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
October 1, 2005
-----------------------------------------------------
FIRST HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2005-FA9
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-FA9
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS...........................................................................................5
ARTICLE II CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND
WARRANTIES........................................36
SECTION 2.1 Conveyance
of Mortgage
Loans.....................................................................36
SECTION 2.2 Acceptance
by Trustee of the Mortgage
Loans......................................................40
SECTION 2.3
Representations and Warranties of the Master Servicer; Covenants of the
Seller..................42
SECTION 2.4
Representations and Warranties of the Depositor as to the Mortgage
Loans.........................44
SECTION 2.5 Delivery
of Opinion of Counsel in Connection with
Substitutions..................................45
SECTION 2.6 Execution
and Delivery of
Certificates...........................................................45
SECTION 2.7 REMIC
Matters....................................................................................46
SECTION 2.8 Covenants
of the Master
Servicer.................................................................48
ARTICLE III ADMINISTRATION AND SERVICING OF
MORTGAGE
LOANS.......................................................48
SECTION 3.1 Master
Servicer to Service Mortgage
Loans........................................................48
SECTION 3.2
Subservicing; Enforcement of the Obligations of
Servicers........................................49
SECTION 3.3 Rights of
the Depositor and the Trustee in Respect of the Master
Servicer........................50
SECTION 3.4 Trustee to
Act as Master
Servicer................................................................50
SECTION 3.5 Collection
of Mortgage Loan Payments; Certificate Account; Distribution
Account..................51
SECTION 3.6 Collection
of Taxes, Assessments and Similar Items; Escrow
Accounts..............................54
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......................55
SECTION 3.9
Maintenance of Hazard Insurance; Maintenance of Primary Insurance
Policies.......................57
SECTION 3.10
Enforcement of Due-on-Sale Clauses; Assumption
Agreements.......................................58
SECTION 3.11
Realization Upon Defaulted Mortgage Loans; Repurchase of Certain
Mortgage Loans.................60
SECTION 3.12 Trustee
to Cooperate; Release of Mortgage
Files.................................................62
SECTION 3.13 Documents
Records and Funds in Possession of Master Servicer to be Held for
the Trustee.........63
SECTION 3.14 Master
Servicing
Compensation...................................................................63
SECTION 3.15 Access to
Certain
Documentation.................................................................64
SECTION 3.16 Annual
Statement as to
Compliance...............................................................64
SECTION 3.17 Annual
Independent Public Accountants' Servicing Statement; Financial
Statements................64
SECTION 3.18 Errors
and Omissions Insurance; Fidelity
Bonds..................................................65
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ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE
MASTER
SERVICER....................................................65
SECTION 4.1
Advances.........................................................................................65
SECTION 4.2 Priorities
of
Distribution.......................................................................66
SECTION 4.3 Method of
Distribution...........................................................................69
SECTION 4.4 Allocation
of
Losses.............................................................................71
SECTION 4.5
Reserved.........................................................................................73
SECTION 4.6 Monthly
Statements to
Certificateholders.........................................................73
SECTION 4.7 Corridor
Reserve
Fund............................................................................75
SECTION 4.8 Separate
Interest
Trust..........................................................................76
SECTION 4.9
Determination of Pass-Through Rates for LIBOR
Certificates.......................................76
ARTICLE V THE
CERTIFICATES.....................................................................................78
SECTION 5.1 The
Certificates.................................................................................78
SECTION 5.2
Certificate Register; Registration of Transfer and Exchange of
Certificates......................79
SECTION 5.3 Mutilated,
Destroyed, Lost or Stolen
Certificates................................................85
SECTION 5.4 Persons
Deemed
Owners............................................................................85
SECTION 5.5 Access to
List of Certificateholders' Names and
Addresses........................................85
SECTION 5.6
Maintenance of Office or
Agency..................................................................86
ARTICLE VI THE DEPOSITOR AND THE MASTER
SERVICER................................................................86
SECTION 6.1 Respective
Liabilities of the Depositor and the Master
Servicer..................................86
SECTION 6.2 Merger or
Consolidation of the Depositor or the Master
Servicer..................................86
SECTION 6.3 Limitation
on Liability of the Depositor, the Master Servicer and
Others.........................87
SECTION 6.4 Limitation
on Resignation of Master
Servicer.....................................................87
ARTICLE VII
DEFAULT..............................................................................................88
SECTION 7.1 Events of
Default................................................................................88
SECTION 7.2 Trustee to
Act; Appointment of
Successor.........................................................90
SECTION 7.3
Notification to
Certificateholders...............................................................91
ARTICLE VIII CONCERNING THE
TRUSTEE..............................................................................91
SECTION 8.1 Duties of
Trustee................................................................................91
SECTION 8.2 Certain
Matters Affecting the
Trustee............................................................93
SECTION 8.3 Trustee
Not Liable for Certificates or Mortgage
Loans............................................95
SECTION 8.4 Trustee
May Own
Certificates.....................................................................95
SECTION 8.5 Trustee's
Fees and
Expenses......................................................................95
SECTION 8.6
Eligibility Requirements for
Trustee.............................................................96
SECTION 8.7
Resignation and Removal of
Trustee...............................................................96
SECTION 8.8 Successor
Trustee................................................................................97
SECTION 8.9 Merger or
Consolidation of
Trustee...............................................................97
SECTION 8.10
Appointment of Co-Trustee or Separate
Trustee...................................................97
SECTION 8.11 Tax
Matters.....................................................................................99
SECTION 8.12 Periodic
Filings...............................................................................101
ARTICLE IX
TERMINATION.........................................................................................101
SECTION 9.1
Termination upon Liquidation or Purchase of all Mortgage
Loans..................................101
SECTION 9.2 Final
Distribution on the
Certificates..........................................................102
SECTION 9.3 Additional
Termination
Requirements.............................................................103
ARTICLE X
[RESERVED]..........................................................................................104
ARTICLE XI MISCELLANEOUS
PROVISIONS............................................................................104
SECTION 11.1
Amendment......................................................................................104
SECTION 11.2
Recordation of Agreement;
Counterparts.........................................................105
SECTION 11.3 Governing
Law..................................................................................105
SECTION 11.4 Intention
of
Parties...........................................................................106
SECTION 11.5
Notices........................................................................................106
SECTION 11.6
Severability of
Provisions.....................................................................107
SECTION 11.7
Assignment.....................................................................................107
SECTION 11.8
Limitation on Rights of
Certificateholders.....................................................108
SECTION 11.9
Inspection and Audit
Rights....................................................................108
SECTION 11.10
Certificates Nonassessable and Fully
Paid.....................................................109
SECTION 11.11
Limitations on Actions; No
Proceedings........................................................109
SECTION 11.12
Acknowledgment of
Seller......................................................................109
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SCHEDULES
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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-1:
Form of Senior Certificate
A-1-1
Exhibit A-2:
Form of Senior Certificate/Class A-PO
A-2-1
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
Exhibit N:
Principal Balance Schedules
N-1
</TABLE>
<PAGE>
THIS POOLING AND SERVICING AGREEMENT, dated as of October 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, each having assets as provided
herein. 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 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]
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Initial Class
Minimum
Integral Multiples
Class Designation
Certificate Balance
Pass-Through Rate
Denominations in
Excess Minimum
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Class A-1
$ 250,207,000.00
variable(1)
$ 25,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-2
(2)
variable(3)
$
500,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-3
$ 29,090,000.00
5.500%
$ 25,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-4A
$ 41,278,000.00
5.500%
$ 25,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-4B
$ 2,568,000.00
5.500%
$ 25,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-5
$ 115,320,000.00
5.500%
$ 25,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-PO
$ 1,299,952.36
(4)
$ 25,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class A-R
$
100.00
5.500%
$
100
N/A
--------------------------------------------------------------------------------------------------------------------
Class B-1
$ 9,200,000.00
5.500%
$
100,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class B-2
$ 3,910,000.00
5.500%
$
100,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class B-3
$ 2,300,000.00
5.500%
$
100,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class B-4
$ 2,070,000.00
5.500%
$
100,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class B-5
$ 1,610,000.00
5.500%
$
100,000
$
1,000
--------------------------------------------------------------------------------------------------------------------
Class B-6
$ 1,150,750.71
5.500%
$
100,000
$
1,000
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</TABLE>
(1) The Pass-Through Rate with respect to
any Distribution Date for the Class
A-1 Certificates is the per annum rate
equal to (a) 4.550% with respect to the
first Distribution Date, and (b)
thereafter, the lesser of (i) LIBOR plus 0.700%
and (ii) 5.500%, subject to a minimum rate
of 0.700%.
(2) The Class A-2 Certificates are Notional
Amount Certificates and will accrue
interest during each Interest Accrual
Period on a Notional Amount equal to the
Class Certificate Balance of the Class A-1
Certificates. The initial Notional
Amount of the Class A-2 Certificates will
be $250,207,000.00.
(3) The Pass-Through Rate with respect to
any Distribution Date for the Class
A-2 Certificates is the per annum rate
equal to (a) 0.950% with respect to the
first Distribution Date, and (b)
thereafter, the lesser of (i) 4.800% minus
LIBOR and (ii) 4.800%, subject to a minimum
rate of 0.000%.
(4) The Class A-PO Certificates are
Principal Only Certificates and will not
accrue interest.
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.
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............
The
Class A-1 Certificates.
Inverse Floating Rate Certificates....
The
Class A-2 Certificates.
LIBOR Certificates....................
The
Class A-1, and Class A-2 Certificates.
NAS Certificates......................
The
Class A-4A and Class A-4B Certificates.
Non-Delay Certificates................
The
LIBOR Certificates.
Notional Amount Certificates..........
The
Class A-2 Certificates.
Offered Certificates..................
All
Classes of Certificates other than the Private Certificates.
Physical Certificates.................
The
Private Certificates and the Residual Certificates.
Planned Principal Classes.............
None.
Principal Only Certificates...........
The
Class A-PO Certificates.
Private Certificates..................
The
Class A-PO, Class B-4, Class B-5 and Class B-6 Certificates.
Rating Agencies.......................
S&P and Moody's; 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.
Regular Certificates..................
All
Classes of Certificates, other than the Residual Certificates.
Residual Certificates.................
The
Class A-R Certificates.
Retail/Lottery Certificates...........
None.
Scheduled Balance Certificates........
None.
Senior Certificates...................
The
Class A-1, Class A-2, Class A-3, Class A-4A, Class A-4B and Class
A-5
Certificates, collectively.
Senior Support Mezzanine Certificates.
The
Class A-4B Certificates.
</TABLE>
3
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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 A-4A Certificates.
Support Classes.......................
None.
Targeted Principal Classes............
None.
Underwriters..........................
Citigroup Global Markets Inc. and Credit Suisse First Boston
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:
Accretion Directed Certificates: Not applicable.
Accretion Termination Date: Not applicable.
Accrual Amount: Not
applicable.
Accrual Certificates:
Not applicable.
Accrued Certificate Interest: For any Class of Certificates
entitled to
distributions of interest for any
Distribution Date, the interest accrued during
the related Interest Accrual Period at the
applicable Pass-Through Rate on the
Class Certificate Balance (or Notional
Amount, in the case of the Notional
Amount Certificates) of such Class of
Certificates immediately prior to such
Distribution Date, less such Class' share
of any Net Interest Shortfall.
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.
Advance: The payment required to be made by the Master Servicer
with
respect to any Distribution Date pursuant
to Section 4.1, the amount of any such
payment being equal to the aggregate of
payments of principal and interest (net
of the Master Servicing Fee and net of any
net income in the case of any REO
Property) on the Mortgage Loans that were
due on the related Due Date and not
received as of the close of business on the
related Determination Date, less the
aggregate amount of any such delinquent
payments that the Master Servicer has
determined would constitute a
Nonrecoverable Advance if advanced.
Agreement: This Pooling and Servicing Agreement and all amendments
or
supplements hereto.
Allocable Share: With respect to any Class of Subordinated
Certificates
on any Distribution Date, such Class' pro
rata share (based on the Class
Certificate Balance of each Class entitled
thereto) of each of the components of
the Subordinated Optimal Principal Amount;
provided that, solely for purposes of
this definition, the applicable
Subordinated Optimal Principal Amount will be
reduced by the amounts required to be
distributed to the related Class PO
Certificates in respect of the applicable
Class PO Deferred Amount on such
Distribution Date, and any such reduction
in the Subordinate Optimal Principal
Amount shall reduce the amounts calculated
pursuant to clauses (1), (4), (2),
(3) and (5) of the definition thereof, in
that order, and the Class Certificate
Balances of each Class of Subordinated
Certificates will be reduced by such
amounts in reverse order of priority until
the respective Class Certificate
Balances of each Class of Subordinated
Certificates has been reduced to zero;
provided further, 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.
5
<PAGE>
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.
Amount Held for Future Distribution: As to any Distribution Date,
the
aggregate amount held in the Certificate
Account at the close of business on the
related Determination Date on account of
(i) Principal Prepayments received
after the related Prepayment Period and
Liquidation Proceeds received in the
month of such Distribution Date and (ii)
all Scheduled Payments due after the
related Due 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: With
respect to any Distribution Date, an amount
equal to the sum of:
(a) all scheduled
installments of interest, net of the Master
Servicing Fee, the Trustee Fee and any amounts due to First
Horizon in respect of the Retained Yield on such Distribution
Date, and all scheduled installments of principal due in
respect
of the Mortgage Loans 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;
(b) all Insurance
Proceeds, Liquidation Proceeds and Unanticipated
Recoveries received in respect of the Mortgage Loans 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;
6
<PAGE>
(c) all Principal
Prepayments received in respect of the Mortgage
Loans during the related Prepayment Period, plus interest
received
thereon, net of any Prepayment Interest Excess;
(d) any Compensating
Interest in respect of Principal Prepayments in
Full received in respect of the Mortgage Loans during the
related
Prepayment Period; and
(e) any Substitution
Adjustment Amount or the Purchase Price for any
Deleted Mortgage Loan or a Mortgage Loan 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
<PAGE>
Certificate Account: The separate Eligible Account created and
maintained by the Master Servicer pursuant
to Section 3.5 with a depository
institution in the name of the Master
Servicer for the benefit of the Trustee on
behalf of Certificateholders and designated
"First Horizon Home Loan Corporation
in trust for the registered holders of
First Horizon Asset Securities Inc.
Mortgage Pass-Through Certificates, Series
2005-FA9."
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.
Citigroup: Citigroup Global Markets Inc.
Class: All
Certificates bearing the same class designation as set
forth in the Preliminary Statement.
Class A-PO Deferred Amount: With respect to the Class A-PO
Certificates
and any Distribution Date through the
Cross-over Date, the sum of (1) the Class
PO Percentage of the principal portion of
Non-Excess Losses on a Discount
Mortgage Loan allocated to the Class A-PO
Certificates on such date, and (2) all
amounts previously allocated to the Class
A-PO Certificates in respect of such
losses and not distributed to the Class
A-PO Certificates on prior Distribution
Dates.
8
<PAGE>
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 Certificates pursuant to Section
4.2(f).
Class PO Certificates:
The Class A-PO Certificates.
Class PO Deferred Amount: With respect to the Class A-PO
Certificates
and any Distribution Date through the
Cross-over Date, the sum of (1) the
applicable PO Percentage of the principal
portion of Non-Excess Losses on a
Discount Mortgage Loan allocated to the
Class A-PO Certificates on such date,
and (2) all amounts previously allocated to
the Class A-PO Certificates in
respect of such losses and not distributed
to the Class A-PO Certificates on
prior Distribution Dates.
Class PO Deferred Payment Writedown Amount: For any Distribution
Date
and any Class of Principal Only
Certificates, the amount, if any, distributed on
such date in respect of the related Class
PO Deferred Amount pursuant to Section
4.2(a)(iv) herein. The Subordinated
Certificate Writedown Amount and the Class
PO Deferred Payment Writedown Amount will
be allocated to the Classes of
Subordinated Certificates in inverse order
of priority, until the Class
Certificate Balance of each such Class has
been reduced to zero.
Class PO Principal Distribution Amount: With respect to each
Distribution Date and the Principal Only
Certificates, an amount equal to the
sum of:
(1) the applicable PO Percentage of all Scheduled Payments of
principal due on each Mortgage Loan 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 applicable PO Percentage of the Stated Principal
Balance of each Mortgage Loan which was the subject of a
Principal
Prepayment in Full received by the Master Servicer during the
related
Prepayment Period;
(3) the applicable PO Percentage of (a) all partial Principal
Prepayments for each Mortgage Loan received during the related
Prepayment Period and (b) all Unanticipated Recoveries in respect
of
each Mortgage Loan received by the Master Servicer during the
calendar
month preceding such Distribution Date;
(4) the applicable PO Percentage of the sum of (a) the
Liquidation Proceeds allocable to principal on each Mortgage Loan
which
became a Liquidated Mortgage Loan during the related Prepayment
Period,
other than Mortgage Loans described in clause (b), and (b) the
principal balance of each Mortgage Loan that was purchased by a
private
mortgage insurer during the related Prepayment Period as an
alternative
to paying a claim under the related mortgage insurance policy;
and
9
<PAGE>
(5) the applicable PO Percentage, of the sum of (a) the Stated
Principal Balance of each Mortgage Loan which was repurchased by
the
Seller in connection with such Distribution Date, and (b) the
difference, if any, between the Stated Principal Balance of a
Mortgage
Loan 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.
For purposes of clauses (2) and (5) above, the Stated Principal
Balance
of a Mortgage Loan will be reduced by the
amount of any Deficient Valuation that
occurred prior to the reduction of the
Bankruptcy Loss Coverage Amount to zero.
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 of the Class Certificate Balance
of such Class and each Class
subordinate thereto, if any, and the
denominator of which is the Pool Principal
Balance with respect to such Distribution
Date, equals or exceeds such
percentage calculated as of the Closing
Date.
Closing Date: October
28, 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 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 shall not
exceed 0.0083% of the Pool Principal
Balance 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.
10
<PAGE>
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real
property and improvements constituting
the Cooperative Property and which governs
the Cooperative Property, which
Cooperative Corporation must qualify as a
Cooperative Housing Corporation under
Section 216 of the Code.
Coop Shares: Shares
issued by a Cooperative Corporation.
Cooperative Loan: Any
Mortgage Loan secured by Coop Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by
the
Cooperative Corporation, including the
allocation of individual dwelling units
to the holders of the Coop Shares of the
Cooperative Corporation.
Cooperative Unit: A
single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The designated office of the Trustee in
the
State of New York at which at any
particular time its corporate trust business
with respect to this Agreement shall be
administered, which office at the date
of the execution of this Agreement is
located at The Bank of New York, 101
Barclay Street, 8W, New York, New York
10286 (Attn: Corporate Trust
Mortgage-Backed Securities Group, First
Horizon Asset Securities Inc. Series
2005-FA9), 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.
Corridor Contract: The interest rate cap agreement dated October
28,
2005 with respect to the Class A-1
Certificates, by and between the Separate
Interest Trust and the Corridor Contract
Counterparty, including the schedule
thereto and the related confirmation
(Reference No. CPC3892 / CPC3893).
Corridor Contract Counterparty: Citibank, N.A. and its successors
and
permitted assigns.
Corridor Contract Notional Balance: For any Distribution Date,
the
amount set forth on Schedule A to the
Corridor Contract for such Distribution
Date in the Corridor Contract.
Corridor Contract Termination Date: The Distribution Date occurring
in
August 2014.
Corridor Residual Owner: Citigroup and its successors and
assigns.
Corridor Reserve Fund: A fund created as part of the Separate
Interest
Trust pursuant to Section 4.7(a) of this
Agreement.
Cross-over Date: The Distribution Date on which the Class
Certificate
Balance of each Class of Subordinated
Certificates has been reduced to zero.
11
<PAGE>
Custodial Agreement: The Custodial Agreement dated as of October
28,
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: October
1, 2005.
Cut-off Date Pool Principal Balance: $460,003,803.07.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
Stated
Principal Balance thereof as of the close
of business on the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction
by a court of competent jurisdiction in a
proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage
Loan which became final and
non-appealable, except such a reduction
resulting from a Deficient Valuation or
any reduction that results in a permanent
forgiveness of principal.
Defective Mortgage Loan: Any Mortgage Loan which is required to
be
repurchased pursuant to Section 2.2 or
2.3.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by
a court of competent jurisdiction of the
Mortgaged Property in an amount less
than the then-outstanding indebtedness
under the Mortgage Loan, or any reduction
in the amount of principal to be paid in
connection with any Scheduled Payment
that results in a permanent forgiveness of
principal, which valuation or
reduction results from an order of such
court which is final and non-appealable
in a proceeding under the Bankruptcy
Code.
Definitive Certificates: Any Certificate evidenced by a
Physical
Certificate and any Certificate issued in
lieu of a Book-Entry Certificate
pursuant to Section 5.2(e).
Delay Certificates: As
specified in the Preliminary Statement.
Delay Delivery Mortgage Loans: The Mortgage Loans for which all or
a
portion of a related Mortgage File is not
delivered to 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.
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<PAGE>
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.
Discount Mortgage Loan: Any Mortgage Loan with an Adjusted Net
Mortgage
Rate of less than 5.50%.
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-FA9." 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 November 2005.
Due Date: With respect to any Distribution Date, the first day of
the
month in which the related Distribution
Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with
a
federal or state chartered depository
institution or trust company the
short-term unsecured debt obligations of
which (or, in the case of a depository
institution or trust company that is the
principal subsidiary of a holding
company, the debt obligations of such
holding company) have the highest
short-term ratings of each Rating Agency at
the time any amounts are held on
deposit therein, or (ii) an account or
accounts in a depository institution or
trust company in which such accounts are
insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF,
as applicable) and the uninsured
deposits in which accounts are otherwise
secured such that, as evidenced by an
Opinion of Counsel delivered to the Trustee
and to each Rating Agency, the
Certificateholders have a claim with
respect to the funds in such account or a
perfected first priority security interest
against any collateral (which shall
be limited to Permitted Investments)
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.
13
<PAGE>
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.
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.
14
<PAGE>
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 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.
Fraud Loss Coverage Amount: As of the Closing Date, $9,200,076. 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 $4,600,038 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.
FTBNA: First Tennessee Bank National Association, a national
banking
association.
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: $150,000.
Initial Component Balance: Not applicable.
Initial LIBOR Rate: With respect to the calculation of the
initial
Pass-Through Rate for the Class A-1 and
Class A-2 Certificates, 3.85% per annum.
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.
15
<PAGE>
Insured Expenses: Expenses covered by an Insurance Policy or any
other
insurance policy with respect to the
Mortgage Loans.
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.
Latest Possible Maturity Date: As to each Class of Certificates
and
each Lower REMIC Interest, the Distribution
Date following the third anniversary
of the scheduled maturity date of the
Mortgage Loan having the latest scheduled
maturity date as of the Cut-off Date.
Lender PMI Mortgage Loan: Not applicable.
LIBOR: The London interbank offered rate for one month United
States
dollar deposits calculated in the manner
described in Section 4.9.
LIBOR Business Day: Any day on which banks in London, England and
The
City of New York are open and conducting
transactions in foreign currency and
exchange.
LIBOR Certificates: As
specified in the Preliminary Statement.
LIBOR Determination Date: For the LIBOR Certificates, the second
LIBOR
Business Day immediately preceding the
commencement of each Interest Accrual
Period for each LIBOR Certificate.
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(h).
16
<PAGE>
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 Retained Yield, the Lower
REMIC Interests, the RL Interest,
the RU Interest and the Separate Interest
Trust.
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.
Master Servicing Fee: As to each Mortgage Loan and any
Distribution
Date, an amount payable out of each full
payment of interest received on such
Mortgage Loan and equal to one-twelfth of
the Master Servicing Fee Rate
multiplied by the Stated Principal Balance
of such Mortgage Loan as of the Due
Date in the month of such Distribution Date
(prior to giving effect to any
Scheduled Payments due on such Mortgage
Loan on such Due Date), subject to
reduction as provided in Section 3.14.
Master Servicing Fee Rate: For each Mortgage Loan a per annum
rate
equal to 0.369%.
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: The Mortgage Loan Purchase Agreement dated as of October
28,
2005, by and between First Horizon Home
Loan Corporation, as seller, and First
Horizon Asset Securities Inc., as
purchaser, as related to the transfer, sale
and conveyance of the Mortgage Loans.
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<PAGE>
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.
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:
(A) the loan
number;
(B) the Mortgagor's
name and the street address of the
Mortgaged Property, including the zip code;
(C) the maturity
date;
(D) the original
principal balance;
(E) the Cut-off Date
Principal Balance;
(F) the first payment
date of the Mortgage Loan;
(G)
the Scheduled Payment
in effect as of the Cut-off Date;
(H) the Loan-to-Value
Ratio at origination;
(I) a code indicating
whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(J) 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;
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<PAGE>
(K) the Mortgage
Rate;
(L) the purpose for
the Mortgage Loan;
(M) the type of
documentation program pursuant to which the
Mortgage Loan was originated;
(N) the Master
Servicing Fee for the Mortgage Loan; and
(O)
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.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of
a Mortgagor under a Mortgage Loan.
Mortgage Pool: The
aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
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.
NAS Certificates: As
specified in the Preliminary Statement.
NAS Distribution Percentage: 0% through the Distribution Date
in
October 2010; 30% of the applicable NAS
Percentage thereafter through the
Distribution Date in October 2011; 40% of
the applicable NAS Percentage
thereafter through the Distribution Date in
October 2012; 60% of the applicable
NAS Percentage thereafter through the
Distribution Date in October 2013; 80% of
the applicable NAS Percentage thereafter
through the Distribution Date in
October 2014; and 100% of the applicable
NAS Percentage thereafter.
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<PAGE>
NAS Percentage: 0% through the Distribution Date in October 2010,
and
for any Distribution Date thereafter, the
lesser of (x) 100% and (y) the
percentage obtained by dividing (1) the
aggregate Class Certificate Balance of
the NAS Certificates immediately preceding
such Distribution Date by (2) the
aggregate Class Certificate Balance of all
Classes of Senior Certificates (other
than the Notional Amount Certificates and
the Class A-PO Certificates)
immediately prior to such Distribution
Date.
NAS Principal Distribution Amount: For any Distribution Date, the
total
of the amounts described in clauses (1)
through (5) of the definition of Senior
Optimal Principal Amount for such date
multiplied by the NAS Distribution
Percentage for such date.
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, the sum of (a)
the
amount of interest which would otherwise
have been received for any Mortgage
Loan 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.
Net Prepayment Interest Shortfalls: As to any Distribution Date,
the
amount by which the aggregate of Prepayment
Interest Shortfalls in respect of
the Mortgage Loans 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-Discount Mortgage Loan: Any Mortgage Loan with an Adjusted
Net
Mortgage Rate that is equal to or greater
than 5.50%.
Non-Excess Loss: Any
Realized Loss other than an Excess Loss.
Non-PO Percentage: (a) With respect to a Discount Mortgage Loan,
the
fraction, expressed as a percentage, equal
to the Adjusted Net Mortgage Rate
divided by 5.50%, and (b) with respect to
each Non-Discount Mortgage Loan, 100%.
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: As
specified in the Preliminary Statement.
Notional Amount Component: Not applicable.
20
<PAGE>
Notional Amount Certificates: As specified in the
Preliminary
Statement.
Novation Agreements:
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 Mortgage Loan: The Mortgage Loan refinanced in connection
with
the origination of a Refinancing Mortgage
Loan.
Original Subordinated Principal Balance: The aggregate of the
Class
Certificate Balances of the Subordinated
Certificates as of the Closing Date.
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:
(a) Certificates
theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
(b) 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.
21
<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 interest bearing Class of Certificates,
the
per annum rate set forth or calculated in
the manner described in the
Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage
interest
evidenced thereby in distributions required
to be made on the related Class,
such percentage interest being set forth on
the face thereof or equal to the
percentage obtained by dividing the
Denomination of such Certificate by the
aggregate of the Denominations of all
Certificates of the same Class.
Permitted Investments:
At any time, any one or more of the following
obligations and securities:
(i) obligations
of the United States or any agency thereof,
provided such obligations are backed by the full faith and
credit of the United States;
(ii) general
obligations of or obligations guaranteed by any
state of the United States or the District of Columbia
receiving the highest long-term debt rating of each Rating
Agency;
(iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper
rating of each Rating Agency;
(iv) certificates of
deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution
or trust company incorporated under the laws of the United
States or of any state thereof and subject to supervision
and examination by federal and/or state banking
authorities, provided that the commercial paper and/or
long term unsecured debt obligations of such depository
institution or trust company (or in the case of the
principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Moody's
is not a Rating Agency) are then rated one of the two
highest long-term and/or the highest short-term ratings of
each Rating Agency for such securities;
(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;
22
<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
23
<PAGE>
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
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 Certificates:
As specified in the Preliminary Statement.
Planned
Principal Classes: Not
applicable.
PO Percentage: (a) With respect to any Discount Mortgage Loan,
a
fraction, expressed as a percentage, equal
to (5.50%-the Adjusted Net Mortgage
Rate) divided by 5.50%, and (b) with
respect to any Non-Discount Mortgage Loan,
0%.
Pool Principal Balance: With respect to any Distribution Date,
the
aggregate of the Stated Principal Balances
of the Mortgage Loans which were
Outstanding Mortgage Loans on the Due Date
in the month preceding the month of
such Distribution Date, 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.
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.
24
<PAGE>
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 Only Certificates: As specified in the
Preliminary
Statement.
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 Certificates:
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.
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.
25
<PAGE>
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, other than a Liquidated
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: A leading bank with an established place of
business in
London engaged in transactions in
Eurodollar deposits in the international
Eurocurrency market, not controlled by, or
under the common control with, the
Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection
with the refinancing of an existing
mortgage loan.
Regular Certificates:
As specified in the Preliminary Statement.
Relief Act: The 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.
26
<PAGE>
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: Either of
the Lower REMIC or 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 Coupon:
5.875% per annum.
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.
Retail/Lottery Certificates: Not applicable.
Retained Yield: As to each Mortgage Loan and any Distribution Date,
(i)
an amount payable to First Horizon Home
Loan Corporation out of each full
payment of interest received on such
Mortgage Loan and equal to one-twelfth of
the Retained Yield 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) and (ii) each prepayment penalty
received, if any.
27
<PAGE>
Retained Yield Rate: For any Non-Discount Mortgage Loan, a per
annum
rate equal to the excess of (a) the
applicable Mortgage Rate over (b) the
Required Coupon. For any Discount Mortgage
Loan, 0%.
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 A-R Certificate.
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 A-R Certificate.
Scheduled Balances:
Not applicable.
Scheduled Balance 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.
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 the MLPA.
Senior Certificates:
As specified in the Preliminary Statement.
Senior Final Distribution Date: For the Senior Certificates,
the
Distribution Date on which the Class
Certificate Balance of each Class of Senior
Certificates has been reduced to zero.
Senior Optimal Principal Amount: With respect to each
Distribution
Date, an amount equal to the sum of:
(1) the Senior Percentage of the applicable Non-PO Percentage
of
Scheduled Payments of principal due on each
Mortgage Loan 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 Senior Prepayment Percentage of the applicable Non-PO
Percentage of the Stated Principal Balance
of each Mortgage Loan which was the
subject of a Principal Prepayment in Full
received by the Master Servicer during
the applicable Prepayment Period;
28
<PAGE>
(3) the Senior Prepayment Percentage of the applicable Non-PO
Percentage of (a) all partial Principal
Prepayments in respect of each Mortgage
Loan received during the applicable
Prepayment Period and (b) all Unanticipated
Recoveries in respect of each Mortgage Loan
received during the calendar month
preceding such Distribution Date;
(4) the
lesser of:
(a) the
Senior Prepayment Percentage of the sum of (x) the
applicable Non-PO Percentage of the Liquidation Proceeds
allocable to principal on each Mortgage Loan which became a
Liquidated Mortgage Loan during the related Prepayment
Period, other than Mortgage Loans described in clause (y),
and (y) the applicable Non-PO Percentage of the Stated
Principal Balance of each Mortgage Loan 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 Senior Percentage of the sum of (x) the applicable
Non-PO Percentage of the Stated Principal Balance of each
Mortgage Loan which became a Liquidated Mortgage Loan
during the related Prepayment Period, other than Mortgage
Loans described in clause (y), and (y) the applicable
Non-PO Percentage of the Stated Principal Balance of each
Mortgage Loan 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 applicable Non-PO Percentage of the
Senior Percentage of the principal portion of Excess Losses
(other than Debt Service Reductions) incurred during the
related Prepayment Period; and
(5) the Senior Prepayment Percentage of the sum of (a) the
applicable Non-PO Percentage of the Stated
Principal Balance of each Mortgage
Loan which was repurchased by the seller in
connection with such Distribution
Date and (b) the difference, if any,
between the applicable Non-PO Percentage of
the Stated Principal Balance of each
Mortgage Loan 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, the lesser of 100% and
the
percentage (carried to six places rounded
up) obtained by dividing the aggregate
Class Certificate Balances of all Classes
of Senior Certificates (other than the
Notional Amount Certificates and the Class
A-PO Certificates) immediately
preceding such Distribution Date by the
Pool Principal Balance (excluding the
aggregate of the applicable PO Percentage
of the principal balance of each
Discount Mortgage Loan) for the immediately
preceding Distribution Date.
Senior Prepayment Percentage: On any Distribution Date occurring
during
the periods set forth below, the Senior
Prepayment Percentages described below:
29
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Period (Dates Inclusive)
Senior Prepayment Percentage
-----------------------------------------------------------------------------------------------------
<S>
<C>
November 2005 - October 2010
100%
-----------------------------------------------------------------------------------------------------
November 2010 - October 2011 The
Senior Percentage plus 70% of the Subordinated Percentage
-----------------------------------------------------------------------------------------------------
November 2011 - October 2012 The
Senior Percentage plus 60% of the Subordinated Percentage
-----------------------------------------------------------------------------------------------------
November 2012 - October 2013 The
Senior Percentage plus 40% of the Subordinated Percentage
-----------------------------------------------------------------------------------------------------
November 2013 - October 2014 The
Senior Percentage plus 20% of the Subordinated Percentage
-----------------------------------------------------------------------------------------------------
November 2014 and thereafter The
Senior Percentage
-----------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, if the Senior Percentage on any
Distribution Date exceeds the initial
Senior Percentage, the Senior Prepayment
Percentage for that Distribution Date will
equal 100%.
In addition, no reduction of the Senior Prepayment Percentage below
the
level in effect for the most recent prior
period specified in the table above
shall be effective on any Distribution Date
unless both of the following
step-down conditions are satisfied as of
the last day of the month preceding
such Distribution Date:
(1) the aggregate Stated Principal Balance of Mortgage Loans
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) does not exceed 50%
of the aggregate Class Certificate
Balances of the Subordinated Certificates
as of such date; and
(2) cumulative
Realized Losses do not exceed:
(a) 30% of the
Original Subordinated Principal
Balance if such Distribution Date occurs
between and including November 2010 and
October 2011;
(b) 35% of the
Original Subordinated Principal
Balance if such Distribution Date occurs
between and including November 2011 and
October 2012;
(c) 40% of the
Original Subordinated Principal
Balance if such Distribution Date occurs
between and including November 2012 and
October 2013;
(d) 45% of the
Original Subordinated Principal
Balance if such Distribution Date occurs
between and including November 2013 and
October 2014; and
30
<PAGE>
(e) 50% of the
Original Subordinated Principal
Balance if such Distribution Date occurs
during or after November 2014.
Senior Support Mezzanine Certificates: As specified in the
Preliminary
Statement.
Separate Interest Trust: A trust created pursuant to Section 4.8(a)
of
this Agreement which is not an asset of any
REMIC created hereunder.
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;
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(4)
nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether
controlled or uncontrolled, and whether such loss be
direct or indirect, proximate or remote or be in
whole or in part caused by, contributed to or
aggravated by a peril covered by the definition of
the term "Special Hazard Loss";
(5)
hostile or warlike action in time of peace and war,
including action in hindering, combating or defending
against an actual, impending or expected attack:
(i) by any
government or sovereign power, de jure or de
facto, or by any authority maintaining or using
military, naval or air forces;
(ii)
by military,
naval or air forces or
(iii) by an agent of
any such government, power, authority
or forces;
(6) any
weapon of war employing nuclear fission, fusion
or other radioactive force, whether in time of peace
or war; or
(7)
insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental
authority in hindering, combating or defending
against such an occurrence, seizure or destruction
under quarantine or customs regulations, confiscation
by order of any government or public authority or
risks of contraband or illegal transportation or
trade.
Special Hazard Loss Coverage Amount: Upon the initial issuance of
the
Certificates, $4,600,038. 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.
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Startup Day: The
Closing Date.
Stated Principal Balance: As to any Mortgage Loan and Due Date,
the
unpaid principal balance of such Mortgage
Loan as of such Due Date as specified
in the amortization schedule at the time
relating thereto (before any adjustment
to such amortization schedule by reason of
any moratorium or similar waiver or
grace period) after giving effect to any
previous partial Principal Prepayments
and Liquidation Proceeds allocable to
principal (other than with respect to any
Liquidated Mortgage Loan) and to the
payment of principal due on such Due Date
and irrespective of any delinquency in
payment by the related Mortgagor.
Streamlined Documentation Mortgage Loan: Any Mortgage Loan
originated
pursuant to the Seller's Streamlined Loan
Documentation Program then in effect.
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordinated Certificate Writedown Amount: As of any Distribution
Date,
the amount by which (a) the sum of the
Class Certificate Balances of all 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 the Certificates on such Distribution
Date, exceeds (b) the Pool Principal
Balance 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
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 Subordinated Percentage of the applicable Non-PO
Percentage of all Scheduled Payments of
principal due on each outstanding
Mortgage Loan 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 Subordinated Prepayment Percentage of the applicable
Non-PO Percentage of the Stated Principal
Balance of each Mortgage Loan which
was the subject of a Principal Prepayment
in Full received by the Master
Servicer during the related Prepayment
Period;
(3) the Subordinated Prepayment Percentage of the applicable
Non-PO Percentage of the sum of (a) all
partial Principal Prepayments received
in respect of each Mortgage Loan during the
related Prepayment Period, (b) all
Unanticipated Recoveries received in
respect of each Mortgage Loan during the
calendar month prior to such Distribution
Date, and (c) on the Senior Final
Distribution Date, 100% of any Senior
Optimal Principal Amount remaining
undistributed on such date;
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(4) the amount, if any, by which the sum of (a) the applicable
Non-PO Percentage of the net Liquidation
Proceeds allocable to principal
received during the related Prepayment
Period in respect of each Liquidated
Mortgage Loan, other than Mortgage Loans
described in clause (b), and (b) the
applicable Non-PO Percentage of the Stated
Principal Balance of each Mortgage
Loan 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 (other than the holders
of the Class A-PO Certificates) under
clause (4) of the definition of Senior
Optimal Principal Amount on such
Distribution Date; and
(5) the Subordinated Prepayment Percentage of the sum of (a)
the applicable Non-PO Percentage of the
Stated Principal Balance of each
Mortgage Loan which was repurchased by the
seller in connection with such
Distribution Date and (b) the difference,
if any, between the applicable Non-PO
Percentage of the Stated Principal Balance
of each Mortgage Loan 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, 100%
minus the
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 lower of (a)
the Adjusted Net Mortgage Rate of the
Deleted Mortgage Loan or (b) 5.50%,
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) 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; (v)
have a remaining term to maturity no
greater than (and not more than one year
less than that of) the Deleted Mortgage
Loan; (vi) not be a Cooperative Loan unless
the Deleted Mortgage Loan was a
Cooperative Loan; and (vii) 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.
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Support Classes: 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 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 the MLPA; (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;
provided that the Trust Fund shall exclude
the Retained Yield.
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, an amount equal to
one-twelfth of the Trustee Fee Rate
multiplied by the 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.
Unanticipated Recovery: As defined in Section 4.2(f).
Underwriters: As
specified in the Preliminary Statement.
Underwriters' Exemption: An individual administrative exemption
granted
by the U.S. Department of Labor to each
Underwriter 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.
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<PAGE>
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any
Certificate. As of any date of
determination, (a) 98% of all Voting Rights
will be allocated among all Holders
of the Certificates, other than the
Notional Amount Certificates and the
Residual Certificates, in proportion to
their then outstanding Class Certificate
Balance; and (b) 1.0% of all Voting Rights
will be allocated among the Holders
of the Notional Amount Certificates, in
proportion to their respective Notional
Amounts; and (c) 1.0% of all Voting Rights
will be allocated to the Residual
Certificates (such Voting Rights to be
allocated among the Holders of
Certificates of such Class in accordance
with their respective Percentage
Interests).
Yield Supplement Amount: For any Distribution Date on or prior to
the
Corridor Contract Termination Date on which
the LIBOR exceeds 4.800%, an amount
equal to interest for the related Interest
Accrual Period on the lesser of (a)
the Class Certificate Balance of the Class
A-1 Certificates immediately prior to
such Distribution Date and (b) the Corridor
Contract Notional Balance for such
Distribution Date at a rate equal to the
excess of (i) the lesser of LIBOR and
8.800% over (ii) 4.800%.
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 the
MLPA, 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 the MLPA.
(b) In connection with
the transfer and assignment set forth in clause
(a) above, the Depositor has delivered or caused to be
delivered
to the Trustee or the Custodian on its behalf (or, in the case
of
the Delay Delivery Mortgage Loans, will deliver or cause to be
delivered to the Trustee or the Custodian on its behalf within
thirty (30) days
following the Closing Date) for the benefit of
the Certificateholders the following documents or instruments
with
respect to each Mortgage Loan so assigned:
(i) (A) the
original Mortgage Note endorsed by manual or
facsimile signature in blank in the following form: "Pay to
the order of ________________, without recourse," with all
intervening endorsements showing a complete chain of
endorsement from the originator to the Person endorsing the
Mortgage Note (each such endorsement being sufficient to
transfer all right, title and interest of the party so
endorsing, as
noteholder or assignee thereof, in and to
that Mortgage Note); or
(B) with respect to any Lost Mortgage Note, a lost note
affidavit from the Seller stating that the original
Mortgage Note was lost or destroyed, together with a copy
of such Mortgage Note;
(ii) except as
provided below and for each Mortgage Loan that is
not a MERS Mortgage Loan, the original recorded Mortgage or
a copy of such Mortgage certified by the Seller as being a
true and complete copy of the Mortgage, and in the case of
each MERS Mortgage Loan, the original recorded Mortgage,
noting the presence of the MIN of the Mortgage Loans and
either language indicating that the Mortgage Loan is a MOM
Loan if the Mortgage Loan is a MOM Loan or if the Mortgage
Loan was not a MOM Loan at origination, the original
Mortgage and the assignment thereof to MERS, with evidence
of recording indicated thereon, or a copy of the Mortgage
certified by the Seller as being a true and complete copy
of the Mortgage;
(iii) in the case of a Mortgage Loan that is not a MERS
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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(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-FA9, 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.
40
<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.
41
<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 the MLPA,
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 the MLPA, are required to conform to,
among other representations and
warranties, a representation and warranty
of the Seller set forth in the MLPA
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 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.
42
<PAGE>
(b) Upon discovery by
any of the parties hereto of a breach of a
representation or warranty made pursuant to Schedule B to the
MLPA
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 the MLPA which materially and adversely affects the
interests
of the Certificateholders in any Mortgage Loan, it shall cure
such
breach in all material respects, and if such breach is not so
cured, shall, (i) if such 90-day period expires prior to the
second anniversary of the Closing Date, remove such Mortgage
Loan
(a "Deleted Mortgage Loan") from the Trust Fund and substitute
in
its place a Substitute Mortgage Loan, in the manner and subject
to
the
conditions set forth in this Section; or (ii) repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at
the
Purchase Price in the manner set forth below; provided,
however,
that any such substitution pursuant to (i) above shall not be
effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.5 hereof, if any, and any such
substitution pursuant to (i) above shall not be effected prior
to
the additional delivery to the Trustee or the Custodian on its
behalf of a Request for Release substantially in the form of
Exhibit M and the Mortgage File for any such Substitute
Mortgage
Loan. The Seller shall promptly reimburse the Master Servicer
and
the Trustee for any expenses reasonably incurred by the Master
Servicer or the Trustee in respect of enforcing the remedies
for
such breach. With respect to the representations and warranties
described in this Section which are made to the best of the
Seller's knowledge, if it is discovered by either the
Depositor,
the Seller or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related
Mortgage
Loan or the interests of the Certificateholders therein,
notwithstanding the Seller's lack of knowledge with respect to
the
substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or
warranty.
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
the MLPA 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.
43
<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 Balance of all
such Deleted Mortgage Loans (after
application of the scheduled principal
portion of the monthly payments due in
the month of substitution). The amount of
such shortage (the "Substitution
Adjustment Amount") plus an amount equal to
the aggregate of any unreimbursed
Advances with respect to such Deleted
Mortgage Loans shall be deposited in the
Certificate Account by the Seller on or
before the Distribution Account Deposit
Date for the Distribution Date in the month
succeeding the calendar month during
which the related Mortgage Loan became
required to be purchased or replaced
hereunder.
In the event that the Seller shall have repurchased a Mortgage
Loan,
the Purchase Price therefor shall be
deposited in the Certificate Account
pursuant to Section 3.5 on or before the
Distribution Account Deposit Date for
the Distribution Date in the month
following the month during which the Seller
became obligated hereunder to repurchase or
replace such Mortgage Loan and upon
such deposit of the Purchase Price, the
delivery of the Opinion of Counsel
required by Section 2.5 and receipt of a
Request for Release in the form of
Exhibit M hereto, the Trustee shall release
or shall cause the Custodian to
release the related Mortgage File held for
the benefit of the Certificateholders
to such Person, and the Trustee shall
execute and deliver or shall cause the
Custodian to execute and deliver at such
Person's direction such instruments of
transfer or assignment prepared by such
Person, in each case without recourse,
as shall be necessary to transfer title
from the Trustee. It is understood and
agreed that the obligation under this
Agreement of the Seller to cure,
repurchase or replace any Mortgage Loan as
to which a breach has occurred and is
continuing shall constitute the sole remedy
against the Seller respecting such
breach available to Certificateholders, the
Depositor or the Trustee on their
behalf.
After giving effect to the sale of the Certificates by the
Depositor to
the Underwriters, and thereafter, so long
as any Certificates remain
outstanding, the Seller, its affiliates and
agents, collectively, shall not
beneficially own Certificates the aggregate
fair value of which would represent
90% or more of the beneficial interests in
the Trust Fund.
The representations and warranties made pursuant to this Section
2.3
shall survive delivery of the respective
Mortgage Files to the Trustee or the
Custodian for the benefit of the
Certificateholders.
SECTION 2.4 Representations and Warranties of the Depositor as
to
the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee
with
respect to each Mortgage Loan as of the
date hereof or such other date set forth
herein that as of the Closing Date, and
following the transfer of the Mortgage
Loans to it pursuant to the MLPA and
immediately prior to the conveyance of the
Mortgage Loans by it to the Trustee
pursuant to Section 2.1(a) hereof, the
Depositor had good title to the Mortgage
Loans and the Mortgage Notes were
subject to no offsets, defenses or
counterclaims.
44
<PAGE>
It is understood and agreed that the representations and warranties
set
forth in this Section 2.4 shall survive
delivery of the Mortgage Files to the
Trustee. Upon discovery by the Depositor or
the Trustee of a breach of any of
the foregoing representations and
warranties set forth in this Section 2.4
(referred to herein as a "breach"), which
breach materially and adversely
affects the interest of the
Certificateholders, the party discovering such
breach shall give prompt written notice to
the others and to each Rating Agency.
SECTION 2.5 Delivery of Opinion of Counsel in Connection with
Substitutions.
(a) Notwithstanding
any contrary provision of this Agreement, no
substitution pursuant to Section 2.2 or Section 2.3 shall be
made
more than 90 days after the Closing Date unless the Depositor
delivers to the Trustee an Opinion of Counsel, which Opinion of
Counsel shall not be at the expense of either the Trustee or
the
Trust Fund, addressed to the Trustee, to the effect that such
substitution will not (i) result in the imposition of the tax
on
"prohibited transactions" on the Trust Fund or contributions
after
the Startup Date, as defined in Sections 860F(a)(2) and 860G(d)
of
the Code, respectively, or (ii) cause any REMIC created
hereunder
to fail to qualify as a REMIC at any time that any Certificates
are outstanding.
(b) Upon discovery by
the Depositor, the Master Servicer or the
Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code,
the party discovering such fact shall promptly (and in any
event
within five (5) Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the
Trustee
shall require the Depositor to cause the Seller, pursuant to
the
MLPA and at the Seller's option, to either (i) substitute, if
the
conditions in Section 2.3(b) with respect to substitutions are
satisfied, a Substitute Mortgage Loan for the affected Mortgage
Loan, or (ii) repurchase the affected Mortgage Loan within 90
days
of such discovery in the same manner as it would a Mortgage
Loan
for a breach of representation or warranty made pursuant to
Section 2.3. The Trustee shall reconvey or shall cause the
Custodian to reconvey to the Seller the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same
terms
and conditions, as it would a Mortgage Loan repurchased for
breach
of a representation or warranty contained in Section 2.3.
SECTION 2.6 Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the
Trust
Fund and, concurrently with such transfer
and assignment, has executed and
delivered to or upon the order of the
Depositor, the Certificates in authorized
denominations evidencing directly or
indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the
Trust Fund and exercise the rights
referred to above for the benefit of all
present and future Holders of the
Certificates and to perform the duties set
forth in this Agreement to the best
of its ability, to the end that the
interests of the Holders of the Certificates
may be adequately and effectively
protected.
45
<PAGE>
SECTION 2.7 REMIC Matters.
(a) REMIC Matters:
The Preliminary Statement sets forth the "latest possible
maturity
date" for federal income tax purposes of
all REMIC regular interests created
hereby.
The assets of the Lower REMIC shall be as set forth in the
definition
thereof. Each interest identified in the
first table below by a designation
beginning with "L" shall be a "regular
interest" in the Lower REMIC and a Lower
REMIC Interest, and the RL Interests shall
be the sole class of residual
interest in the Lower REMIC. The Lower
REMIC Interest shall be uncertificated
and shall be held by the Trustee as assets
of the Upper REMIC.
The assets of the Upper REMIC shall be as set forth in the
definition
thereof. The Regular Certificates shall
represent "regular interests" in the
Upper REMIC. The RU Interest shall be the
sole class of residual interest in the
Upper REMIC. The Class A-R Certificate
shall represent ownership of the RL
Interest and the RU Interest.
The "Startup Day" for purposes of the REMIC Provisions for each
REMIC
hereunder shall be the Closing Date. The
Tax Matters Person with respect to each
REMIC hereunder shall be the Trustee and
the Trustee shall hold the Tax Matters
Person Certificate. Each REMIC's taxable
year shall be the calendar year and its
accounts shall be maintained using the
accrual method.
46
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Lower REMIC
Corresponding Class or Interest
Interest or Lower REMIC
Interest
-------------------------------------
Residual
Balance
Lower REMIC Interest Rate
Interest
Principal
-------------------------------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
<C>
L-A-1
$ 250,207,000.00
5.550%
A1,A2
A1
-------------------------------------------------------------------------------------------------------------
L-A-3
$
29,090,000.00
5.500%
A3
A3
-------------------------------------------------------------------------------------------------------------
L-A-4A
$
41,278,000.00
5.500%
A4A
A4A
-------------------------------------------------------------------------------------------------------------
L-A-4B
$
2,568,000.00
5.500%
A4B
A4B
-------------------------------------------------------------------------------------------------------------
L-A-5
$ 115,320,000.00
5.500%
A5
A5
-------------------------------------------------------------------------------------------------------------
L-A-PO
$
1,299,952.36
N/A
N/A
APO
-------------------------------------------------------------------------------------------------------------
RL
$
0.00
N/A
N/A
N/A
-------------------------------------------------------------------------------------------------------------
L-A-RU
$
100.00
5.500%
RU Interest
RU Interest
-------------------------------------------------------------------------------------------------------------
L-B-1
$
9,200,000.00
5.500%
B1
B1
-------------------------------------------------------------------------------------------------------------
L-B-2
$
3,910,000.00
5.500%
B2
B2
-------------------------------------------------------------------------------------------------------------
L-B-3
$
2,300,000.00
5.500%
B3
B3
-------------------------------------------------------------------------------------------------------------
L-B-4
$
2,070,000.00
5.500%
B4
B4
-------------------------------------------------------------------------------------------------------------
L-B-5
$
1,610,000.00
5.500%
B5
B5
-------------------------------------------------------------------------------------------------------------
L-B-6
$
1,150,750.71
5.500%
B6
B6
-------------------------------------------------------------------------------------------------------------
$
460,003,803.07
-------------------------------------------------------------------------------------------------------------
</TABLE>
On each Distribution Date Available Funds shall be distributed
with
respect to the Lower REMIC Interests in a
manner such that:
(i) interest accrued,
if any, on each Lower REMIC Interest is
distributed with respect to each such Lower REMIC Interest in
the same manner that Accrued Certificate Interest is
distributed with respect to the Corresponding Class or
Classes of Certificates pursuant to Section 4.2; and
(ii) principal is distributed (and Realized Losses shall be
allocated) with respect to each such Lower REMIC Interest in
the same manner that principal is distributed (and Realized
Losses is allocated) with respect to the Corresponding
Classes or Classes of Certificate pursuant to Section 4.2 and
Section 4.4.
The Lower REMIC
Interest L-A-PO shall be entitled to receive the Class
PO Principal Distribution Amount.
The foregoing REMIC structure is intended to cause all of the cash
from
the Mortgage Loans to flow through to the
Upper REMIC as cash flow on a REMIC
regular interest, without creating any
shortfall-actual or potential (other than
for credit losses) to any REMIC regular
interest. To the extent that the
structure is believed to diverge from such
intention the Trustee shall resolve
ambiguities to accomplish such result and
shall to the extent necessary rectify
any drafting errors or seek clarification
to the structure without
Certificateholder approval (but with
guidance of counsel) to accomplish such
intention.
47
<PAGE>
SECTION 2.8
Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor and the
Trustee
as follows:
(a) the Master
Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance
Policy;
and
(b) no written
information, certificate of an officer, statement
furnished in writing or written report delivered to the
Depositor, any affiliate of the Depositor or the Trustee and
prepared by the Master Servicer pursuant to this Agreement
will contain any untrue statement of a material fact or omit
to state a material fact necessary to make such information,
certificate, statement or report not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.1
Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master Servicer
shall
service and administer the Mortgage Loans
in accordance with the terms of (i)
the Servicing Rights Transfer and
Subservicing Agreement, pursuant to which
First Tennessee Mortgage Services, Inc.
engaged the Master Servicer to
subservice the Mortgage Loans, (ii) this
Agreement and (iii) the customary and
usual standards of practice of prudent
mortgage loan servicers; provided that if
there is a conflict between the terms of
the Servicing Agreement and the
Servicing Rights Transfer and Subservicing
Agreement, on the one hand, and this
Agreement, on the other hand, the terms of
this Agreement shall prevail. In
connection with such servicing and
administration, the Master Servicer shall
have full power and authority, acting alone
and/or through Subservicers as
provided in Section 3.2 hereof, to do or
cause to be done any and all things
that it may deem necessary or desirable in
connection with such servicing and
administration, including but not limited
to, the power and authority, subject
to the terms hereof (i) to execute and
deliver, on behalf of the
Certificateholders and the Trustee,
customary consents or waivers and other
instruments and documents, (ii) to consent
to transfers of any Mortgaged
Property and assumptions of the Mortgage
Notes and related Mortgages (but only
in the manner provided in this Agreement),
(iii) to collect any Insurance
Proceeds and other Liquidation Proceeds,
and (iv) to effectuate foreclosure or
other conversion of the ownership of the
Mortgaged Property securing any
Mortgage Loan; provided that the Master
Servicer shall not take any action that
is inconsistent with or prejudices the
interests of the Trust Fund or the
Certificateholders in any Mortgage Loan or
the rights and interests of the
Depositor, the Trustee and the
Certificateholders under this Agreement. The
Master Servicer shall represent and protect
the interests of the Trust Fund in
the same manner as it protects its own
interests in mortgage loans in its own
48
<PAGE>
portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan, and
shall not make or permit any modification,
waiver or amendment of any Mortgage
Loan which would cause any REMIC created
hereunder to fail to qualify as a REMIC
or result in the imposition of any tax
under Section 860F(a) or Section 860G(d)
of the Code. Without limiting the
generality of the foregoing, the Master
Servicer, in its own name or in the name of
the Depositor and the Trustee, is
hereby authorized and empowered by the
Depositor and the Trustee, when the
Master Servicer believes it appropriate in
its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or
any of them, any and all instruments of
satisfaction or cancellation, or of
partial or full release or discharge and
all other comparable instruments, with
respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held
for the benefit of the Certificateholders.
The Master Servicer shall prepare and
deliver to the Depositor and/or the Trustee
such documents requiring execution
and delivery by either or both of them as
are necessary or appropriate to enable
the Master Servicer to service and
administer the Mortgage Loans to the extent
that the Master Servicer is not permitted
to execute and deliver such documents
pursuant to the preceding sentence. Upon
receipt of such documents, the
Depositor and/or the Trustee shall execute
such documents and deliver them to
the Master Servicer. The Master Servicer
further is authorized and empowered by
the Trustee, on behalf of the
Certificateholders and the Trustee, in its own
name or in the name of the Subservicer,
when the Master Servicer or the
Subservicer as the case may be, believes it
appropriate in its best judgment to
register any Mortgage Loan on the MERS(R)
System, or cause the removal from the
registration of any Mortgage Loan on the
MERS(R) System, to execute and deliver,
on behalf of the Trustee and the
Certificateholders or any of them, any and all
instruments of assignment and other
comparable instruments with respect to such
assignment or re-recording of a Mortgage in
the name of MERS, solely as nominee
for the Trustee and its successors and
assigns.
In accordance with the standards of the preceding paragraph, the
Master
Servicer shall advance or cause to be
advanced funds as necessary for the
purpose of effecting the payment of taxes
and assessments on the Mortgaged
Properties, which advances shall be
reimbursable in the first instance from
related collections from the Mortgagors
pursuant to Section 3.6, and further as
provided in Section 3.8. The costs incurred
by the Master Servicer, if any, in
effecting the timely payments of taxes and
assessments on the Mortgaged
Properties and related insurance premiums
shall not, for the purpose of
calculating monthly distributions to the
Certificateholders, be added to the
Stated Principal Balances of the related
Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so
permit.
SECTION 3.2 Subservicing; Enforcement of the Obligations of
Servicers.
(a) The Master
Servicer may arrange for the subservicing of any
Mortgage Loan by a Subservicer pursuant to a subservicing
agreement; provided, however, that such subservicing
arrangement
and the terms of the related subservicing agreement must
provide
for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Unless
the
context otherwise requires, references in this Agreement to
actions taken or to be taken by the Master Servicer in
servicing
the Mortgage Loans include actions taken or to be taken by a
Subservicer on behalf of the Master Servicer. Notwithstanding
the
provisions of any subservicing agreement, any of the provisions
of
this Agreement relating to agreements or arrangements between
the
Master Servicer and a Subservicer or reference to actions taken
through a Subservicer or otherwise, the Master Servicer shall
remain obligated and liable to the Depositor, the Trustee and
the
Certificateholders for the servicing and administration of the
Mortgage Loans in accordance with the provisions of this
Agreement
without diminution of such obligation or liability by virtue of
such subservicing agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and
under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. All
actions of each Subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the
Master Servicer with the same force and effect as if performed
directly by the Master Servicer.
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(b) For purposes of
this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments
with respect to the Mortgage Loans that are received by a
Subservicer regardless of whether such payments are remitted by
the Subservicer to the Master Servicer.
SECTION 3.3 Rights of the Depositor and the Trustee in Respect
of
the Master Servicer.
The Depositor may, but is not obligated to, enforce the obligations
of
the Master Servicer hereunder and may, but
is not obligated to, perform, or
cause a designee to perform, any defaulted
obligation of the Master Servicer
hereunder and in connection with any such
defaulted obligation to exercise the
related rights of the Master Servicer
hereunder; provided that the Master
Servicer shall not be relieved of any of
its obligations hereunder by virtue of
such performance by the Depositor or its
designee. Neither the Trustee nor the
Depositor shall have any responsibility or
liability for any action or failure
to act by the Master Servicer nor shall the
Trustee or the Depositor be
obligated to supervise the performance of
the Master Servicer hereunder or
otherwise.
SECTION 3.4 Trustee to
Act as Master Servicer.
In the event that the Master Servicer shall for any reason no
longer be
the Master Servicer hereunder (including by
reason of an Event of Default), the
Trustee or its successor shall thereupon
assume all of the rights and
obligations of the Master Servicer
hereunder arising thereafter (except that the
Trustee shall not be (i) liable for losses
of the Master Servicer pursuant to
Section 3.9 hereof or any acts or omissions
of the predecessor Master Servicer
hereunder), (ii) obligated to make Advances
if it is prohibited from doing so by
applicable law, (iii) obligated to
effectuate repurchases or substitutions of
Mortgage Loans hereunder including, but not
limited to, repurchases or
substitutions of Mortgage Loans pursuant to
Section 2.2 or 2.3 hereof, (iv)
responsible for expenses of the Master
Servicer pursuant to Section 2.3 or (v)
deemed to have made any representations and
warranties of the Master Servicer
hereunder). Any such assumption shall be
subject to Section 7.2 hereof. If the
Master Servicer shall for any reason no
longer be the Master Servicer (including
by reason of any Event of Default), the
Trustee or its successor shall succeed
to any rights and obligations of the Master
Servicer under each subservicing
agreement.
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The Master Servicer shall, upon request of the Trustee, but at
the
expense of the Master Servicer, deliver to
the assuming party all documents and
records relating to each subservicing
agreement or substitute subservicing
agreement and the Mortgage Loans then being
serviced thereunder and an
accounting of amounts collected or held by
it and otherwise use its best efforts
to effect the orderly and efficient
transfer of the substitute subservicing
agreement to the assuming party.
SECTION 3.5 Collection
of Mortgage Loan Payments; Certificate
Account; Distribution Account.
(a) The Master
Servicer shall make reasonable efforts in accordance
with the customary and usual standards of practice of prudent
mortgage servicers to collect all payments called for under the
terms and provisions of the Mortgage Loans to the extent such
procedures shall be consistent with this Agreement and the
terms
and provisions of any related Required Insurance Policy.
Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any prepayment
charge or penalty interest in connection with the prepayment of
a
Mortgage Loan and (ii) extend the due dates for payments due on
a
Mortgage Note for a period not greater than 180 days; provided,
however, that the Master Servicer cannot extend the maturity of
any such Mortgage Loan past the date on which the final payment
is
due on the latest maturing Mortgage Loan as of the Cut-off
Date.
In the event of any such arrangement, the Master Servicer shall
make Advances on the related Mortgage Loan in accordance with
the
provisions of Section 4.1 during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan
without modification thereof by reason of such arrangements.
The
Master Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether
under a Mortgage, Mortgage Note or otherwise or against any
public
or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the
provision of the Mortgage or other instrument pursuant to which
such payment is required is prohibited by applicable law.
(b) The Master
Servicer shall establish and maintain the Certificate
Account into which the Master Servicer shall deposit or cause
to
be deposited no later than two Business Days after receipt,
except
as otherwise specifically provided herein, the following
payments
and collections remitted by Subservicers or received by it in
respect of the Mortgage Loans subsequent to the Cut-off Date
(other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following
amounts required to be deposited hereunder:
(i) all
payments on account of principal on the Mortgage Loans,
including Principal Prepayments;
(ii) all
payments on account of interest on the Mortgage Loans,
net of the related Master Servicing Fee, any Prepayment
Interest Excess and, for so long as First Horizon is the
Master Servicer, any Retained Yield;
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(iii) all Insurance
Proceeds and Liquidation Proceeds in respect
of the related Mortgage Loans, other than proceeds to be
applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures;
(iv) any amount
required to be deposited by the Master Servicer
pursuant to Section 3.5(c) in connection with any losses on
Permitted Investments;
(v) any
amounts required to be deposited by the Master Servicer
pursuant to Sections 3.9(b) and 3.9(d);
(vi) all
Substitution Adjustment Amounts;
(vii) all Advances made by the Master
Servicer pursuant to
Section 4.1; and
(viii) any other amounts required to be deposited hereunder.
In addition, with respect to any Mortgage Loan that is subject
to a
buydown agreement, on each Due Date for such Mortgage Loan, in
addition to the monthly payment remitted by the Mortgagor, the
Master
Servicer shall cause funds to be deposited into the Certificate
Account
in an amount required to cause an amount of interest to be paid
with
respect to such Mortgage Loan equal to the amount of interest that
has
accrued on such Mortgage Loan from the preceding Due Date at
the
related Adjusted Mortgage Rate on such date.
The foregoing requirements for remittance by the Master
Servicer
shall be exclusive, it being understood and agreed that,
without
limiting the generality of the foregoing, payments in the nature
of
prepayment penalties, late payment charges, assumption fees or
amounts
attributable to reimbursements of Advances, if collected, need not
be
remitted by the Master Servicer. In the event that the Master
Servicer
shall remit any amount not required to be remitted, it may at any
time
withdraw or direct the institution maintaining the Certificate
Account
to withdraw such amount from the Certificate Account, any
provision
herein to the contrary notwithstanding. Such withdrawal or
direction
may be accomplished by delivering written notice thereof to the
Trustee
or such other institution maintaining the Certificate Account
which
describes the amounts deposited in error in the Certificate
Account.
The Master Servicer shall maintain adequate records with respect to
all
withdrawals made pursuant to this Section. All funds deposited in
the
Certificate Account shall be held in trust for the
Certificateholders
until withdrawn
in accordance with Section 3.8.
(c) The Trustee shall
establish and maintain, on behalf of the
Certificateholders, the Distribution Account, into which the
Trustee shall, promptly upon receipt, deposit and retain
therein
the following:
(i) the
aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3.8(a)(ix);
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(ii)
any amount
deposited by the Master Servicer pursuant to
this Section 3.5(c) in connection with any losses on
Permitted Investments; and
(iii) any other
amounts deposited hereunder which are required to
be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount
not required to be remitted, it may at any time direct the Trustee
to
withdraw such amount from the Distribution Account, any
provision
herein to the contrary notwithstanding. Such direction may be
accomplished by delivering an Officer's Certificate to the
Trustee
which describes the amounts deposited in error in the
Distribution
Account. All funds deposited in the Distribution Account shall be
held
by the Trustee in trust for the Certificateholders until disbursed
in
accordance with this Agreement or withdrawn in accordance with
Section
3.8. In no event shall the Trustee incur liability for withdrawals
from
the Distribution Account at the direction of the Master
Servicer.
(iv) The
institutions at which the Certificate Account and the
Distribution
Account are maintained shall invest funds as
directed by the Master Servicer in Permitted Investments
which in both cases shall mature not later than (i) in the
case of the Certificate Account, the second Business Day
next preceding the related Distribution Account Deposit
Date (except that if such Permitted Investment is an
obligation of the institution that maintains such account,
then such Permitted Investment shall mature not later than
the Business Day next preceding such Distribution Account
Deposit Date) and (ii) in the case of the Distribution
Account, the Business Day next preceding the Distribution
Date (except that if such Permitted Investment is an
obligation of the institution that maintains such fund or
account, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall
not be sold or disposed of prior to its maturity. If the
Master Servicer does not provide such prior written
investment direction, the funds in such accounts will be
held uninvested. All such Permitted Investments shall be
made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses
realized from any such investment of funds on deposit in
the Certificate Account shall be for the benefit of the
Master Servicer as servicing compensation and all income
and gain net of any losses realized from any such
investment of funds on deposit in the Distribution Account
shall be for the benefit of the Trustee. The amount of any
Realized Losses in the Certificate Account in respect of
any such investments shall promptly be deposited by the
Master Servicer in the Certificate Account and the amount
of any Realized Losses in the Distribution Account in
respect of any such investments shall promptly be deposited
by the Trustee into the Distribution Account. All
reinvestment
income earned on amounts on deposit in the
Distribution Account shall be for the benefit of the
Trustee. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of
any investment or lack of investment of funds held in the
Certificate Account and made in accordance with this
Section 3.5.
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(v) The
Master Servicer shall give notice to the Trustee, the
Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Certificate Account
prior to any change thereof. The Trustee shall give notice
to the Master Servicer, the Seller, each Rating Agency and
the Depositor of any proposed change of the location of the
Distribution Account prior to any change thereof.
SECTION 3.6 Collection
of Taxes, Assessments and Similar Items;
Escrow Accounts.
(a) To the extent
required by the related Mortgage Note and not
violative of current law, the Master Servicer shall establish
and
maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors
(or
advances by the Master Servicer) for the payment of taxes,
assessments, hazard insurance premiums or comparable items for
the
account of the Mortgagors. Nothing herein shall require the
Master
Servicer to compel a Mortgagor to establish an Escrow Account
in
violation of applicable law.
(b) Withdrawals of
amounts so collected from the Escrow Accounts may
be made only to effect timely payment of taxes, assessments,
hazard insurance premiums, condominium or PUD association dues,
or
comparable items, to reimburse the Master Servicer out of
related
collections for any payments made pursuant to Sections 3.1
hereof
(with respect to taxes and assessments and insurance premiums)
and
3.9 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums determined to be overages, to pay interest,
if
required by law or the terms of the related Mortgage or
Mortgage
Note, to Mortgagors on balances in the Escrow Account or to
clear
and terminate the Escrow Account at the termination of this
Agreement in accordance with Section 9.1 hereof. The Escrow
Accounts shall not be a part of the Trust Fund.
(c) The Master
Servicer shall advance any payments referred to in
Section 3.6(a) that are not timely paid by the Mortgagors on
the
date when the tax, premium or other cost for which such payment
is
intended is due, but the Master Servicer shall be required so
to
advance only to the extent that such advances, in the good
faith
judgment of the Master Servicer, will be recoverable by the
Master
Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise.
SECTION 3.7 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and
documentation regarding the Mortgage Loans
and all accounts, insurance information and
other matters relating to this
Agreement, such access being afforded
without charge, but only upon reasonable
request and during normal business hours at
the office designated by the Master
Servicer.
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Upon reasonable advance notice in writing, the Master Servicer
will
provide to each Certificateholder or
Certificate Owner which is a savings and
loan association, bank or insurance company
certain reports and reasonable
access to information and documentation
regarding the Mortgage Loans sufficient
to permit such Certificateholder or
Certificate Owner to comply with applicable
regulations of the OTS or other regulatory
authorities with respect to
investment in the Certificates; provided
that the Master Servicer shall be
entitled to be reimbursed by each such
Certificateholder or Certificate Owner
for actual expenses incurred by the Master
Servicer in providing such reports
and access.
SECTION 3.8
Permitted Withdrawals from the Certificate Account
and Distribution Account.
(a) The Master
Servicer may from time to time make withdrawals from
the Certificate Account for the following purposes:
(i)
to the extent not previously retained by the Master
Servicer, to pay to First Horizon the Retained Yield and
to pay to the Master Servicer the master servicing
compensation to which it is entitled pursuant to Section
3.14, and earnings on or investment income with respect to
funds in or credited to the Certificate Account as
additional master servicing compensation;
(ii) to
the extent not previously retained by the Master
Servicer, to reimburse the Master Servicer for
unreimbursed Advances made by it, such right of
reimbursement pursuant to this subclause (ii) being
limited to amounts received on the Mortgage Loan(s) in
respect of which any such Advance was made;
(iii) to
reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
(iv) to
reimburse the Master Servicer for Insured Expenses from
the related Insurance Proceeds;
(v)
to reimburse the Master Servicer for (a) unreimbursed
Servicing Advances, the Master Servicer's right to
reimbursement pursuant to this clause (a) with respect to
any Mortgage Loan being limited to amounts received on
such Mortgage Loan(s) which represent late recoveries of
the payments for which such advances were made pursuant to
Section 3.1 or Section 3.6 and (b) for unpaid Master
Servicing Fees as provided in Section 3.11 hereof;
(vi) to
pay to the Seller or Master Servicer, as applicable,
with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to
Section 2.2, 2.3 or 3.11, all amounts received thereon
after the date of such purchase;
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(vii) to
reimburse the Seller, the Master Servicer or the
Depositor for expenses incurred by any of them and
reimbursable pursuant to Section 6.3 hereof;
(viii) to withdraw any
amount deposited in the Certificate
Account and not required to be deposited therein;
(ix) on or
prior to the Distribution Account Deposit Date, to
withdraw an amount equal to the related Available Funds
and the Trustee Fee for such Distribution Date and remit
such amount to the Trustee for deposit in the Distribution
Account; and
(x)
to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.1
hereof.
The Master Servicer shall keep and maintain separate
accounting,
on a Mortgage Loan-by-Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant
to
such subclauses (i), (ii), (iv), (v) and (vi). Prior to making
any
withdrawal from the Certificate Account pursuant to subclause
(iii),
the Master Servicer shall deliver to the Trustee an Officer's
Certificate of a Servicing Officer indicating the amount of any
previous Advance determined by the Master Servicer to be a
Nonrecoverable Advance and identifying the related Mortgage
Loans(s),
and their respective portions of such Nonrecoverable Advance.
The Master Servicer shall distribute the Retained Yield, if
any,
to First Horizon on each Distribution Account Deposit Date during
the
term of this Agreement.
(b) The Trustee shall
withdraw funds from the Distribution Account for
distributions to the Certificateholders in the manner specified
in
this Agreement (and to withhold from the amounts so withdrawn,
the
amount of any taxes that it is authorized to withhold pursuant
to
the last paragraph of Section 8.11). In addition, the Trustee
may
(and with respect to clauses (i) and (ii) below, shall), prior
to
making the distribution pursuant to Section 4.2 from time to
time
make withdrawals from the Distribution Account for the
following
purposes:
(i)
to pay to itself the Trustee Fee for the related
Distribution Date;
(ii) to
pay to itself earnings on or investment income with
respect to funds in the Distribution Account;
(iii) to
withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to
be deposited therein; and
(iv) to
clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.1
hereof.
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SECTION 3.9
Maintenance of Hazard Insurance; Maintenance of
Primary Insurance Policies.
(a) The Master
Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an
amount that is at least equal to the lesser of (i) the maximum
insurable
value of the improvements securing such Mortgage Loan or
(ii) the greater of (y) the outstanding principal balance of
the
Mortgage Loan and (z) an amount such that the proceeds of such
policy shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. Each such policy of
standard
hazard insurance shall contain, or have an accompanying
endorsement that contains, a standard mortgagee clause. Any
amounts collected by the Master Servicer under any such
policies
(other than the amounts to be applied to the restoration or
repair
of the related Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's normal
servicing procedures) shall be deposited in the Certificate
Account. Any cost incurred by the Master Servicer in
maintaining
any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances
to
the Trustee for their benefit, be added to the principal
balance
of the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the
Master Servicer out of late payments by the related Mortgagor
or
out of Liquidation Proceeds to the extent permitted by Section
3.8
hereof. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor or
maintained on property acquired in respect of a Mortgage other
than pursuant to such applicable laws and regulations as shall
at
any time be in force and as shall require such additional
insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated
special
flood hazard area and such area is participating in the
national
flood insurance program, the Master Servicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan.
Such flood insurance shall be in an amount equal to the least
of
(i) the original principal balance of the related Mortgage
Loan,
(ii) the replacement value of the improvements which are part
of
such Mortgaged Property, and (iii) the maximum amount of such
insurance available for the related Mortg
