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MORTGAGE LOAN PURCHASE
AGREEMENT
Dated as of November 21,
2006
between
FIRST HORIZON ASSET SECURITIES
INC.
(Purchaser)
and
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
(Seller)
First Horizon ABS Trust
2006-HE2
MORTGAGE LOAN PURCHASE AGREEMENT, dated as of
November 21, 2006 (this "Agreement"), between First Tennessee Bank
National Association (the "Seller") and First Horizon Asset
Securities Inc. (the "Purchaser").
WITNESSETH
WHEREAS, the Seller is the owner of the notes or
other evidence of indebtedness (the "Mortgage Notes") indicated on
Schedule I hereto (the "Mortgage Loan Schedule"), and the Related
Documents (as defined in Section 2.03 below, and together with the
Mortgage Notes, the "Mortgage Loans");
WHEREAS, the Seller, as of the date hereof, owns
the mortgages (the "Mortgages") on the properties (the "Mortgaged
Properties") securing the Mortgage Loans, including rights to (a)
any property acquired by foreclosure or deed in lieu of foreclosure
or otherwise and (b) the proceeds of any insurance policies
covering the Mortgage Loans or the Mortgaged Properties or the
obligors on the Mortgage Loans;
WHEREAS, the parties hereto desire that the
Seller sell the Mortgage Loans to the Purchaser pursuant to the
terms of this Agreement; and
WHEREAS, pursuant to the terms of a Sale and
Servicing Agreement dated as of November 1, 2006 (the "Sale and
Servicing Agreement") among the Seller, as seller and as servicer,
the Purchaser, as depositor, The Bank of New York, as indenture
trustee (the "Indenture Trustee") and First Horizon ABS Trust
2006-HE2 (the "Trust"), the Purchaser will convey the Mortgage
Loans to the Trust.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions . All capitalized terms used but not defined
herein shall have the meanings assigned thereto in the Sale and
Servicing Agreement.
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE
PRICE
Section 2.01 Sale
of Mortgage Loans . The Seller, concurrently with the
execution and delivery of this Agreement, does hereby sell, assign,
set over, and otherwise convey to the Purchaser, without recourse,
all of its right, title and interest in and to (i) each Mortgage
Loan and the related Mortgage File, including its Cut-Off Date
Principal Balance (including all Additional Balances resulting from
Draws made pursuant to the related Mortgage Note prior to the
termination of the Trust; provided, however, that the Purchaser
does not assume any obligation under any Mortgage Note to fund any
such future Draws, and the Purchaser will not be obligated or
permitted to fund any such future Draws) and all collections in
respect of interest and principal received after the related
Cut-Off Date; (ii) property that secured a Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure;
(iii) its rights under any insurance policies maintained in respect
of the Mortgage Loans (including any insurance proceeds); and (iv)
any and all proceeds of the foregoing.
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Section 2.02 Reserved .
Section 2.03 Obligations of Seller Upon Sale . In connection with any
transfer pursuant to Section 2.01 hereof, the Seller further
agrees, at its own expense, on or prior to the Closing Date, (a) to
indicate in its books and records that the Mortgage Loans have been
sold to the Purchaser or to the Owner Trustee as assignee of the
Purchaser, as applicable, pursuant to this Agreement and (b) to
deliver to the Purchaser or at the direction of the Purchaser, to
the Indenture Trustee, as applicable, a computer file containing a
true and complete list of all such Mortgage Loans specifying, among
other things, for each such Mortgage Loan, as of the Cut-Off Date,
(1) its account number and (2) the Cut-Off Date Principal Balance.
Such file, which forms a part of Exhibit A to the Sale and
Servicing Agreement, shall also be marked as Schedule I to this
Agreement and is hereby incorporated into and made a part of this
Agreement.
In connection with such transfer by the Seller,
the Seller agrees to:
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(i)
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on behalf of the Purchaser, on or before the
Closing Date, deliver to and deposit with the Purchaser or, at the
direction of the Purchaser, to the Indenture Trustee (or its
designee), the Mortgage Loan Schedule in computer readable format;
and
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(ii)
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on behalf of the Purchaser, deliver to and
deposit with the Custodian, for the benefit of the Indenture
Trustee and the Insurer, the following documents or instruments
with respect to each Mortgage Loan so assigned:
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(A) the
original Mortgage Note, endorsed in blank, or a copy of such
original Mortgage Note with an accompanying Lost Note
Affidavit;
(B) the original
Assignment of Mortgage from the Seller to "The Bank of New York, as
Indenture Trustee for First Horizon ABS Trust 2006-HE2", which
assignment shall be in form and substance acceptable for
recording;
(C)the original recorded Mortgage or a copy of
such recorded Mortgage, certified by the Seller as being a true and
complete copy thereof; provided that if the original Mortgage has
been delivered for recording to the appropriate public recording
office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by such
recording office, the Seller shall deliver to the Custodian a copy
of such original Mortgage, certified by the Seller as being a true
and complete copy thereof and certifying that such original
Mortgage has been so delivered to such recording office; in all
such instances, the Seller shall deliver or cause to be delivered
to the Custodian the original recorded Mortgage, or a copy thereof,
certified by the Seller as being a true and complete copy thereof,
promptly upon its receipt thereof;
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(D) (i) if the
Credit Limit for such Mortgage Loan is greater than $500,000, the
original attorney’s opinion of title or the original policy
of title insurance, or a copy of the original attorney’s
opinion of title or the original policy of title insurance,
certified by the Seller as being a true and complete copy thereof;
or (ii) if the Credit Limit for such Mortgage Loan is equal to
or less than $500,000, the Seller may deliver to the Custodian an
original lender’s policy of title insurance or a copy of the
original lender’s policy of title insurance, certified by the
Seller as being a true and complete copy thereof, or, if the
Mortgage Loan is insured by alternative title protection evidenced
by a certificate of lien protection policy, the Seller may deliver
to the Custodian an original lien protection certificate or copy of
the original lien protection certificate, certified by the Seller
as being a true and complete copy thereof; or (iii) if the Mortgage
Loan is a "combo loan" pursuant to which the Seller has also
originated the related Senior Lien, the Seller may deliver to the
Custodian a copy of the original attorney’s opinion of title
or the original policy of title insurance for the first lien
mortgage loan;
(E) all original
intervening recorded assignments, or copies of such intervening
assignments certified by the Seller as being true and complete
copies of the interim assignments (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 related Mortgage); 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; and
(F) originals of all
assumption and modification agreements, if any, or copies thereof,
certified by the Seller as being true and complete copies
thereof,
provided, however, that as to any Mortgage Loan,
if as evidenced by an Opinion of Counsel delivered to and in form
and substance satisfactory to the Owner Trustee, the Indenture
Trustee, the Insurer and the Rating Agencies, (x) an optical image
or other representation of the related documents specified in
clause (ii)(C) above is enforceable in the relevant jurisdictions
to the same extent as the original of such document and (y) such
optical image or other representation does not impair the ability
of an owner of such Mortgage Loan to transfer or perfect its
interest in such Mortgage Loan, such optical image or other
representation may be delivered as required in clause (ii)
above.
The Seller hereby confirms to the Purchaser that
it has made the appropriate entries in its general accounting
records, to indicate clearly and unambiguously that such Mortgage
Loans have been sold to the Purchaser by the Seller, sold by the
Purchaser to the Trust and pledged by the Trust to the
Indenture Trustee and constitute part of the Trust in accordance
with the terms of the Sale and Servicing Agreement.
The Purchaser hereby acknowledges its acceptance
of all right, title and interest to the Mortgage Loans and other
property, now existing and hereafter created, conveyed to it
pursuant to Section 2.01 above.
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The Seller hereby acknowledges that, within 90
days following the occurrence of an Assignment Event specified in
clause (i) of the definition thereof, the Seller shall (i)
segregate (a) the Related Documents from documents and instruments
relating to mortgage loans that are not Mortgage Loans and (b) the
Mortgage Note from the Related Documents for each Mortgage Loan and
shall assemble and maintain the Mortgage Notes together (separate
and apart from the Related Documents) and (ii) prepare an
Assignment of Mortgage for each Mortgage Loan. The Assignments of
Mortgage will be held by the Seller pursuant to Section 2.01(b) of
the Sale and Servicing Agreement.
The Seller acknowledges that the Indenture
Trustee is required to review the Mortgage Notes and Related
Documents in the case of any delivery required upon the occurrence
of an Assignment Event pursuant to Sections 2.01(d) and (e) of the
Sale and Servicing Agreement and if the Indenture Trustee finds any
document or documents not to have been properly executed, or to be
missing or to be defective in any material respect, the Indenture
Trustee is required to notify the Seller. If the Seller does not
within the time period specified in Section 2.02(b) of the Sale and
Servicing Agreement correct or cure such omission or document
deficiency, the Seller shall either repurchase such relevant
Mortgage Loan directly from the Trust or substitute an Eligible
Substitute Mortgage Loan for such Mortgage Loan, in either case,
within the time frame and in the manner specified in Section
2.02(b) of the Sale and Servicing Agreement.
Without limiting the generality of the foregoing,
the Seller hereby agrees to take such actions described in Section
2.01(a) of the Sale and Servicing Agreement as are necessary to
complete and file any UCC Financing Statements and any continuation
statements required to perfect and protect the Purchaser's interest
in the Mortgage Loans.
Section 2.04 Payment of Purchase Price for the Mortgage Loans . (a)
In consideration of the sale of the Mortgage Loans from the Seller
to the Purchaser on or before the Closing Date, the Purchaser
agrees to pay to the Seller on the Closing Date by transfer of
immediately available funds, an amount equal to the sum of
$353,935,000 in respect of the Mortgage Loans (the "Purchase
Price"). The Purchaser shall pay all expenses it incurs in
connection with the Trust's issuance of the Notes, including,
without limitation, printing fees incurred in connection with the
prospectus relating to the Notes, blue sky registration fees and
expenses, fees and expenses of Purchaser's counsel, fees of the
rating agencies requested to rate the Notes, accountant's fees and
expenses and the fees of the Insurer as set forth in the Insurance
and Indemnity Agreement.
(b) Each Mortgage
Note permits the related Mortgagor to make Draws against
its Mortgage Loan. Such Draws will create Additional Balances,
which Additional Balances the Seller shall sell to the Purchaser or
its assignee from time to time. In consideration of the sale of
Additional Balances by the Seller to the Purchaser from time to
time, the Purchaser agrees to pay the Seller on the date any such
Additional Balance is delivered an amount equal to the outstanding
principal balance of such Additional Balance. Payment will be made,
(i) during the Managed Amortization Period, (A) from Principal
Collections, to the extent that Principal Collections exceed Draws,
and/or (B) by increasing the value of the Transferor Interest, to
the extent that Draws exceed Principal Collections, and (ii) during
the Rapid Amortization Period, by increasing the value of the
Transferor Interest. Any increase in the value of the Transferor
Interest, which shall initially be held by the Seller, will result
in a corresponding increase in the value of the Seller's interest
in the Trust.
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(c) The Seller, at
its expense, shall within 90 days of an Assignment Ev
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