requirements of the Code.

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

                              -93-

<PAGE>

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

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

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

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

          SECTION 11.2   Recordation of Agreement; Counterparts.

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

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

          SECTION 11.3   Governing Law.

     THIS AGREEMENT (OTHER THAN SECTION 2.1 HEREOF) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS,

                              -94-

<PAGE>

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.

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

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

                              -95-

<PAGE>

               (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.

     (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: Wade Walker; (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.

                              -96-

<PAGE>

          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.

     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

                              -97-

<PAGE>

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.

     (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 MLPA I.

                           * * * * * *

                              -98-

<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:_______________________________
                                   Wade Walker
                                     Senior Vice President -
                                     Asset Securitization

                              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:_______________________________
                                   Wade Walker
                                    Senior Vice President -
                                    Asset Securitization

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:  _____________________________
     Wade Walker
     Senior Vice President - Asset Securitization

FHASI 2003-AR3
Pooling and Servicing Agreement - Signature Page

<PAGE>

                           SCHEDULE I

               First Horizon Asset Securities Inc.
       Mortgage Pass-Through Certificates Series 2003-AR3

                     Mortgage Loan Schedule

              [Available Upon Request from Trustee]

                               I-1

<PAGE>

                           SCHEDULE II

               First Horizon Asset Securities Inc.
       Mortgage Pass-Through Certificates Series 2003-AR3

      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

                              II-1

<PAGE>

     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.

          (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.

                              II-2

<PAGE>

                          SCHEDULE III

               First Horizon Asset Securities Inc.
       Mortgage Pass-Through Certificates Series 2003-AR3

             Form of Monthly Master Servicer Report
             --------------------------------------

                      [Begins on Next Page]

                              III-1

<PAGE>

                            EXHIBIT A

                  [FORM OF SENIOR CERTIFICATE]

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

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

                               A-1

<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 Mortgage Pass-Through Trust 2003-AR3
       Mortgage Pass-Through Certificates, Series 2003-AR3
                        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 a pool of conventional mortgage loans (the "Mortgage
     Loans") secured by first liens on one- to four-family
     residential properties.

        First Horizon Asset Securities Inc., as Depositor

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

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

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

                               A-2

<PAGE>

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

                               A-3

<PAGE>

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

Dated:  August __, 2003

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

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

Countersigned:

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

                               A-4

<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.]

[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 THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR A PLAN 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

                               B-1

<PAGE>

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 Mortgage Pass-Through Trust 2003-AR3
       Mortgage Pass-Through Certificates, Series 2003-AR3
                           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 a pool 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 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 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 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 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 and the Master Servicer 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 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.

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

                               B-4

<PAGE>

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

Dated:  August __, 2003

                              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 IS
A "RESIDUAL 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 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 SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR A PLAN 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 Mortgage Pass-Through Trust 2003-AR3
       Mortgage Pass-Through Certificates, Series 2003-AR3

          evidencing the distributions allocable to the
     Class II-A-R Certificates with respect to a Trust Fund
     consisting primarily of a pool 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 II-A-R Certificate at the Corporate Trust Office or
the office or agency maintained by the Trustee in New York, New
York.

     No transfer of a Class II-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 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 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 and the Master Servicer to
the effect that the purchase or holding of such Class II-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
or the Master Servicer.  [Such representation shall be deemed to
have been made to the Trustee by the Transferee's acceptance of
this Class II-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 II-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 II-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
II-A-R Certificate must be a Permitted Transferee, (ii) no
Ownership Interest in this Class II-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 II-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 II-A-R Certificate must agree not to
transfer an Ownership Interest in this Class II-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 II-A-R Certificate in
violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.

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

                               C-3

<PAGE>

     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:  August __, 2003

                              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 Mortgage Pass-Through Trust 2003-AR3
               Mortgage Pass-Through Certificates

     This Certificate is one of a duly authorized issue of
Certificates designated as First Horizon Mortgage Pass-Through
Trust 2003-AR3 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

                               D-1

<PAGE>

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.

     As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate
is registrable in the Certificate Register of the Trustee upon
surrender of this Certificate for registration of transfer at the
Corporate Trust Office or the office or agency maintained by the
Trustee in New York, New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon
one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated
transferee or transferees.

     The Certificates are issuable only as registered
Certificates without coupons in denominations specified in the
Agreement.  As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for
new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.

     No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

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

     On any Distribution Date on which the Pool Principal Balance
is less than 10% of the aggregate Cut-off Date Pool Principal
Balance of Pool I, Pool II and Pool III combined, 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 August 29, 2003 by and
          among the Bank of New York, as Trustee, First Horizon
          Home Loan Corporation, as Servicer and LaSalle 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 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. Capitalized words and phrases used herein
shall have the respective meanings assigned to them in the
Custodial Agreement.

                               E-1

<PAGE>

                              LASALLE 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 August 29, 2003 by and
          among the Bank of New York, as Trustee, First Horizon
          Home Loan Corporation, as Servicer and LaSalle 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";
and

     (ii) a duly executed assignment of the Mortgage (which may
be included in a blanket assignment or assignments); provided,
however, that it has received no assignment with respect to any
Mortgage for which the related Mortgage Property is located in
the Commonwealth of Puerto Rico.

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

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

                               F-1

<PAGE>

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

                              LASALLE BANK NATIONAL ASSOCIATION,

                              By:_____________________________
                              Name:___________________________
                              Title:__________________________

                               F-2

<PAGE>

                            EXHIBIT G

            FORM OF FINAL 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 August 29, 2003 by and
          among the Bank of New York, as Trustee, First Horizon
          Home Loan Corporation, as Servicer and LaSalle Bank
          National Association, as Custodian

Ladies and 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 paid in full or listed on the attached Document Exception
Report) it has received:

          (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 below, the original recorded Mortgage or
               a copy of such Mortgage certified by the Seller as being a true
               and complete copy of the Mortgage;

         (iii) 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 related); provided
               that, if the

                               G-1

<PAGE>

               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
               (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, 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).

               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

                               G-2

<PAGE>

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.

                         LASALLE BANK NATIONAL ASSOCIATION,

                              By:_______________________________
                              Name:_____________________________
                              Title:____________________________

                               G-3

<PAGE>

                            EXHIBIT H

                       TRANSFER AFFIDAVIT

       First Horizon Mortgage Pass-Through Trust 2003-AR3
               Mortgage Pass-Through Certificates
                         Series 2003-AR3

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 II-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 that is
subject to ERISA or a plan that is subject to Section 4975 of the
Code, and the Transferee is not acting on behalf of such a plan.

     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 the REMIC created pursuant to the Agreement
to fail to qualify as a REMIC at any time that the Certificates
(as defined in the Agreement) are outstanding; provided, however,
that if a person is classified as a partnership or a disregarded
entity under the Code, such person shall only be a Permitted
Transferee if all of its beneficial owners are described in
subclauses (a), (b), (c) or (d) of clause (vi) and the governing
documents of such person prohibits a transfer of any interest in
such person to any person described in clause (vi). The terms
"United States," "State" and "International Organization" shall
have the meanings set forth in section 7701 of the Code or
successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political
subdivision thereof for these purposes if all of its activities
are subject to tax and, with the exception of the Federal Home
Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.

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

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

                               H-4

<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, and 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 the REMIC created hereunder to fail
to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding
or acquiring any Ownership Interest in a Residual Certificate
hereby consents to any amendment of this Agreement which, based
on an Opinion of Counsel furnished to the Trustee, is reasonably
necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Residual Certificate is not
transferred, directly or indirectly, to a Person that is not a
Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Residual Certificate which is held by a Person that
is not a Permitted Transferee to a Holder that is a Permitted
Transferee.

                               H-7

<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 Mortgage Pass-Through Trust 2003-AR3
          Mortgage Pass-Through Certificates, Series 2003-AR3,
          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 the 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 August 1, 2003, 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 Mortgage Pass-Through Trust 2003-AR3
          Mortgage Pass-Through Certificates, Series 2003-AR3,
          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 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 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 PTCE
95-60, (e) if an insurance company, 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 PTCE
95-60, (f) 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 (h) below), (g) 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 (h) we
will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other

                               J-1

<PAGE>

disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration
requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this
Certificate that such sale, transfer or other disposition may be
made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you
a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise
complied with any conditions for transfer set forth in the
Pooling and Servicing Agreement.

                                   Very truly yours,

                                   ____________________________
                                    Print Name of 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 Mortgage Pass-Through Trust 2003-AR3
          Mortgage Pass-Through Certificates, Series 2003-AR3,
          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 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, 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
PTCE 95-60, (f) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any
interest in the Certificates or any other similar security from,
or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any
other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would
render the disposition of the Certificates a violation of Section
5 of the Act or require registration pursuant thereto, nor will
act, nor has authorized or will

                               K-1

<PAGE>

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 $ ______[FN-1] in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.

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

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

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

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

          ___  Insurance Company.  The Buyer is an insurance
     company whose primary and predominant business activity is
     the writing of insurance or the reinsuring of risks
     underwritten by insurance companies and which is subject to

          -----------------
FN-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>

     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.

     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

                               K-4

<PAGE>

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 LASALLE 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 LASALLE 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-1MORTGAGE LOAN PURCHASE AGREEMENT

     THIS MORTGAGE LOAN PURCHASE AGREEMENT dated as of August 29,
2003 by and between FIRST HORIZON HOME LOAN CORPORATION, a Kansas
corporation (the "Seller"), and FIRST TENNESSEE BANK NATIONAL
ASSOCIATION (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.

     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:  August 29, 2003

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

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

     Coop Shares:  Shares issued by a Cooperative Corporation.

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

                               -1-

<PAGE>

     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:  LaSalle Bank National Association, a national
banking association, and its successors and assigns, as custodian
under the Custodial Agreement dated as of August 29, 2003 by and
among The Bank of New York, as trustee, First Horizon Home Loan
Corporation, as master servicer, and the Custodian.

     Cut-Off Date:  August 1, 2003.

     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 applied accounting principals as in effect
from time to time in the United States of America.

     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.

                               -2-

<PAGE>

     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.

     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:  $384,674,889.34

     Purchaser:  First Tennessee Bank National Association, 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.

                               -3-

<PAGE>

     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 Tennessee Bank National
Association 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 Loan; (ii) have 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.

                               -4-

<PAGE>

                           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"):

     (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, the original recorded Mortgage or
          a copy of such Mortgage certified by the Seller as being a true
          and complete copy of the Mortgage;

                               -5-

<PAGE>

     (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, and

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

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

          (2)  The executed Security Agreement;

          (3)  The executed Proprietary Lease;

          (4)  The executed Recognition Agreement;

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

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

     In the event that in connection with any Mortgage Loan 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

                               -6-

<PAGE>

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. 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.

     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.

                               -7-

<PAGE>

                           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.

               (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.

                               -8-

<PAGE>

               (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.

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

     (c)  Upon discovery by either of the parties hereto of a
          breach of a representation or warranty made pursuant to Schedule
          B hereto that materially and adversely affects the interests of
          the Purchaser in any Mortgage Loan, the party discovering such
          breach shall give prompt notice thereof to the other party. The
          Seller hereby covenants that within 90 days of the earlier of its
          discovery or its receipt of written notice from the Purchaser of
          a breach of any representation or warranty made pursuant to
          Schedule B hereto which materially and adversely affects the
          interests of the Purchaser in any Mortgage Loan, it shall cure
          such breach in all material respects, and if such breach is not
          so cured, shall, (i) if such 90-day period expires prior to the
          second anniversary of the Closing Date, remove such Mortgage Loan
          (a "Deleted Mortgage Loan") from the pool of mortgages listed on
          Schedule B hereto and substitute in its place a Substitute
          Mortgage Loan, in the manner and subject to the conditions set
          forth in this Section; or (ii) repurchase the affected Mortgage
          Loan or Mortgage Loans from the Purchaser at the Mortgage Loan
          Purchase Price in the manner set forth below.  With respect to
          the representations and warranties described in this Section
          which are made to the best of the Seller's knowledge, if it is
          discovered by either the Seller or the Purchaser that the
          substance of such representation and warranty is inaccurate and
          such inaccuracy materially and adversely affects the value of the
          related Mortgage Loan or the interests of the Purchaser therein,
          notwithstanding the Seller's lack of knowledge with respect to
          the substance of such representation or warranty, such inaccuracy
          shall be deemed a breach of the applicable representation or
          warranty.

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

                               -9-

<PAGE>

          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.

                            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.

                              -10-

<PAGE>

     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:      165 Madison Avenue
                                   Memphis, Tennessee 38103
                                   Attn: Clyde A. Billings, Jr.

               If to the Seller:   4000 Horizon Way
                                   Irving, Texas 75063
                                   Attn: Larry P. Cole

     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]

                              -11-

<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 29th day of August, 2003.

                              FIRST HORIZON HOME LOAN
                              CORPORATION, as Seller

                              By:______________________________
                                   Wade Walker
                                   Senior Vice President - Asset
                                     Securitization

                              FIRST TENNESSEE BANK NATIONAL
                              ASSOCIATION, as Purchaser

                              By:_______________________________
                                   Wade Walker
                                   Senior Vice President - Asset
                                     Securitization

Mortgage Loan Purchase Agreement I - 2003-AR3, 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 Tennessee Bank National Association
(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
August 29, 2003 (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.

     (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.

     (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.

                               B-1

<PAGE>

     (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.

     (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.

     (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.

                               B-2

<PAGE>

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

                               B-3

<PAGE>

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

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

     (25) At origination, substantially all of the Mortgage Loans in
          the Mortgage Pools had stated terms to maturity of 30 years.

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

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

     (28) Substantially all 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, Pool II and Pool III was
          originated on or after January 1, 2003, October 15, 2002 and
          February 7, 2003, respectively.

     (30) The latest stated maturity date of any Mortgage Loan in Pool
          I, Pool II and Pool III is August 1, 2033.  The earliest stated
          maturity of any Mortgage Loan in Pool I is February 1, 2033.  The
          earliest stated maturity date of any Mortgage Loan in Pool II is
          November 1, 2032.  The earliest stated maturity date of any
          Mortgage Loan in Pool III is March 1, 2033.

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

                               B-4

<PAGE>

     (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.

                               B-5

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