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, 2005
-----------------------------------------------------
FIRST HORIZON MORTGAGE PASS-THROUGH TRUST 2005-AR4
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-AR4
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.............................................................................................5
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND
WARRANTIES.........................................34
SECTION 2.1 Conveyance of
Mortgage
Loans......................................................................34
SECTION 2.2 Acceptance by
Trustee of the Mortgage
Loans.......................................................38
SECTION 2.3 Representations
and Warranties of the Master Servicer; Covenants of the
Seller...................40
SECTION 2.4 Representations
and Warranties of the Depositor as to the Mortgage
Loans..........................42
SECTION 2.5 Delivery of
Opinion of Counsel in Connection with
Substitutions...................................43
SECTION 2.6 Execution and
Delivery of
Certificates............................................................43
SECTION 2.7 REMIC
Matters.....................................................................................43
SECTION 2.8 Covenants of the
Master
Servicer..................................................................47
ARTICLE III ADMINISTRATION AND SERVICING OF
MORTGAGE
LOANS.......................................................47
SECTION 3.1 Master Servicer
to Service Mortgage
Loans.........................................................47
SECTION 3.2 Subservicing;
Enforcement of the Obligations of
Servicers.........................................48
SECTION 3.3 Rights of the
Depositor and the Trustee in Respect of the Master
Servicer.........................49
SECTION 3.4 Trustee to Act
as Master
Servicer.................................................................49
SECTION 3.5 Collection of
Mortgage Loan Payments; Certificate Account; Distribution
Account...................50
SECTION 3.6 Collection of
Taxes, Assessments and Similar Items; Escrow
Accounts...............................53
SECTION 3.7 Access to
Certain Documentation and Information Regarding the Mortgage
Loans......................54
SECTION 3.8 Permitted
Withdrawals from the Certificate Account and Distribution
Account.......................54
SECTION 3.9 Maintenance of
Hazard Insurance; Maintenance of Primary Insurance
Policies........................56
SECTION 3.10 Enforcement of
Due-on-Sale Clauses; Assumption
Agreements........................................57
SECTION 3.11 Realization
Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans..................59
SECTION 3.12 Trustee to
Cooperate; Release of Mortgage
Files..................................................61
SECTION 3.13 Documents
Records and Funds in Possession of Master Servicer to be Held for
the Trustee..........62
SECTION 3.14 Master
Servicing
Compensation....................................................................62
SECTION 3.15 Access to
Certain
Documentation..................................................................63
SECTION 3.16 Annual
Statement as to
Compliance................................................................63
SECTION 3.17 Annual
Independent Public Accountants' Servicing Statement; Financial
Statements.................63
SECTION 3.18 Errors and
Omissions Insurance; Fidelity
Bonds...................................................64
SECTION 3.19 Notification of
Adjustments......................................................................64
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY
THE MASTER
SERVICER.....................................................65
SECTION 4.1
Advances..........................................................................................65
SECTION 4.2 Priorities of
Distribution........................................................................65
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SECTION 4.3 Method of
Distribution............................................................................70
SECTION 4.4 Allocation of
Losses..............................................................................71
SECTION 4.5
[RESERVED]........................................................................................72
SECTION 4.6 Monthly
Statements to
Certificateholders..........................................................72
ARTICLE V THE
CERTIFICATES.......................................................................................74
SECTION 5.1 The
Certificates..................................................................................74
SECTION 5.2 Certificate
Register; Registration of Transfer and Exchange of
Certificates.......................75
SECTION 5.3 Mutilated,
Destroyed, Lost or Stolen
Certificates.................................................80
SECTION 5.4 Persons Deemed
Owners.............................................................................80
SECTION 5.5 Access to List
of Certificateholders' Names and
Addresses.........................................81
SECTION 5.6 Maintenance of
Office or
Agency...................................................................81
ARTICLE VI THE DEPOSITOR AND THE MASTER
SERVICER.................................................................81
SECTION 6.1 Respective
Liabilities of the Depositor and the Master
Servicer...................................81
SECTION 6.2 Merger or
Consolidation of the Depositor or the Master
Servicer...................................81
SECTION 6.3 Limitation on
Liability of the Depositor, the Master Servicer and
Others..........................82
SECTION 6.4 Limitation on
Resignation of Master
Servicer......................................................82
ARTICLE VII
DEFAULT..............................................................................................83
SECTION 7.1 Events of
Default.................................................................................83
SECTION 7.2 Trustee to Act;
Appointment of
Successor..........................................................85
SECTION 7.3 Notification to
Certificateholders................................................................86
ARTICLE VIII CONCERNING THE
TRUSTEE..............................................................................86
SECTION 8.1 Duties of
Trustee.................................................................................86
SECTION 8.2 Certain Matters
Affecting the
Trustee.............................................................88
SECTION 8.3 Trustee Not
Liable for Certificates or Mortgage
Loans.............................................90
SECTION 8.4 Trustee May Own
Certificates......................................................................90
SECTION 8.5 Trustee's Fees
and
Expenses.......................................................................90
SECTION 8.6 Eligibility
Requirements for
Trustee..............................................................91
SECTION 8.7 Resignation and
Removal of
Trustee................................................................91
SECTION 8.8 Successor
Trustee.................................................................................92
SECTION 8.9 Merger or
Consolidation of
Trustee................................................................92
SECTION 8.10 Appointment of
Co-Trustee or Separate
Trustee....................................................92
SECTION 8.11 Tax
Matters......................................................................................94
SECTION 8.12 Periodic
Filings.................................................................................96
ARTICLE IX
TERMINATION...........................................................................................96
SECTION 9.1 Termination upon
Liquidation or Purchase of all Mortgage
Loans....................................96
SECTION 9.2 Final
Distribution on the
Certificates............................................................97
SECTION 9.3 Additional
Termination
Requirements...............................................................98
ARTICLE X
[RESERVED].............................................................................................99
ARTICLE XI MISCELLANEOUS
PROVISIONS..............................................................................99
SECTION 11.1
Amendment........................................................................................99
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SECTION 11.2 Recordation of
Agreement;
Counterparts..........................................................100
SECTION 11.3 Governing
Law...................................................................................100
SECTION 11.4 Intention of
Parties............................................................................101
SECTION 11.5
Notices.........................................................................................101
SECTION 11.6 Severability of
Provisions......................................................................102
SECTION 11.7
Assignment......................................................................................102
SECTION 11.8 Limitation on
Rights of
Certificateholders......................................................103
SECTION 11.9 Inspection and
Audit
Rights.....................................................................103
SECTION 11.10 Certificates
Nonassessable and Fully
Paid......................................................104
SECTION 11.11 Limitations on
Actions; No
Proceedings.........................................................104
SECTION 11.12 Acknowledgment
of
Seller.......................................................................104
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 Subsequent Certification of Custodian
G-1
Exhibit H:
Transfer Affidavit
H-1
Exhibit I:
Form of Transferor Certificate
I-1
Exhibit J:
Form of Investment Letter [Non-Rule 144A]
J-1
Exhibit K:
Form of Rule 144A Letter
K-1
Exhibit L:
Request for Release (for Trustee)
L-1
Exhibit M:
Request for Release (Mortgage Loan)
M-1
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iii
<PAGE>
THIS
POOLING AND SERVICING
AGREEMENT, dated as of
August 1, 2005,
among
FIRST HORIZON ASSET SECURITIES INC., a
Delaware corporation,
as depositor (the
"Depositor"), FIRST HORIZON HOME LOAN
CORPORATION,
a Kansas corporation, as
master servicer (the "Master Servicer"), and THE BANK OF NEW YORK, a
banking
corporation organized under the laws of the State of New
York, as trustee (the
"Trustee").
WITNESSETH THAT
In
consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT
The
Depositor is the owner of the Trust Fund
that is hereby
conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal
income
tax purposes will consist of two separate REMICs. The Certificates will
represent the entire beneficial ownership interest in the Trust Fund. The
Regular Certificates will represent
"regular interests" in the Upper REMIC. The
Class II-A-R Certificates will represent the residual
interests in the
Lower
REMIC and Upper REMIC, as described in Section 2.7. The "latest possible
maturity date" for federal income tax purposes of all REMIC
regular interests
created hereby will be the Latest Possible
Maturity Date.
The
following table sets forth characteristics of the Certificates,
together with the minimum denominations and
integral multiples in excess thereof
in which such Classes shall be issuable (except that one Certificate of each
Class of Certificates may be issued in a
different amount and, in addition, one
Residual Certificate representing the Tax Matters Person
Certificate
may be
issued in a different amount):
[Remainder of Page Intentionally Left Blank]
1
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Initial Class
Initial
Integral Multiples
Class Designation
Certificate Balance Pass Through
Rate
Minimum Denomination in Excess Minimum
-------------------------
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Class I-A-1
$
29,815,000.00
5.1209%(1) $
25,000 $
1,000
Class I-A-2
$
1,193,000.00
5.1209%(1) $
25,000 $
1,000
Class II-A-1
$
216,122,000.00
5.3514%(2) $
25,000 $
1,000
Class II-A-R
$
100.00
5.3514%(2) $
100 $
N/A
Class III-A-1
$
54,803,000.00
5.4029%(3) $
25,000 $
1,000
Class IV-A-1
$
54,608,000.00
5.4755%(4) $
25,000 $
1,000
Class IV-A-2
$
50,000,000.00
5.4755%(4) $
25,000 $
1,000
Class IV-A-3
$
2,000,000.00
5.4755%(4) $
25,000 $
1,000
Class B-1
$
7,873,000.00
5.3732%(5) $
100,000 $
1,000
Class B-2
$
3,192,000.00
5.3732%(5) $
100,000 $
1,000
Class B-3
$
2,127,000.00
5.3732%(5) $
100,000 $
1,000
Class B-4
$
1,703,000.00
5.3732%(5) $
100,000 $
1,000
Class B-5
$
1,277,000.00
5.3732%(5) $
100,000
$
1,000
Class B-6
$
851,609.53
5.3732%(5) $
100,000 $
1,000
</TABLE>
(1) The Pass-Through Rates for the Class I-A-1 and
Class I-A-2 Certificates for
each subsequent Distribution Date will equal the Weighted
Average Adjusted Net
Mortgage Rate for Pool I, 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 and any Principal
Prepayments received on or after such date
and distributed to Certificateholders
on the prior Distribution Date.
(2) The Pass-Through Rates for the Class II-A-1 and
Class II-A-R
Certificates
for each subsequent Distribution Date will equal the Weighted
Average Adjusted
Net Mortgage Rate for Pool II, 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 and any Principal
Prepayments received on or after such date
and distributed to Certificateholders
on the prior Distribution Date.
(3) The Pass-Through Rates for the Class III-A-1 Certificates for each
subsequent Distribution Date will equal the Weighted Average Adjusted Net
Mortgage Rate for Pool III, 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 and any Principal
Prepayments received on or after such date
and distributed to Certificateholders
on the prior Distribution Date.
(4) The Pass-Through Rates for the Class IV-A-1,
Class IV-A-2 and Class
IV-A-3
Certificates for each subsequent Distribution Date will equal the Weighted
Average Adjusted Net Mortgage Rate for Pool
IV, 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
and any
Principal Prepayments received on or after such date and distributed to
Certificateholders on the prior
Distribution Date.
(5) 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 all of the
Mortgage Pools, 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
and any Principal Prepayments received on or after
such date and distributed to
Certificateholders on the prior
Distribution Date.
2
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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; with respect to Pool
III, the Group III Senior
Certificates; and with respect to
Pool IV, the Group IV Senior
Certificates. The Subordinated
Certificates correspond to all of the
Mortgage Pools.
COFI Certificates.....................
None.
Component Certificates................
None.
Components............................
None.
Delay Certificates....................
All
interest-bearing Classes of Certificates other than the
Non-Delay
Certificates, if any.
ERISA-Restricted Certificates.........
The
Residual
Certificates, Private Certificates
and Certificates of any Class that no
longer satisfy the applicable rating
requirement of the Underwriters'
Exemption.
Floating Rate Certificates............
None.
Group I Senior Certificates...........
The
Class I-A-1 and Class I-A-2 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.
Group IV Senior Certificates..........
The
Class IV-A-1, Class IV-A-2 and Class IV-A-3 Certificates.
Insured Retail Certificates...........
None.
Inverse Floating Rate Certificates....
None.
LIBOR Certificates....................
None.
Non-Delay Certificates................
None.
Notional Amount Components............
None.
Notional Amount Certificates..........
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.
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. The
Class B-6 Certificates will not be rated.
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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, Group II Senior Certificates, Group
III
Senior Certificates and Group IV Senior Certificates,
collectively.
Senior Mezzanine Certificates.........
The
Class I-A-2 and Class IV-A-3 Certificates.
Subordinated Certificates.............
The
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
B-6
Certificates.
Super Senior Certificates.............
The
Class I-A-1 and Class IV-A-2.
Support Classes.......................
None.
Targeted Principal Classes............
None.
Underwriters..........................
FTN
Financial Capital Markets, a
division of First Tennessee Bank
National Association, and Banc of
America Securities LLC
</TABLE>
With
respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect,
and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such
designations and
amounts. Defined
terms
and provisions herein relating to statistical
rating agencies not designated
above as Rating Agencies shall be of no
force or effect.
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 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.
Alternative Title Product: Any one of the following:
(i) Lien
Protection
Insurance issued by Integrated Loan
Services or ATM Corporation of America, (ii)
a Mortgage Lien Report issued by EPN
Solutions/ACRAnet,
(iii) a Property
Plus
Report issued by Rapid Refinance Service through SharperLending.com, or (iv)
such other alternative title insurance product that the Seller utilizes in
connection with its then current
underwriting criteria.
5
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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
on the related Mortgage Pool received
in the month of such Distribution Date and (ii) all Scheduled
Payments in the
related Mortgage Pool due after the related
Due Date.
Apportioned Principal Balance: For any Class of Subordinated
Certificates
and any Distribution Date, an amount equal to the Class
Certificate Balance
of
such Class immediately prior to that
Distribution Date multiplied by a fraction,
the numerator of which is the applicable Group Subordinate Amount for such
Distribution Date and the denominator of which is the sum of the Group
Subordinate Amounts for such Distribution
Date.
Appraised
Value: With respect to any Mortgage Loan, the Appraised Value
of
the related Mortgaged Property shall be: (i) with respect to a
Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal
made at the time of the origination
of such Mortgage Loan and (b) the sales price of
the Mortgaged Property
at the
time of the origination of such Mortgage Loan; (ii) with respect to a
Refinancing Mortgage Loan other than a
Streamlined
Documentation Mortgage Loan,
the value of the Mortgaged Property based
upon the appraisal made at the time of
the origination of such Refinancing Mortgage Loan; and (iii) with
respect to a
Streamlined Documentation Mortgage Loan, (a) if the
loan-to-value
ratio with
respect to the Original Mortgage Loan at
the time of the origination thereof was
90% or less, the value of the Mortgaged
Property based upon
the appraisal made
at the time of the origination of the Original Mortgage Loan and (b) if the
loan-to-value ratio with respect to the Original
Mortgage Loan at the time of
the origination thereof was greater than 90%, the value of the Mortgaged
Property based upon the appraisal
(which may be a
drive-by appraisal)
made at
the time of the origination of such
Streamlined Documentation Mortgage Loan.
Available
Funds: For each
Mortgage Pool, with respect to any Distribution
Date, an amount equal to the sum of:
o
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;
o
all
Insurance Proceeds, Liquidation Proceeds and Unanticipated
Recoveries received
in respect of the Mortgage Loans in such
Mortgage Pool during
the calendar
month before the Distribution
Date, which in each case is net of unreimbursed expenses incurred
in
connection with
a liquidation or foreclosure and unreimbursed
Advances, if any;
o
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;
6
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o
any
Compensating
Interest in respect of
Principal Prepayments
in
Full received in respect of the Mortgage Loans in such Mortgage
Pool
during the related
Prepayment Period (or,
in the case of the first
Distribution Date, from the Cut-off Date); and
o
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.
7
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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 Trustee on behalf of Certificateholders and
designated "First Horizon Home Loan Corporation in trust for the registered
holders of First Horizon Asset Securities Inc. Mortgage Pass-Through
Certificates, Series 2005-AR4."
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.
Certificate Register:
The register maintained pursuant to Section 5.2
hereof.
Certificateholder or
Holder: The person in
whose name a
Certificate is
registered in the Certificate Register, except that, solely for the
purpose of
giving any consent pursuant to this
Agreement, any Certificate registered in the
name of the Depositor or the Seller or any
affiliate or agent of
the Depositor
or the Seller shall be deemed not to be
Outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in
determining
whether the
requisite amount of Percentage Interests necessary to effect such consent
has
been obtained; provided, however, that if any such Person (including the
Depositor) owns 100% of the Percentage Interests evidenced by a Class of
Certificates, such Certificates shall be deemed to be Outstanding
for purposes
of any provision hereof that requires the
consent of the Holders of Certificates
of a particular Class as a condition to the
taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of
the Depositor or
any affiliate of the Depositor in
determining which
Certificates are registered
in the name of an affiliate of the
Depositor.
Class: All
Certificates bearing the same class designation as set forth in
the Preliminary Statement.
Class
Certificate Balance:
With respect to any
Class of Certificates and
as of any Distribution Date the aggregate
of the Certificate
Principal Balances
of all Certificates of such Class as of such date, plus the amount of any
Unanticipated Recoveries added to the Class
Certificate Balance of such Class of
Certificate pursuant to Section 4.2(h).
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<PAGE>
Class
Prepayment
Distribution
Trigger: For a Class of Subordinated
Certificates (other than the Class of
Subordinated Certificates with the highest
priority of distribution), a trigger that is satisfied on any
Distribution Date
on which a fraction (expressed as a percentage),
the numerator of which
is the
aggregate Class Certificate Balance of such Class and each
Class subordinate
thereto, if any, and the denominator of which is the aggregate Pool
Principal
Balance for all of the Mortgage
Pools with respect to
such Distribution
Date,
equals or exceeds such percentage
calculated as of the Closing Date.
Closing
Date: August 30, 2005.
Code:
The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COFI: Not
applicable.
COFI
Certificates: Not applicable.
Compensating Interest:
As to any Distribution Date and any Principal
Prepayment in respect of a Mortgage Loan
that is received during the period from
the sixteenth day of the month (or, in the
case of the first
Distribution Date,
from the Cut-off Date) prior to the month
of such Distribution
Date through the
last day of such month, an additional
payment to the related
Mortgage Pool made
by the Master Servicer, to the extent funds are available from the Master
Servicing Fee, equal to the amount of
interest at the Adjusted Net Mortgage Rate
for that Mortgage Loan from the date of the
prepayment to the
related Due Date;
provided that the aggregate of all such payments as
to the Mortgage Loans
in a
Mortgage Pool shall not exceed 0.0083% of the Pool Principal Balance of such
Mortgage Pool as of the related
Determination Date, and provided further that if
a partial Principal Prepayment is applied
on or after the first day of the month
following the month of receipt, no additional payment is required for such
Principal Prepayment.
Component:
Not applicable.
Component
Balance: Not applicable.
Component
Certificates: Not applicable.
Cooperative Corporation: The entity that holds title (fee or an
acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a
Cooperative Housing Corporation under
Section 216 of the Code.
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.
9
<PAGE>
Cooperative Unit:
A single family dwelling located in a Cooperative
Property.
Corporate
Trust Office: The
designated office of the Trustee in the State
of New York at which at any particular time its corporate trust business with
respect to this Agreement shall be
administered, which office at the date of the
execution of this Agreement is located at The Bank of New
York, 101 Barclay
Street, 8W, New York, New York 10286 (Attn: Corporate Trust Mortgage-Backed
Securities Group, First Horizon Asset Securities Inc. Series 2005-AR4),
facsimile no. (212) 815-3986, and which is the address to which
notices to and
correspondence with the Trustee should be
directed.
Corresponding Classes:
As to any Lower REMIC Interest identified in
Section 2.7, the Class or Classes that are identified in Section 2.7 as
corresponding to such Lower REMIC
Interest.
Cross-over
Date: The Distribution Date on which the Class
Certificate
Balance of each Class of Subordinated
Certificates has been reduced to zero.
Custodial
Agreement:
The Custodial
Agreement dated as of August 30, 2005
by and among the Trustee, the Master
Servicer and the Custodian.
Custodian:
First Tennessee Bank
National Association,
a national banking
association, and its successors and assigns,
as custodian
under the
Custodial
Agreement.
Cut-off
Date: August 1, 2005.
Cut-off
Date
Pool Principal Balance: With respect to Pool I,
$32,300,005.83; with respect to Pool II,
$225,127,218.00; with
respect to Pool
III, $57,087,434.13; and with respect to
Pool IV, $111,050,051.57.
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.
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<PAGE>
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 the Trustee on the
Closing Date. The number of Delay
Delivery Mortgage Loans shall not exceed
25%
of the aggregate number of Mortgage Loans
as of the Closing Date.
Deleted
Mortgage Loan: As defined in Section 2.3(b) hereof.
Denomination: With
respect to each
Certificate, the
amount set forth on
the face thereof as the "Initial
Certificate Balance of this Certificate" or the
Percentage Interest appearing on the face
thereof.
Depositor:
First Horizon Asset Securities Inc., a Delaware corporation, or
its successor in interest.
Depository: The
initial Depository shall be The Depository Trust Company,
the nominee of which is CEDE & Co., as
the registered
Holder of the
Book-Entry
Certificates. The Depository shall at all times
be a "clearing
corporation" as
defined in Section 8-102(a)(5) of the Uniform
Commercial
Code of the State
of
New York.
Depository
Participant:
A broker, dealer, bank or other financial
institution or other Person for whom from time to time a
Depository
effects
book-entry transfers and pledges of
securities deposited with the Depository.
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 2005-AR4." 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 2005.
Due Date:
With respect to any Distribution Date, the first day of the
month in which the related Distribution
Date occurs.
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<PAGE>
Eligible
Account: Any of (i) an account or
accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of
which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any
amounts are held
on
deposit therein, or (ii) an account or accounts in
a depository
institution or
trust company in which such accounts are
insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF, as
applicable)
and the uninsured
deposits in which accounts are otherwise
secured such that, as
evidenced by an
Opinion of Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such
account or a
perfected first priority security interest against any collateral
(which shall
be limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or creditors of the
depository
institution
or
trust company in which such account is
maintained,
or (iii) a trust
account or
accounts maintained with (a) the trust department of a federal or state
chartered depository institution or (b) a
trust company, acting in its fiduciary
capacity or (iv) any other account
acceptable to each
Rating Agency.
Eligible
Accounts may bear interest, and may include, if otherwise qualified under
this
definition, accounts maintained with the
Trustee.
ERISA: The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying
Underwriting:
With respect
to any ERISA-Restricted
Certificate, a best efforts or firm
commitment underwriting or private placement
that meets the requirements of the
Underwriters' Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow
Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.6(a)
hereof.
Event of
Default: As defined in Section 7.1 hereof.
Excess
Loss: The amount of any (i) Fraud Loss
realized after the Fraud
Loss Coverage Termination Date, (ii) Special Hazard Loss realized after the
Special Hazard Coverage Termination Date or (iii)
Deficient Valuation
realized
after the Bankruptcy Coverage Termination
Date.
Excess
Proceeds: With respect to any Liquidated Mortgage Loan, the
amount,
if any, by which the sum of any Liquidation
Proceeds, Insurance
Proceeds and/or
Unanticipated Recoveries in respect of such Mortgage Loan received in the
calendar month in which such Mortgage Loan
became a Liquidated
Mortgage Loan,
net of any amounts previously reimbursed to the Master Servicer as
Nonrecoverable Advance(s) with respect to
such Mortgage Loan pursuant to Section
3.8(a)(iii), exceeds (i) the unpaid principal balance of such Liquidated
Mortgage Loan as of the Due Date in the
month in which such Mortgage Loan became
a Liquidated Mortgage Loan plus (ii) accrued
interest at the Mortgage Rate from
the Due Date as to which interest was last
paid or advanced (and not reimbursed)
to Certificateholders up to the Due Date applicable to
the Distribution
Date
immediately following the calendar month
during which such liquidation occurred.
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<PAGE>
Expense
Fee Rate: As to each Mortgage Loan, the sum of the related
Master
Servicing Fee Rate and the Trustee Fee
Rate.
FDIC: The
Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC:
The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States
created and existing under Title III of the
Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
FIRREA:
The Financial
Institutions Reform,
Recovery, and Enforcement Act
of 1989.
First
Horizon: First Horizon
Home Loan Corporation,
a Kansas corporation
and an indirect wholly owned subsidiary of
First Horizon National Corporation, a
Tennessee corporation.
Fitch:
Fitch Ratings and its successors and/or assigns. 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, $8,511,294. As of any
Distribution Date from the first anniversary of the Cut-off Date and prior
to
the fifth anniversary of the Cut-off Date,
the Fraud Loss Coverage Amount will
equal $4,255,671 minus the aggregate amount
of Fraud Losses that would have been
allocated to the Subordinated Certificates
in the absence of the Loss Allocation
Limitation since the Cut-off Date. As of
any Distribution
Date on or after
the
earlier of the Cross-over Date or the fifth
anniversary of the Cut-off Date, the
Fraud Loss Coverage Amount shall be
zero.
Fraud Loss
Coverage Termination Date: The date on which the Fraud
Loss
Coverage Amount is reduced to zero.
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.
FTBNA:
First Tennessee Bank National Association, a national banking
association.
Group I
Senior Certificates: As specified in the Preliminary Statement.
Group II
Senior Certificates: As specified in the Preliminary Statement.
13
<PAGE>
Group III
Senior Certificates: As specified in the Preliminary Statement.
Group IV
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.
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: $147,947.
Initial
Component Balance: Not applicable.
Insurance
Policy: With respect
to any Mortgage Loan included in the Trust
Fund, any insurance policy, including all riders and
endorsements
thereto in
effect, including any replacement policy or
policies for any Insurance Policies.
Insurance
Proceeds: Proceeds
paid by an insurer pursuant to any Insurance
Policy, in each case other than any amount
included in such Insurance Proceeds
in respect of Insured Expenses.
Insured
Expenses: Expenses covered by an Insurance
Policy or any
other
insurance policy with respect to the
Mortgage Loans.
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: Not applicable.
Latest
Possible Maturity Date: As to the Group II Senior Certificates,
the
Group III Senior Certificates, each Class of Subordinated
Certificates and each
Lower REMIC Interest, the Distribution Date following the third
anniversary of
the scheduled maturity date of the Mortgage Loan
in Pool II and Pool III having
the latest scheduled maturity date as of the Cut-off
Date. As to the Group
I
Senior Certificates and the Group IV Senior
Certificates, the
Distribution Date
following the third anniversary of the scheduled
maturity date of the
Mortgage
Loan in Pool I and Pool IV having the
latest scheduled
maturity date as of
the
Cut-off Date.
Lender PMI
Mortgage Loan: Not applicable.
14
<PAGE>
LIBOR: Not
applicable.
LIBOR
Certificates: Not applicable.
Liquidated
Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO
Property) which was liquidated in the
calendar month preceding the month of such
Distribution Date and as to which the
Master Servicer has determined (in
accordance with this
Agreement) that it has
received all amounts it expects to receive
in connection with the liquidation of
such Mortgage Loan, including the final
disposition of an REO Property.
Liquidation Proceeds:
All cash amounts, other than Insurance Proceeds and
Unanticipated Recoveries, received in connection
with the partial or
complete
liquidation of defaulted Mortgage Loans, whether through trustee's sale,
foreclosure sale or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged
Property and any other
proceeds
received in connection with an REO Property, less the sum of related
unreimbursed Master Servicing Fees,
Servicing Advances and Advances.
Loan-to-Value Ratio:
With respect to any Mortgage Loan and as of any date
of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which
is the Appraised Value of the related
Mortgaged Property.
Loss
Allocation Limitation: As defined in Section 4.4(g).
Lost
Mortgage Note: Any Mortgage Note the original of which was
permanently lost or destroyed and has not
been replaced.
Lower
REMIC: The segregated
pool of assets
consisting of the
Trust Fund
but excluding the Lower REMIC Interests,
the RL Interest and the RU Interest.
Lower
REMIC Interests: The REMIC regular interests, within the meaning of
the REMIC Provisions, issued by the Lower
REMIC as set forth in Section 2.7.
Maintenance: With
respect to any
Cooperative Unit, the
rent paid by the
Mortgagor to the Cooperative Corporation
pursuant to the Proprietary Lease.
Majority
in Interest: As to any Class of Regular Certificates, the
Holders
of Certificates of such Class evidencing,
in the aggregate, at
least 51% of the
Percentage Interests evidenced by all
Certificates of such Class.
Master
Servicer:
First
Horizon Home Loan Corporation, a Kansas
corporation, and its successors and assigns, in
its capacity as master servicer
hereunder.
Master
Servicer Advance Date: As to any Distribution Date, 1:30 p.m.
Central time on the Business Day
immediately preceding such Distribution Date.
15
<PAGE>
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: A per annum rate equal to 0.244%.
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.
MLPA I:
The Mortgage Loan Purchase Agreement dated as of August 30,
2005,
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 30,
2005,
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.
MOM Loan:
Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
Monthly
Statement:
The statement delivered to the Certificateholders
pursuant to Section 4.6.
Moody's:
Moody's Investors Service, Inc. and its successors and/or
assigns. 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.
16
<PAGE>
Mortgage
Loan Schedule:
The list of Mortgage
Loans (as from time to time
amended by the Master Servicer to reflect the addition
of Substitute
Mortgage
Loans and the deletion of Deleted
Mortgage Loans pursuant to the provisions
of
this Agreement) transferred to the Trustee as part of the
Trust Fund and from
time to time subject to this Agreement, attached hereto as Schedule I,
setting
forth the following information with
respect to each Mortgage Loan:
(1)
the loan
number;
(2)
the Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(3)
the maturity
date;
(4)
the original
principal balance;
(5)
the Cut-off Date
Principal Balance;
(6)
the first
payment date of the Mortgage Loan;
(7)
the Scheduled
Payment in effect as of the Cut-off Date;
(8)
the
Loan-to-Value Ratio at origination;
(9)
a code
indicating whether the
residential
dwelling at the time
of
origination was represented to be owner-occupied;
(10)
a code indicating
whether the
residential dwelling
is either (a) a
detached single family
dwelling (b) a dwelling in a de minimis PUD,
(c) a condominium unit
or PUD (other than a de minimis PUD), (d) a
two-to-four unit residential property or (e) a Cooperative
Unit;
(11)
the Mortgage Rate;
(12)
the purpose for the
Mortgage Loan;
(13)
the type of
documentation
program pursuant to which the Mortgage
Loan was originated;
(14)
the Master Servicing
Fee for the Mortgage Loan; and
(15)
a code indicating
whether the Mortgage Loan is a MERS Mortgage Loan.
Such
schedule shall also set forth the total of the
amounts described
under (4) and (5) above for all of the
Mortgage Loans.
Mortgage
Loans: Such of the mortgage loans transferred and assigned to
the
Trustee pursuant to the provisions hereof as from time to time are
held as a
part of the Trust Fund (including any REO
Property), the
mortgage loans so held
being identified in the Mortgage Loan
Schedule,
notwithstanding
foreclosure or
other acquisition of title of the related
Mortgaged Property.
17
<PAGE>
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, Pool III or Pool IV.
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 in such
Mortgage Pool during the
related Prepayment Period exceeds an
amount equal to the Compensating Interest
paid in respect of such Mortgage Loans, if
any, for such Distribution Date.
Non-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.
18
<PAGE>
Notional
Amount Component: Not applicable.
Notional
Amount Certificates: 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
Subordinated
Principal Balance: The
aggregate Class Certificate
Balance of the Subordinated Certificates as
of the Closing Date.
Original
Mortgage Loan: The
Mortgage Loan
refinanced in connection with
the origination of a Refinancing Mortgage
Loan.
OTS: The
Office of Thrift Supervision.
Outside
Reference Date: Not applicable.
Outstanding:
With respect
to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated
under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered
to
the Trustee for cancellation; and
(ii) Certificates
in exchange
for which or in lieu
of which other
Certificates have been executed and
delivered by the
Trustee pursuant to
this
Agreement.
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.
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<PAGE>
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 Class of Certificates, the per annum rate set
forth or calculated in the manner described
in the Preliminary Statement.
Percentage
Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related
Class,
such percentage interest being set forth on the face
thereof or equal to
the
percentage obtained by dividing the
Denomination
of such Certificate by the
aggregate of the Denominations of all
Certificates of the same Class.
Permitted
Investments:
At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided
such obligations are backed by the full
faith and credit of the United States;
(ii) general
obligations of or obligations guaranteed by any state
of the United States or the District of
Columbia receiving the highest long-term
debt rating of each Rating Agency;
(iii) commercial or
finance company paper
which is then
receiving
the highest commercial or finance company
paper rating of each Rating Agency;
(iv) certificates of deposit, demand or time deposits,
or bankers'
acceptances issued by any depository
institution or trust
company
incorporated
under the laws of the United States or of any state
thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations
of such depository institution or trust
company (or in the case of the principal
depository institution in a holding
company system, the commercial paper or
long-term unsecured debt obligations of such holding company, but only if
Moody's is not a Rating Agency) are then
rated one of the two highest long-term
and/or the highest short-term ratings of
each Rating Agency for such securities;
(v) demand or time deposits or certificates of deposit issued by
any
bank or trust company or savings institution to the extent that such
deposits
are fully insured by the FDIC and receiving
the highest short-term
debt rating
of each Rating Agency;
(vi) guaranteed
reinvestment
agreements
issued by any bank,
insurance company or other corporation and
receiving the highest short-term debt
rating of each Rating Agency and
containing, at the time of the issuance of such
agreements, such terms and conditions as will
not result in the
downgrading or
withdrawal of the rating then assigned to the Certificates by either Rating
Agency;
20
<PAGE>
(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.
Permitted
Transferee:
Any person other than
(i) the United States,
any
State or political subdivision thereof, or any agency
or instrumentality of any
of the foregoing, (ii) a foreign
government,
International
Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code
(including
the tax
imposed by section 511 of the Code on
unrelated business
taxable income) on any
excess inclusions (as defined in section
860E(c)(l) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) an "electing large
partnership" as defined in section 775 of the Code, (vi) a Person that is not
(a) a citizen or resident of the United
States, (b) a corporation, partnership,
or other entity created or organized in or under
the laws of the United States,
any state thereof or the District of
Columbia, (c) an
estate whose income from
sources without the United States is includible in gross income for United
States federal income tax purposes
regardless of its connection with the conduct
of a trade or business within the United
States or (d) a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial
decisions of the
trust, unless such Person
has furnished the transferor and the Trustee with a duly
completed Internal
Revenue Service Form W-8ECI or any
applicable
successor form, and (vii) any
other Person so designated by the Depositor based upon an Opinion of
Counsel
that the Transfer of an Ownership Interest in a Residual
Certificate
to such
Person may cause any REMIC created hereunder to fail to qualify as a REMIC
at
any time that the Certificates are outstanding;
provided, however, that if a
person is classified as a partnership
under the Code, such
person shall only be
a Permitted Transferee if all of its beneficial owners are described in
21
<PAGE>
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.
Pool IV:
The aggregate of the
Mortgage Loans
identified on the
Mortgage
Loan Schedule as being included in Pool
IV.
Pool
Principal Balance: For each Mortgage Pool, with respect to any
Distribution Date, the aggregate of the Stated Principal Balances of the
Mortgage Loans in such Mortgage Pool which
were Outstanding
Mortgage Loans on
the Due Date in the month preceding the
month of such Distribution Date, and for
the first Distribution Date, as of the Closing Date, less any Principal
Prepayments received on or after such Due Date and distributed to
Certificateholders on the prior
Distribution Date.
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.
22
<PAGE>
Prepayment
Interest Shortfall: As
to any Distribution Date, Mortgage Loan
and Principal Prepayment received (a) during the period
from the sixteenth day
of the month preceding the month of such
Distribution
Date (or, in the case
of
the first Distribution Date, from the
Cut-off Date) through the last day of such
month, in the case of a Principal
Prepayment
in Full, or (b) during
the month
preceding the month of such Distribution Date, in the case of a partial
Principal Prepayment, the amount, if any, by which one
month's interest at the
related Adjusted Mortgage Rate on such
Principal Prepayment
exceeds the amount
of interest actually paid by the Mortgagor in
connection
with such Principal
Prepayment.
Prepayment
Period: (a) With
respect to any Principal Prepayments in Full
and any Distribution Date, the period from the sixteenth day of the month
preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, from the Cut-off Date)
through the fifteenth day of the month
of such Distribution Date, and (b) with respect to any other Principal
Prepayments and any Distribution Date, the month preceding the month of such
Distribution Date.
Primary
Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy
therefor with respect to any Mortgage Loan.
Principal
Balance Schedules: Not applicable.
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.
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.
23
<PAGE>
Qualified
Insurer: A mortgage guaranty insurance company duly qualified
as
such under the laws of the state of its
principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states
and to write the
insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and having a claims paying
ability rating of at
least "AA" or equivalent rating by a
nationally recognized
statistical
rating
organization. Any replacement insurer with
respect to a Mortgage Loan must have
at least as high a claims paying
ability rating as the insurer it replaces
had
on the Closing Date.
Rating
Agency: Each of the
Rating Agencies
specified in the
Preliminary
Statement. If any such organization or a successor is no longer in
existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the
Depositor,
notice of which designation shall be given
to the Trustee.
References herein to
a given rating category of a Rating Agency shall mean such rating category
without giving effect to any modifiers.
Realized
Loss: With respect to
each Liquidated
Mortgage Loan, an
amount
(not less than zero or more than the Stated
Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as
of the date of such liquidation, plus
(ii) interest at the Adjusted
Net Mortgage
Rate from the Due Date
as to which
interest was last paid or advanced (and not
reimbursed) to Certificateholders up
to the Due Date in the month in which
Liquidation
Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) any Liquidation Proceeds, Insurance Proceeds
and/or Unanticipated Recoveries received during the month in which such
liquidation occurred (or during the calendar month preceding the related
Distribution Date, as applicable), to the extent applied as recoveries of
interest at the Adjusted Net Mortgage Rate and to principal of the
Liquidated
Mortgage Loan. With respect to each Mortgage Loan
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.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with
the refinancing of an existing mortgage
loan.
24
<PAGE>
Regular
Certificates: As specified in the Preliminary Statement.
Relief
Act: The
Servicemembers Civil
Relief Act, or any similar state or
local legislation or regulations.
Relief
Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a
reduction in the
amount of interest
collectible thereon for the most recently
ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which interest
collectible on such Mortgage Loan for the most
recently ended calendar month is
less than interest accrued thereon for such
month pursuant to the Mortgage Note.
REMIC: A
"real estate mortgage
investment conduit"
within the meaning of
section 860D of the Code.
REMIC
Change of Law: Any proposed, temporary or final regulation,
revenue
ruling, revenue procedure or other official announcement or interpretation
relating to REMICs and the REMIC Provisions
issued after the Closing Date.
REMIC
Pool: Any of the Lower REMIC or the Upper REMIC.
REMIC
Provisions:
Provisions
of the federal
income tax law
relating to
real estate mortgage investment conduits,
which appear at
sections 860A through
860G of Subchapter M of Chapter 1 of the Code,
and related provisions, and
regulations promulgated thereunder,
as the foregoing may
be in effect from time
to time as well as provisions of applicable
state laws.
REO
Property: A Mortgaged Property acquired by the Trust Fund
through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Request
for Release:
The Request
for Release submitted by the Master
Servicer to the Trustee, substantially in the form of Exhibits L and M, as
appropriate.
Required
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.
RL
Interest: The REMIC residual interest, within the meaning of the
REMIC
Provisions, issued by the Lower REMIC,
which shall be
represented by the Class
II-A-R Certificate.
25
<PAGE>
RU
Interest: The REMIC residual interest, within the meaning of the
REMIC
Provisions, issued by the Upper REMIC,
which shall be
represented by the Class
II-A-R Certificate.
Scheduled
Balances: Not applicable.
Scheduled
Certificates: Not applicable.
Scheduled
Payment: The scheduled monthly payment on a Mortgage Loan due
on
any Due Date allocable to principal and/or
interest on such Mortgage Loan which,
unless otherwise specified herein, shall
give effect to any related Debt Service
Reduction and any Deficient Valuation that affects the amount of the
monthly
payment due on such Mortgage Loan.
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
Mezzanine Certificates: As specified in the Preliminary
Statement.
Senior
Optimal Principal Amount: As to a Mortgage Pool and with respect
to
each Distribution Date, an amount equal to
the sum of:
(1) the related
Senior Percentage of 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
Principal Prepayment in Full received by the Master Servicer during the
applicable Prepayment Period;
(3) the related Senior
Prepayment Percentage
of the sum of (a) all
partial Principal Prepayments in respect of each
Mortgage Loan in such Mortgage
Pool received during the applicable
Prepayment Period and
(b) all Unanticipated
Recoveries received in respect of each
Mortgage Loan in the related Mortgage
Pool during the calendar month prior to
such Distribution Date;
26
<PAGE>
(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
(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
each Mortgage Loan
in such Mortgage Pool that has been replaced by the seller with a
Substitute
Mortgage Loan pursuant to this Agreement in connection
with such Distribution
Date and the Stated Principal Balance of
such Substitute Mortgage Loan.
Senior
Percentage:
On any Distribution
Date for a Certificate Group, the
lesser of 100% and the percentage
(carried to six
places) 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 2005 - August 2012 100%
-----------------------------
------------------------------------------------
September 2012 - August 2013 The related
Senior Percentage plus 70% of the
related Subordinated Percentage
-----------------------------
------------------------------------------------
September 2013 - August 2014 The related
Senior Percentage plus 60% of the
related Subordinated Percentage
-----------------------------
------------------------------------------------
27
<PAGE>
September 2014 - August 2015 The related
Senior Percentage plus 40% of the
related Subordinated Percentage
-----------------------------
------------------------------------------------
September 2015 - August 2016 The related
Senior Percentage plus 20% of the
related Subordinated Percentage
-----------------------------
------------------------------------------------
September 2016 and thereafter The related Senior
Percentage
-----------------------------
------------------------------------------------
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 Group for such
Distribution Date will equal 100%, (ii) if on
any Distribution Date
before the
Distribution Date in September 2008, prior
to giving effect to any distributions
on such Distribution Date, the Subordinated Percentage for such Certificate
Group for such Distribution Date is equal to or 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 2008, prior to
giving effect to any
distributions on such Distribution Date, the Subordinated
Percentage for
such
Certificate Group for such Distribution Date is equal to or
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 both of the following
step-down conditions are satisfied with
respect to each Mortgage Pool, as of the
last day of the month preceding the
Distribution Date:
(1)
the aggregate
Stated Principal
Balance of Mortgage
Loans in all of
the Mortgage Pools
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 Class Certificate
Balances of the Subordinated Certificates as of that date; and
(2)
cumulative
Realized Losses on the Mortgage Loans in all of the
Mortgage Pools do not exceed:
(a) 20% of the
Original Subordinated Principal Balance if such
Distribution Date
occurs between and
including September
2005 and
August 2008; and
(b) 30% of the
Original Subordinated Principal Balance if such
Distribution Date occurs on or after September 2008.
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<PAGE>
Servicing
Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the
performance by the Master Servicer of
its servicing obligations, including, but not limited to, the cost of
(i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
expenses reimbursable to the Master
Servicer pursuant to Section 3.11 and
any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv)
compliance
with the
obligations under Section 3.9.
Servicing
Agreement:
The servicing
agreement,
dated as of November
26,
2002 by and between First Horizon Asset Securities Inc. and its assigns, as
owner, and First Tennessee Mortgage
Services, Inc., as servicer.
Servicing
Officer: Any officer of the Master
Servicer involved in, or
responsible for, the administration and servicing of the Mortgage
Loans whose
name and facsimile signature appear on a
list of servicing officers furnished to
the Trustee by the Master Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to
time be amended.
Servicing
Rights Transfer and Subservicing Agreement: The servicing
rights
transfer and subservicing agreement, dated as of November 26, 2002, by and
between First Horizon Home Loan
Corporation, as transferor and subservicer, and
First Tennessee Mortgage Services, Inc., as
transferee and servicer.
Special
Hazard Coverage
Termination
Date: The date on
which the Special
Hazard Loss Coverage Amount is reduced to
zero.
Special
Hazard Loss: Any Realized Loss suffered by a Mortgaged Property
on
account of direct physical loss but not
including (i) any loss of a type covered
by a hazard insurance policy or a flood insurance policy required to be
maintained with respect to such Mortgaged
Property pursuant to Section 3.9 to
the extent of the amount of such loss
covered thereby,
or (ii) any loss
caused
by or resulting from:
(1) normal wear and tear;
(2) fraud,
conversion
or other dishonest act on the part of the
Trustee, the Master Servicer or any of
their agents or employees (without regard
to any portion of the loss not covered by
any errors and omissions policy);
(3) errors in design, faulty workmanship or faulty materials,
unless
the collapse of the property or a part thereof ensues and then only for the
ensuing loss;
(4) nuclear or chemical reaction or nuclear radiation or
radioactive
or chemical contamination, all whether controlled or
uncontrolled, and
whether
such loss be direct or indirect, proximate or remote or be in whole
or in part
caused by, contributed to or aggravated by a
peril covered by the definition of
the term "Special Hazard Loss";
(5) hostile or warlike
action in time of
peace and war,
including
action in hindering, combating or defending against an actual, impending or
expected attack:
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(i) by any government or sovereign power, de jure or de facto, or
by
any authority maintaining or using
military, naval or air forces;
(ii) by military, naval or air forces; or
(iii) by an
agent of any such government, power, authority or
forces;
(6)
any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace
or war; or
(7)
insurrection,
rebellion,
revolution,
civil war,
usurped power or
action taken by governmental authority in hindering, combating or defending
against such an occurrence, seizure or destruction
under quarantine or
customs
regulations, confiscation by order of any government or public authority or
risks of contraband or illegal
transportation or trade.
Special
Hazard Loss
Coverage Amount: Upon the initial issuance of the
Certificates, $5,682,887. 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, a division of The McGraw-Hill Companies,
Inc., and
its successors and/or assigns. 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.
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<PAGE>
Streamlined
Documentation Mortgage
Loan: Any Mortgage Loan originated
pursuant to the Seller's Streamlined Loan
Documentation Program then in effect.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated
Certificate Writedown
Amount: As of any Distribution Date,
the amount by which (a) the sum of the
Class Certificate
Balances of all of the
Certificates, after giving effect to the distribution of principal and the
allocation of Realized Losses in reduction
of the Class Certificate Balances of
all of the Certificates on such
Distribution Date,
exceeds (b) the aggregate of
the Pool Principal Balances of all of the
Mortgage Pools on the first day of the
month of such Distribution Date, less any
Deficient Valuations
occurring before
the Bankruptcy Loss Coverage Amount has
been reduced to zero.
Subordinated Optimal
Principal Amount: With respect to each Mortgage Pool
and each Distribution Date, an amount equal to the sum
of the following (but in
no event greater than the aggregate Class Certificate Balances of the
Subordinated Certificates immediately prior
to such Distribution Date):
(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 Principal Prepayment in Full received by the Master
Servicer during the
related Prepayment Period;
(3) the
related Subordinated
Prepayment Percentage
of the sum of (a) all
partial Principal Prepayments received in respect of each
Mortgage Loan in the
related Mortgage Pool during the related Prepayment Period, (b) all
Unanticipated Recoveries received in respect of each Mortgage Loan in the
related Mortgage Pool during the calendar
month prior to such Distribution Date,
and (c) on the Senior Final Distribution Date, 100% of any related Senior
Optimal Principal Amount remaining
undistributed on such date;
(4)
the amount, if any, by which the sum of (a) the 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
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(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 each
Mortgage Loan in the related Mortgage Pool that has been
replaced by the seller
with a Substitute Mortgage Loan pursuant to this
Agreement in
connection with
such Distribution Date and the Stated
Principal Balance of each such Substitute
Mortgage Loan.
Subordinated
Percentage: For any
Distribution Date and
each Certificate
Group, 100% minus the related Senior
Percentage.
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.
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.
Super
Senior Certificates: As specified in the Preliminary Statement.
Support
Classes: Not applicable.
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<PAGE>
Targeted
Balances: Not applicable.
Targeted
Principal Classes: Not applicable.
Tax
Matters Person: The
person designated as
"tax matters person" in the
manner provided under Treasury regulation ss. 1.860F-4(d) and Treasury
regulation ss. 301.6231(a)(7)-1.
Initially, the Tax
Matters Person shall be the
Trustee.
Tax
Matters Person
Certificate:
The Class II-A-R Certificates with a
Denomination of $0.01.
Transfer:
Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Trust
Fund: The corpus of
the trust created
hereunder consisting
of (i)
the Mortgage Loans and all interest and
principal received on or with respect
thereto after the Cut-off Date to the extent not
applied in computing the
Cut-off Date Principal Balance thereof; (ii) all of the Depositor's
rights as
purchaser under 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.
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) and (iii) of
the proviso in the definition of "Senior
Prepayment Percentage."
Unanticipated Recovery: As defined in Section 4.2(h).
Undercollateralization Distribution: As defined in Section
4.2(i).
Undercollateralized
Group: With respect to
any Distribution
Date, the
Senior Certificates of any Certificate Group 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.
Underwriters: As specified in the Preliminary Statement.
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<PAGE>
Underwriters' Exemption: An individual administrative exemption
granted by
the U.S. Department of Labor to the
Underwriters providing
exceptions from some
of the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by employee benefit plans in
certificates in pass-through trusts having assets and meeting conditions
described therein, as amended by Prohibited
Transaction
Exemption 2000-58
(65
Fed. Reg. 67765, November 13, 2000), as amended, and Prohibited Transaction
Exemption 2002-41 (67 Fed. Reg. 54487, August 22, 2002), as amended (or any
successor thereto), or any substantially similar administrative exemption
granted by the U.S. Department of
Labor.
Upper
REMIC: The segregated
pool of assets
consisting of the Lower REMIC
Interests.
Voting
Rights: The portion of the voting rights of all of the
Certificates
which is allocated to any Certificate. As
of any date of determination, (a) 99%
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) 1.0% 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 to (A) require the Seller to
cure
any breach
of a representation or
warranty made by the Seller pursuant to
MLPA I, or
(B) repurchase or substitute for any affected Mortgage Loan in
accordance
herewith, and (ii) all right, title and interest of the
Depositor
in, to and under the Servicing Agreement, which right has been
assigned
to the Depositor pursuant to MLPA II.
(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:
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<PAGE>
(i)
(A) the
original Mortgage Note endorsed by manual or facsimile
signature in
blank in the
following form: "Pay to the order of
________________, without recourse," with all intervening
endorsements showing
a complete chain of endorsement from the
originator to the
Person endorsing
the Mortgage Note (each such
endorsement being
sufficient
to transfer all right, title and
interest of the
party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note); or
(B) with respect to any Lost Mortgage Note, a lost note affidavit
from the Seller stating that the original Mortgage Note was lost or
destroyed, together with a copy of such Mortgage Note;
(ii)
except as provided
below and for each
Mortgage Loan,
the original
recorded Mortgage or a copy of such Mortgage certified by the
Seller
as being a true and complete copy of the Mortgage, and in the case
of each MERS Mortgage
Loan, the presence of the MIN of the Mortgage
Loans and either language indicating that the Mortgage Loan is a
MOM
Loan if the Mortgage
Loan is a MOM Loan or if the Mortgage Loan was
not a MOM Loan
at origination, the original Mortgage and the
assignment thereof to
MERS, with
evidence of recording
indicated
thereon;
(iii) in
the case of each Mortgage Loan, a duly executed assignment of
the
Mortgage, or a copy of
such assignment
certified by the
Seller as
being a true and complete copy of the assignment, in blank (which
may be included in a blanket assignment or assignments), together
with, except as provided below, all interim recorded assignments,
or
copies of such interim assignments certified by the Seller as
being
true and complete copies of the interim assignments, of such
Mortgage (each such assignment, when duly and validly completed,
to
be in recordable form and sufficient to effect the assignment of
and
transfer to the
assignee thereof,
under the Mortgage to
which the
assignment relates);
provided that, if the related Mortgage has not
been returned from the
applicable public
recording office, such
assignment of
the Mortgage may exclude the information to be
provided by the recording office;
(iv)
the original or copies of each
assumption,
modification,
written
assurance or substitution agreement, if any;
(v)
either the
original or duplicate original title policy, or a copy of
such title
policy certified by the Seller as being a true and
complete copy of the title policy, (including all riders thereto)
with respect
to the related mortgaged property, if available,
provided that the title policy (including all riders thereto) will
be delivered
as soon as it
becomes available, and if the title
policy is not available, and to the extent required
pursuant to the
second paragraph below or otherwise in connection with the rating
of
the Certificates,
a written commitment or interim binder or
preliminary report of
the title issued by
the title insurance
or
escrow company with
respect to the mortgaged property, or in lieu
thereof, an
Alternative Title Product or a copy of such Alternative
Title Product
certified by the
Seller as being a true and complete
copy of the Alternative Title Product, and
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<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 that is not
a MERS
Mortgage Loan the Depositor cannot deliver
(a) the original recorded Mortgage or
(b) all interim recorded assignments
satisfying the
requirements of clause (ii)
or (iii) above, respectively, concurrently with the execution and delivery
hereof because such document or documents have not been returned from the
applicable public recording office, the Depositor shall promptly
deliver or
cause to be delivered to the Trustee or the Custodian on its behalf such
original Mortgage or such interim
assignment, as the
case may be, with evidence
of recording indicated thereon upon receipt thereof from
the public
recording
office, or a copy thereof, certified, if appropriate, by the
relevant recording
office, but in no event shall any such
delivery of the
original Mortgage and
each such interim assignment or a copy
thereof, certified,
if appropriate,
by
the relevant recording office, be made
later than one year following the Closing
Date; provided, however, in the event the Depositor is unable to deliver or
cause to be delivered by such date each Mortgage and each such interim
assignment by reason of the fact that any
such documents have
not been returned
by the appropriate recording office, or, in the case of each such interim
assignment, because the related Mortgage has not been returned by the
appropriate recording office, the Depositor shall deliver or cause to be
delivered such documents to the Trustee or the Custodian on its behalf as
promptly as possible upon receipt thereof and, in any event, within 720 days
following the Closing Date. The Depositor
shall forward or cause to be forwarded
to the Trustee or the Custodian on its behalf (a) from
time to time
additional
original documents evidencing an assumption or
modification of a Mortgage Loan
and (b) any other documents required to be delivered
by the Depositor or the
Master Servicer to the Trustee.
In the event that the
original Mortgage is
not
delivered and in connection with the payment in full of the
related Mortgage
Loan and the public recording office requires the presentation of a "lost
instruments affidavit and indemnity" or any
equivalent document,
because only a
copy of the Mortgage can be delivered
with the instrument of satisfaction or
reconveyance, the Master Servicer shall execute and deliver or cause to be
executed and delivered such a document to
the public recording
office. In the
case where a public recording office
retains the original
recorded Mortgage
or
in the case where a Mortgage is lost after recordation in a public recording
office, the Depositor shall deliver or cause to be
delivered to the Trustee or
the Custodian on its behalf a copy of such
Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
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<PAGE>
In
addition, in the event
that in connection
with any Mortgage Loan
the
Depositor cannot deliver or cause to be
delivered the original or duplicate
original lender's title policy (together
with all riders
thereto),
satisfying
the requirements of clause (v) above, concurrently with the execution and
delivery hereof because the related Mortgage has not been returned from the
applicable public recording office, the Depositor shall promptly
deliver or
cause to be delivered to the Trustee or the Custodian on its behalf such
original or duplicate original lender's title policy (together
with all riders
thereto) upon receipt thereof from the
applicable title insurer, but in no event
shall any such delivery of the original or
duplicate original
lender's title
policy be made later than one year following the Closing Date; provided,
however, in the event the Depositor is unable to deliver or cause to be
delivered by such date the original or
duplicate original
lender's title policy
(together with all riders thereto) because the related Mortgage has not been
returned by the appropriate recording office, the Depositor shall deliver or
cause to be delivered such documents to the Trustee or the Custodian on its
behalf as promptly as possible upon receipt thereof and, in any event,
within
720 days following the Closing Date; provided further, however, that the
Depositor shall not be required to deliver
an original or
duplicate lender's
title policy (together with all riders thereto) if the Depositor
delivers an
Alternative Title Product in lieu thereof.
Notwithstanding
the preceding,
in
connection with any Mortgage Loan for which either the original or
duplicate
original title policy has not been
delivered to the Trust, if at any time during
the term of this Agreement the parent
company of the Seller does not have a long
term senior debt rating of A- or higher
from S&P and A- or higher from Fitch (if
rated by Fitch), then the Depositor shall within 30
days deliver or cause to be
delivered to the Trustee or the Custodian on its behalf (if it has not
previously done so) a written commitment or
interim binder or preliminary report
of the title issued by the title insurance
or escrow company with respect to the
Mortgaged Property.
Subject to
the immediately
following sentence, as promptly as practicable
subsequent to such transfer and assignment,
and in any event, within thirty (30)
days thereafter, the Master Servicer shall (i) complete each assignment of
Mortgage, as follows: "First Horizon
Mortgage Pass-Through Certificates, Series
2005-AR4, 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.
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<PAGE>
In the
case of Mortgage
Loans that have been prepaid in full as of the
Closing Date, the Depositor, in lieu of delivering the above
documents to the
Trustee or the Custodian on its behalf,
will deposit in the
Certificate Account
the portion of such payment that is
required to be deposited in the Certificate
Account pursuant to Section 3.8 hereof.
Notwithstanding anything to the contrary in this Agreement,
within thirty
days after the Closing Date, the Depositor
shall either (i)
deliver or cause to
be delivered to the Trustee or the
Custodian on its
behalf the Mortgage File as
required pursuant to this Section 2.1 for
each Delay Delivery
Mortgage Loan or
(ii) (A) substitute or cause to be
substituted a
Substitute Mortgage
Loan for
the Delay Delivery Mortgage Loan or (B) repurchase or cause to be
repurchased
the Delay Delivery Mortgage Loan, which substitution or repurchase shall be
accomplished in the manner and subject to the
conditions
set forth in
Section
2.3 (treating each Delay Delivery
Mortgage Loan as a
Deleted Mortgage Loan
for
purposes of such Section 2.3), provided,
however, that if the Depositor fails to
deliver a Mortgage File for any Delay Delivery Mortgage Loan within the
thirty-day period provided in the prior
sentence, the Depositor shall use its
best reasonable efforts to effect or cause
to be effected a substitution, rather
than a repurchase of, such Deleted
Mortgage Loan and
provided further that
the
cure period provided for in Section 2.2 or
in Section 2.3 shall not apply to the
initial delivery of the Mortgage File for
such Delay Delivery Mortgage Loan, but
rather the Depositor shall have five (5) Business
Days to cure or cause
to be
cured such failure to deliver. At the end
of such thirty-day period, the Trustee
or the Custodian, on its behalf shall send a Delay
Delivery Certification
for
the Delay Delivery Mortgage Loans delivered
during such
thirty-day
period in
accordance with the provisions of Section
2.2. Notwithstanding
anything to the
contrary contained in this Agreement, none of the Mortgage Loans in the
Trust
Fund is or will be Delay Delivery Mortgage
Loans.
SECTION
2.2 Acceptance by Trustee of the Mortgage Loans.
The
Trustee or the Custodian, on behalf of the Trustee, acknowledges
receipt of the documents identified in the Initial
Certification
in the form
annexed hereto as Exhibit E and declares
that it or the Custodian holds and will
hold such documents and the other documents
delivered to it or the Custodian, as
applicable, constituting the Mortgage Files,
and that it or the
Custodian, as
applicable, holds or will hold such other
assets as are
included in the
Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee acknowledges that the Custodian will
maintain
possession of the Mortgage Notes in the State of Texas, unless otherwise
permitted by the Rating Agencies.
The
Trustee agrees to
execute and deliver or
to cause the Custodian
to
execute and deliver on the Closing Date to
the Depositor and the Master Servicer
an Initial Certification in the form annexed hereto as
Exhibit E. Based on its
or the Custodian's review and examination, and only as to the documents
identified in such Initial Certification, the Custodian, on behalf of the
Trustee, acknowledges that such documents appear regular on their face and
relate to such Mortgage Loan. Neither the Trustee nor the
Custodian shall be
under any duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate
for the represented purpose or that they
have actually been recorded in the real estate
records or that they
are other
than what they purport to be on their
face.
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<PAGE>
On or
about the thirtieth
(30th) day after the Closing Date, the Trustee
shall deliver or shall cause the
Custodian to deliver
to the Depositor and the
Master Servicer a Delay Delivery Certification in the form annexed hereto as
Exhibit F, with any applicable exceptions noted thereon. Notwithstanding
anything to the contrary contained in this
Agreement, none of the Mortgage Loans
in the Trust Fund is or will be Delay
Delivery Mortgage Loans.
Not later
than 90 days after the Closing Date, the Trustee shall deliver
or shall cause the Custodian to deliver to
the Depositor and the Master Servicer
a Subsequent Certification in the form annexed hereto as Exhibit G, with any
applicable exceptions noted thereon.
If, in the
course of such review, the Trustee or the Custodian, on behalf
of the Trustee, finds any document constituting a
part of a Mortgage File which
does not meet the requirements of Section 2.1, the Trustee shall
list or shall
cause the Custodian to list such as an exception in the Subsequent
Certification; provided, however that neither the Trustee nor the
Custodian
shall make any determination as to whether (i)
any endorsement is sufficient to
transfer all right, title and interest of
the party so endorsing, as noteholder
or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in
recordable form or is sufficient to effect
the assignment of and transfer to the
assignee thereof under the mortgage to
which the assignment relates. The Seller
shall promptly correct or cure such defect within
90 days from the date it was
so notified of such defect and, if the Seller does not correct or
cure such
defect within such period, the Seller shall either (a) substitute for the
related Mortgage Loan a Substitute
Mortgage Loan, which
substitution
shall be
accomplished in the manner and subject to the
conditions
set forth in
Section
2.3, or (b) purchase such Mortgage Loan
from the Trustee within 90 days from the
date the Seller was notified of such defect
in writing at the Purchase Price of
such Mortgage Loan; provided, however, that in no event shall
such substitution
or purchase occur more than 540 days from the
Closing Date, except
that if the
substitution or purchase of a Mortgage
Loan pursuant to this provision is
required by reason of a delay in delivery
of any documents
by the appropriate
recording office, and there is a dispute between
either the Master Servicer or
the Seller and the Trustee over the
location or status of the recorded document,
then such substitution or purchase shall
occur within 720 days from the Closing
Date. The Trustee shall deliver or shall
cause the Custodian to deliver written
notice to each Rating Agency within 270 days from the Closing
Date indicating
each Mortgage Loan (a) which has not been
returned by the appropriate recording
office or (b) as to which there is a dispute as to
location or status of such
Mortgage Loan. Such notice shall be
delivered every 90 days thereafter until the
related Mortgage Loan is returned to the
Trustee or the Custodian on its behalf.
Any such substitution pursuant to (a) above or purchase
pursuant to (b)
above
shall not be effected prior to the delivery to the Trustee of the Opinion
of
Counsel required by Section 2.5 hereof, if
any, and any substitution pursuant to
(a) above shall not be effected prior to
the additional
delivery to the Trustee
of a Request for Release substantially in
the form of Exhibit L. No substitution
is permitted to be made in any calendar
month after the
Determination Date
for
such month. The Purchase Price for any such
Mortgage Loan shall be deposited by
the Seller in the Certificate Account on or prior to the
Distribution
Account
Deposit Date for the Distribution Date in the month following the month of
repurchase and, upon receipt of such deposit and
certification
with respect
thereto in the form of Exhibit M hereto,
the Trustee
shall cause the
Custodian
to release the related Mortgage File to the
Seller and shall execute and deliver
at the Seller's request such instruments of transfer or
assignment prepared
by
the Seller, in each case without recourse,
as shall be necessary
to vest in the
Seller, or a designee, the Trustee's interest in any Mortgage
Loan released
pursuant hereto. If pursuant to the
foregoing provisions
the Seller repurchases
a Mortgage Loan that is a MERS Mortgage
Loan, the Master
Servicer shall
either
(i) cause MERS to execute and deliver an assignment of the Mortgage in
recordable form to transfer the Mortgage
from MERS to the Seller and shall cause
such Mortgage to be removed from registration on the MERS(R) System in
accordance with MERS' rules and regulations or (ii) cause MERS to
designate on
the MERS(R) System the Seller as the
beneficial holder of such Mortgage Loan.
39
<PAGE>
The
Trustee shall retain or shall cause the Custodian to retain
possession
and custody of each Mortgage File in accordance with and subject to the terms
and conditions set forth herein.
The Master Servicer
shall promptly deliver
to
the Trustee or the Custodian on its behalf, upon the execution or receipt
thereof, the originals of such other
documents or instruments constituting the
Mortgage File as come into the possession of the Master Servicer from time to
time.
It is
understood
and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan which does not meet the
requirements of Section 2.1 above shall
constitute the sole
remedy respecting
such defect available to the Trustee,
the Depositor and any
Certificateholder
against the Seller.
The
mortgage loans permitted by the terms of this Agreement to be
included
in the Trust Fund are limited to (i) the
Mortgage Loans (which the Depositor
acquired pursuant to MLPA I, which
contains, among other
representations
and
warranties, a representation and warranty
of the Seller that no Mortgage Loan is
a "high cost loan" as defined by the
specific applicable local, state or federal
predatory and abusive lending laws, and
(ii) Substitute
Mortgage Loans
(which,
by definition as set forth in this Agreement and referred to in MLPA I, are
required to conform to, among other representations and warranties, a
representation and warranty of the Seller
set forth in MLPA I that no Substitute
Mortgage Loan is a "high cost loan" as
defined by the specific applicable local,
state or federal predatory and abusive
lending laws). It is therefore understood
and agreed by the parties hereto that it is not intended
that any Mortgage Loan
be included in the Trust Fund that is a "high cost loan" as
defined in the by
the specific applicable local, state or federal predatory and
abusive lending
laws.
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
40
<PAGE>
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.
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.
41
<PAGE>
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 Balan
