MORTGAGE LOAN PURCHASE AGREEMENT

 

                        MORTGAGE LOAN PURCHASE AGREEMENT

 

         THIS MORTGAGE LOAN PURCHASE AGREEMENT dated as of April 29, 2005 by and

between FIRST HORIZON HOME LOAN CORPORATION, a Kansas corporation (the

"Seller"), and FIRST HORIZON ASSET SECURITIES INC. (the "Purchaser").

 

         WHEREAS, the Seller owns certain Mortgage Loans (as hereinafter

defined) which Mortgage Loans are more particularly listed and described in

Schedule A attached hereto and made a part hereof.

 

         WHEREAS, the Seller and the Purchaser wish to set forth the terms

pursuant to which the Mortgage Loans, excluding the servicing rights thereto,

are to be sold by the Seller to the Purchaser.

 

         WHEREAS, the Seller will simultaneously transfer the servicing rights

for the Mortgage Loans to First Tennessee Mortgage Services, Inc. ("FTMSI")

pursuant to the Servicing Rights Transfer and Subservicing Agreement (as

hereinafter defined).

 

         WHEREAS, the Purchaser will engage FTMSI to service the Mortgage Loans

pursuant to the Servicing Agreement (as hereinafter defined).

 

         NOW, THEREFORE, in consideration of the foregoing, other good and

valuable consideration, and the mutual terms and covenants contained herein, the

parties hereto agree as follows:

 

                                     ARTICLE I

                                   Definitions

 

         Agreement: This Mortgage Loan Purchase Agreement, as the same may be

amended, supplemented or otherwise modified from time to time in accordance with

the terms hereof.

 

         Alternative Title Product: Means one of the following: (i) Lien

Protection Insurance issued by Integrated Loan Services or ATM Corporation of

America, (ii) a Mortgage Lien Report issued by EPN Solutions/ACRAnet, (iii) a

Property Plus Report issued by Rapid Refinance Service through

SharperLending.com, or (iv) such other alternative title insurance product that

the Seller utilizes in connection with its then current underwriting criteria.

 

         Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a

day on which banking institutions in the City of Dallas, or the State of Texas

or New York City is located are authorized or obligated by law or executive

order to be closed.

 

         Closing Date:   April 29, 2005

 

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

amendatory provisions.

 

         Cooperative Corporation: The entity that holds title (fee or an

acceptable leasehold estate) to the real property and improvements constituting

the Cooperative Property and which governs the Cooperative Property, which

Cooperative Corporation must qualify as a Cooperative Housing Corporation under

Section 216 of the Code.

 

         Coop Shares:   Shares issued by a Cooperative Corporation.

 

         Cooperative Loan:   Any Mortgage Loan secured by Coop Shares and a

Proprietary Lease.

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         Cooperative Property: The real property and improvements owned by the

Cooperative Corporation, including the allocation of individual dwelling units

to the holders of the Coop Shares of the Cooperative Corporation.

 

         Cooperative Unit: A single family dwelling located in a Cooperative

Property.

 

         Custodian: First Tennessee Bank National Association, and its

successors and assigns, as custodian under the Custodial Agreement dated as of

April 29, 2005 by and among The Bank of New York, as trustee, First Horizon Home

Loan Corporation, as master servicer, and the Custodian.

 

         Cut-Off Date:   April 1, 2005.

 

         Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated

Principal Balance thereof as of the close of business on the Cut-off Date.

 

         Debt Service Reduction: With respect to any Mortgage Loan, a reduction

by a court of competent jurisdiction in a proceeding under the Bankruptcy Code

in the Scheduled Payment for such Mortgage Loan which became final and

non-appealable, except such a reduction resulting from a Deficient Valuation or

any reduction that results in a permanent forgiveness of principal.

 

         Deficient Valuation: With respect to any Mortgage Loan, a valuation by

a court of competent jurisdiction of the Mortgaged Property in an amount less

than the then-outstanding indebtedness under the Mortgage Loan, or any reduction

in the amount of principal to be paid in connection with any Scheduled Payment

that results in a permanent forgiveness of principal, which valuation or

reduction results from an order of such court which is final and non-appealable

in a proceeding under the United States Bankruptcy Reform Act of 1978, as

amended.

 

         Delay Delivery Mortgage Loans: The Mortgage Loans for which all or a

portion of a related Mortgage File is not delivered to the Trustee or to the

Custodian on its behalf on the Closing Date. The number of Delay Delivery

Mortgage Loans shall not exceed 25% of the aggregate number of Mortgage Loans as

of the Closing Date.

 

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

        

         Determination Date: The earlier of (i) the third Business Day after the

15th day of each month, and (ii) the second Business Day prior to the 25th day

of each month, or if such 25th day is not a Business Day, the next succeeding

Business Day.

 

         GAAP: Generally accepted accounting principles as in effect from time

to time in the United States of America.

 

                                      -2-

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         Insurance Proceeds: Proceeds paid by an insurer pursuant to any

insurance policy, including all riders and endorsements thereto in effect,

including any replacement policy or policies, in each case other than any amount

included in such Insurance Proceeds in respect of expenses covered by such

insurance policy.

 

         Liquidation Proceeds: Amounts, including Insurance Proceeds, received

in connection with the partial or complete liquidation of defaulted Mortgage

Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts

received in connection with any condemnation or partial release of a Mortgaged

Property.

 

         MERS: Mortgage Electronic Registration Systems, Inc., a corporation

organized and existing under the laws of the State of Delaware, or any successor

thereto.

 

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

System.

 

         MERS(R) System: The system of recording transfers of mortgages

electronically maintained by MERS.

 

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

 

         MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,

solely as nominee for the originator of such Mortgage Loan and its successors

and assigns.

 

         Mortgage: The mortgage, deed of trust or other instrument creating a

first lien on the property securing a Mortgage Note.

 

         Mortgage File: The mortgage documents listed in Section 3.1 pertaining

to a particular Mortgage Loan and any additional documents required to be added

to the Mortgage File pursuant to this Agreement.

 

         Mortgage Loans: The mortgage loans transferred, sold and conveyed by

the Seller to the Purchaser, pursuant to this Agreement.

 

         Mortgage Loan Purchase Price: With respect to any Mortgage Loan

required to be purchased by the Seller pursuant to Section 4.1(c) hereof, an

amount equal to the sum of (i) 100% of the unpaid principal balance of the

Mortgage Loan on the date of such purchase, and (ii) accrued interest thereon at

the applicable Mortgage Rate from the date through which interest was last paid

by the Mortgagor to the first day in the month in which the Mortgage Loan

Purchase Price is to be distributed to the Purchaser or its designees.

 

         Mortgage Note: The original executed note or other evidence of

indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

 

         Mortgaged Property: The underlying property securing a Mortgage Loan,

which, with respect to a Cooperative Loan, is the related Coop Shares and

Proprietary Lease.

 

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

 

                                      -3-

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         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:   $271,157,150.62

 

         Purchaser: First Horizon Asset Securities Inc., in its capacity as

purchaser of the Mortgage Loans from the Seller pursuant to this Agreement.

 

         Recognition Agreement: With respect to any Cooperative Loan, an

agreement between the Cooperative Corporation and the originator of such

Mortgage Loan which establishes the rights of such originator in the Cooperative

Property.

 

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due

on the first day of the month allocable to principal and/or interest on such

Mortgage Loan which, unless otherwise specified herein, shall give effect to any

related Debt Service Reduction and any Deficient Valuation that affects the

amount of the monthly payment due on such Mortgage Loan.

 

         Security Agreement: The security agreement with respect to a

Cooperative Loan.

 

         Seller: First Horizon Home Loan Corporation, a Kansas corporation, and

its successors and assigns, in its capacity as seller of the Mortgage Loans.

 

         Servicing Agreement: The servicing agreement, dated as of November 26,

2002 by and between First Horizon Asset Securities Inc. and its assigns, as

owner, and First Tennessee Mortgage Services, Inc., as servicer.

 

         Servicing Rights Transfer and Subservicing Agreement: The servicing

rights transfer and subservicing agreement, dated as of November 26, 2002 by and

between First Horizon Home Loan Corporation, as transferor and subservicer, and

First Tennessee Mortgage Services, Inc., as transferee and servicer.

 

         Stated Principal Balance: As to any Mortgage Loan, the unpaid principal

balance of such Mortgage Loan as specified in the amortization schedule at the

time relating thereto (before any adjustment to such amortization schedule by

reason of any moratorium or similar waiver or grace period) after giving effect

to any previous partial Principal Prepayments and Liquidation Proceeds allocable

to principal (other than with respect to any Liquidated Mortgage Loan) and to

the payment of principal due on such date and irrespective of any delinquency in

payment by the related Mortgagor.

 

         Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for

a Deleted Mortgage Loan which must, on the date of such substitution, (i) have a

Stated Principal Balance, after deduction of the principal portion of the

Scheduled Payment due in the month of substitution, not in excess of, and not

more than 10% less than the Stated Principal Balance of the Deleted Mortgage

Loan; (ii) have a Mortgage Rate not lower than the Mortgage Rate of the Deleted

Mortgage Loan; (iii) have a maximum mortgage rate not more than 1% per annum

higher or lower than the maximum mortgage rate of the Deleted Mortgage Loan;

(iv) have a minimum mortgage rate specified in its related Mortgage Note not

more than 1% per annum higher or lower than the minimum mortgage rate of the

Deleted Mortgage Loan; (v) have the same mortgage index, reset period and

periodic rate as the Deleted Mortgage Loan and a gross margin not more than 1%

per annum higher or lower than that of the Deleted Mortgage Loan (vi) be

accruing interest at a rate no lower than and not more than 1% per annum higher

than, that of the Deleted Mortgage Loan; (iv) have a loan-to-value ratio no

higher than that of the Deleted Mortgage Loan; (vii) have a remaining term to

maturity no greater than (and not more than one year less than that of) the

Deleted Mortgage Loan; (viii) not be a Cooperative Loan unless the Deleted

Mortgage Loan was a Cooperative Loan and (ix) comply with each representation

and warranty set forth in Schedule B hereto.

 

                                      -4-

<PAGE>

 

         Trustee: The Bank of New York and its successors and, if a successor

trustee is appointed hereunder, such successor.

 

                                   ARTICLE II

                                Purchase and Sale

 

         Section 2.1 Purchase Price. In consideration for the payment to it of

the Purchase Price on the Closing Date, pursuant to written instructions

delivered by the Seller to the Purchaser on the Closing Date, the Seller does

hereby transfer, sell and convey to the Purchaser on the Closing Date, but with

effect from the Cut-off Date, (i) all right, title and interest of the Seller in

the Mortgage Loans, excluding the servicing rights thereto, and all property

securing such Mortgage Loans, including all interest and principal received or

receivable by the Seller with respect to the Mortgage Loans on or after the

Cut-off Date and all interest and principal payments on the Mortgage Loans

received on or prior to the Cut-off Date in respect of installments of interest

and principal due thereafter, but not including payments of principal and

interest due and payable on the Mortgage Loans on or before the Cut-off Date,

and (ii) all proceeds from the foregoing. Items (i) and (ii) in the preceding

sentence are herein referred to collectively as "Mortgage Assets."

 

         Section 2.2 Timing. The sale of the Mortgage Assets hereunder shall

take place on the Closing Date.

 

                                   ARTICLE III

                             Conveyance and Delivery

 

         Section 3.1 Delivery of Mortgage Files. In connection with the transfer

and assignment set forth in Section 2.1 above, the Seller has delivered or

caused to be delivered to the Trustee or to the Custodian on its behalf (or, in

the case of the Delay Delivery Mortgage Loans, will deliver or cause to be

delivered to the Trustee or to the Custodian on its behalf within thirty (30)

days following the Closing Date) the following documents or instruments with

respect to each Mortgage Loan so assigned (collectively, the "Mortgage Files"):

 

                                      -5-

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             (a)      (1) the original Mortgage Note endorsed by manual or

                 facsimile signature in blank in the following form: "Pay to the

                 order of ________________, without recourse," with all

                 intervening endorsements showing a complete chain of

                 endorsement from the originator to the Person endorsing the

                 Mortgage Note (each such endorsement being sufficient to

                 transfer all right, title and interest of the party so

                 endorsing, as noteholder or assignee thereof, in and to that

                 Mortgage Note); or

 

                     (2) with respect to any Lost Mortgage Note, a lost note

                 affidavit from the Seller stating that the original Mortgage

                 Note was lost or destroyed, together with a copy of such

                  Mortgage Note;

 

             (b) except as provided below and for each Mortgage Loan that is not

                 a MERS Mortgage Loan, the original recorded Mortgage or a copy

                 of such Mortgage certified by the Seller as being a true and

                 complete copy of the Mortgage, and in the case of each MERS

                 Mortgage Loan, the original Mortgage, noting the presence of

                 the MIN of the Mortgage Loans and either language indicating

                 that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a

                 MOM Loan or if the Mortgage Loan was not a MOM Loan at

                 origination, the original Mortgage and the assignment thereof

                 to MERS, with evidence of recording indicated thereon, or a

                 copy of the Mortgage certified by the public recording office

                 in which such Mortgage has been recorded;

 

             (c) a duly executed assignment of the Mortgage in blank (which may

                  be included in a blanket assignment or assignments), together

                 with, except as provided below, all interim recorded

                 assignments of such mortgage (each such assignment, when duly

                 and validly completed, to be in recordable form and sufficient

                 to effect the assignment of and transfer to the assignee

                 thereof, under the Mortgage to which the assignment relates);

                 provided that, if the related Mortgage has not been returned

                 from the applicable public recording office, such assignment of

                 the Mortgage may exclude the information to be provided by the

                 recording office;

 

             (d) the original or copies of each assumption, modification,

                 written assurance or substitution agreement, if any;

 

             (e) either the original or duplicate original title policy

                 (including all riders thereto) with respect to the related

                 Mortgaged Property, if available, provided that the title

                 policy (including all riders thereto) will be delivered as soon

                 as it becomes available, and if the title policy is not

                 available, and to the extent required pursuant to the second

                 paragraph below or otherwise in connection with the rating of

                 the Certificates, a written commitment or interim binder or

                 preliminary report of the title issued by the title insurance

                 or escrow company with respect to the Mortgaged Property, or,

                 in lieu thereof, an Alternative Title Product, and

 

             (f) in the case of a Cooperative Loan, the originals of the

                  following documents or instruments:

 

                                      -6-

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

 

                 (2)   The executed Security Agreement;

 

                 (3)   The executed Proprietary Lease;

 

                 (4)   The executed Recognition Agreement;

 

                 (5)   The executed UCC-1 financing statement with evidence of

             recording thereon which have been filed in all places required

              to perfect the Seller's interest in the Coop Shares and the

             Proprietary Lease; and

 

                 (6)   Executed UCC-3 financing statements or other appropriate

             UCC financing statements required by state law, evidencing a

             complete and unbroken line from the mortgagee to the Trustee

             with evidence of recording thereon (or in a form suitable for

             recordation).

 

         In the event that in connection with any Mortgage Loan that is not a

MERS Mortgage Loan the Seller cannot deliver (i) the original recorded Mortgage

or (ii) all interim recorded assignments satisfying the requirements of clause

(b) or (c) above, respectively, concurrently with the execution and delivery

hereof because such document or documents have not been returned from the

applicable public recording office, the Seller shall promptly deliver or cause

to be delivered to the Trustee or the Custodian on its behalf such original

Mortgage or such interim assignment, as the case may be, with evidence of

recording indicated thereon upon receipt thereof from the public recording

office, or a copy thereof, certified, if appropriate, by the relevant recording

office, but in no event shall any such delivery of the original Mortgage and

each such interim assignment or a copy thereof, certified, if appropriate, by

the relevant recording office, be made later than one year following the Closing

Date; provided, however, in the event the Seller is unable to deliver or cause

to be delivered by such date each Mortgage and each such interim assignment by

reason of the fact that any such documents have not been returned by the

appropriate recording office, or, in the case of each such interim assignment,

because the related Mortgage has not been returned by the appropriate recording

office, the Seller shall deliver or cause to be delivered such documents to the

Trustee or the Custodian on its behalf as promptly as possible upon receipt

thereof and, in any event, within 720 days following the Closing Date; provided,

further, however, that the Seller shall not be required to provide an original

or duplicate lender's title policy (together with all riders thereto) if the

Seller delivers an Alternative Title Product in lieu thereof. The Seller shall

forward or cause to be forwarded to the Trustee or the Custodian on its behalf

(i) from time to time additional original documents evidencing an assumption or

modification of a Mortgage Loan and (ii) any other documents required to