MORTGAGE LOAN PURCHASE AGREEMENT
THIS MORTGAGE LOAN
PURCHASE AGREEMENT
dated as of August 30,
2004 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.
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
30, 2004
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.
<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: First
Tennessee Bank National Association, and its
successors and assigns, as custodian under the Custodial
Agreement dated as
of
August 30, 2004 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, 2004.
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.
-2-
<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.
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.
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.
-3-
<PAGE>
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:
$254,166,049.90.
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
-4-
<PAGE>
periodic rate as the Deleted Mortgage Loan and a gross margin
not more than 1%
per annum higher or lower than that of the Deleted Mortgage Loan (vi) be
accruing interest at a rate no lower than
and not more than 1% per annum higher
than, that of the Deleted Mortgage Loan; (iv) have a loan-to-value ratio no
higher than that of the Deleted
Mortgage Loan; (vii) have a remaining term to
maturity no greater than (and not more than one year less than that of)
the
Deleted Mortgage Loan; (viii) not be a Cooperative Loan unless the Deleted
Mortgage Loan was a Cooperative
Loan and (ix) comply
with each
representation
and warranty set forth in Schedule B
hereto.
Trustee: The Bank of
New York and its
successors and, if a
successor
trustee is appointed hereunder, such
successor.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase Price. In consideration for the payment to it of
the Purchase Price on the Closing Date, pursuant to written instructions
delivered by the Seller to the Purchaser on the Closing
Date, the Seller does
hereby transfer, sell and convey to the Purchaser
on the Closing Date, but with
effect from the Cut-off Date, (i) all
right, title and interest of the Seller in
the Mortgage Loans, excluding the servicing
rights thereto, and all property
securing such Mortgage Loans, including all interest and
principal received
or
receivable by the Seller with respect to the Mortgage Loans on or after the
Cut-off Date and all interest and principal payments on the Mortgage Loans
received on or prior to the Cut-off Date in
respect of
installments of interest
and principal due thereafter, but not including payments of principal and
interest due and payable on the Mortgage
Loans on or before the
Cut-off Date,
and (ii) all proceeds from the foregoing. Items (i) and (ii) in the
preceding
sentence are herein referred to
collectively as "Mortgage Assets."
Section 2.2 Timing.
The sale of the Mortgage Assets hereunder shall
take place on the Closing Date.
ARTICLE III
CONVEYANCE AND DELIVERY
Section 3.1 Delivery of Mortgage Files. In connection with the
transfer
and assignment set forth in Section 2.1 above, the Seller has delivered or
caused to be delivered to the Trustee or to
the Custodian on its
behalf (or, in
the case of the Delay Delivery Mortgage Loans, will deliver or cause to be
delivered to the Trustee or to the
Custodian on its
behalf within
thirty (30)
days following the Closing Date) the
following documents or
instruments
with
respect to each Mortgage Loan so assigned
(collectively, the "Mortgage Files"):
(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
-5-
<PAGE>
(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, 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;
-6-
<PAGE>
(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 behal
