FIRST HORIZON ASSET SECURITIES INC. MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2007-AA2 TERMS AGREEMENT (to Underwriting Agreement, dated February 24, 2006 among the Company, First Horizon Home Loan Corporation and the Underwriter)

EX-1.2 2 c49363_ex1-2.htm c49363_ex1-2.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 1.2

EXECUTION

FIRST HORIZON ASSET SECURITIES INC.

MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2007-AA2

TERMS AGREEMENT
(to Underwriting Agreement,
dated February 24, 2006
among the Company, First Horizon
Home Loan Corporation
and the Underwriter)


First Horizon Asset Securities Inc.		New York, New York
4000 Horizon Way		June 27, 2007
Irving, Texas 75063

Bear, Stearns & Co. Inc. (the “Underwriter”) agrees, subject to the terms and provisions herein and of the captioned Underwriting Agreement (the “Underwriting Agreement”), to purchase such Classes of First Horizon Alternative Mortgage Securities Trust 2007-AA2, Mortgage Pass-Through Certificates, Series 2007-AA2 (the “Series 2007-AA2 Certificates”) specified in Section 2(a) hereof (the “Offered Certificates”). This letter supplements and modifies the Underwriting Agreement solely as it relates to the purchase and sale of the Offered Certificates described below. The Series 2007-AA2 Certificates are registered with the Securities and Exchange Commission by means of an effective Registration Statement (No. 333-143015). Capitalized terms used and not defined herein have the meanings given them in the Underwriting Agreement.

Section 1. The Mortgage Pools: The Series 2007-AA2 Certificates shall evidence the entire beneficial ownership interest in two mortgage pools (“Pool I” and “Pool II” and, collectively, the “Mortgage Pools”) of primarily 30-year adjustable rate, first lien, fully amortizing, one- to four-family residential mortgage loans (the “Mortgage Loans”) having the following characteristics as of June 1, 2007 (the “Cut-off Date”):

(a) Aggregate Principal Amount of the Mortgage Pools: Approximately $242,004,675 aggregate principal balance as of the Cut-off Date, subject to an upward or downward variance of up to 5%, the precise aggregate principal balance to be determined by the Company.

(b) Original Terms to Maturity: The original term to maturity of each Mortgage Loan included in Pool I shall be 360 months. The original term to maturity of each Mortgage Loan included in Pool II shall be 360 months.

Section 2. The Certificates: The Offered Certificates shall be issued as follows:

(a) Classes: The Offered Certificates shall be issued with the following Class designations, initial pass-through rates and class principal

227942 FHAMS 2007-AA2
Underwriting Terms Agreement

balances, subject in the aggregate to the variance referred to in Section 1(a) and, as to any particular Class, to an upward or downward variance of up to 5%:

	Class Principal			Initial Pass-Through		Class Purchase Price		Required Ratings
Class	Balance			Rate⁽¹⁾		Percentage		Fitch	Moody’s

Class I-A-1	$	191,389,000		6.1000	%	101 ###-###-####	%	AAA	Aaa
Class I-A-2	$	14,807,000		6.1000	%	101 ###-###-####	%	AAA	Aaa
Class I-A-3	$	206,196,000	⁽²⁾	0.4192	%	-		AAA	Aaa
Class I-A-R	$	100		6.5192	%	101 ###-###-####	%	AAA	Aaa
Class II-A-1	$	19,594,000		6.0000	%	101 ###-###-####	%	AAA	Aaa
Class II-A-2	$	19,594,000	⁽³⁾	0.9630	%	-		AAA	Aaa
Class B-1	$	8,954,000		6.5578	%	100.191540000	%	AA	N/A
Class B-2	$	2,420,000		6.5578	%	98 ###-###-####	%	A	N/A
Class B-3	$	1,815,000		6.5578	%	90.406740000	%	BBB	N/A

⁽¹⁾Initial pass-through rates. The pass-through rates for these Classes of Offered Certificates (other thank the Class I-A-3 and the Class I-A-2 Certificates) are variable and will be calculated as described in the Prospectus Supplement.

⁽²⁾The Class I-A-3 Certificates are notional amount certificates that will accrue interest during each interest accrual period on a notional amount equal to the aggregate class certificate balances of the Class I-A-1 and Class I-A-2 Certificates.

⁽³⁾The Class II-A-2 Certificates are notional amount certificates that will accrue interest during each interest accrual period on a notional amount equal to the class certificate balance of the Class II-A-1 Certificates.

“N/R” indicates that these Classes of Certificates are not rated by the applicable Rating Agency.

(b) The Offered Certificates shall have such other characteristics as described in the related Prospectus.

Section 3. Purchase Price: The Purchase Price for each Class of the Offered Certificates shall be the Class Purchase Price Percentage therefor (as set forth in Section 2(a) above) of the initial Class Principal Balance thereof plus accrued interest at the applicable per annum initial pass-through rate set forth in 2(a) above from and including the Cut-off Date up to, but not including, June 29, 2007 (the “Closing Date”).

Section 4. Required Ratings: The Offered Certificates shall have received at least the Required Ratings from Fitch, Inc. (“Fitch”) and Moody’s Investors Service, Inc. (“Moody’s”) set forth in Section 2(a) above.

Section 5. Tax Treatment: One or more elections will be made to treat the assets of the Trust Fund as a REMIC.

Section 6. Acknowledgment of Merger. The Underwriter hereby acknowledges that, effective May 31, 2007, First Horizon Home Loan Corporation merged with and into First Tennessee Bank National Association. All references in the Underwriting Agreement to First Horizon Home Loan Corporation shall be deemed to refer to First Horizon Home Loans, a division of First Tennessee Bank National Association, as successor by merger to First Horizon Home Loan Corporation.

227942 FHAMS 2007-AA2
Underwriting Terms Agreement

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the undersigned a counterpart hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Underwriter, First Horizon Home Loans, a division of First Tennessee Bank National Association,.

	Very truly yours,


	BEAR, STEARNS & CO. INC.


	By:
		Name:
		Title:

The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.


FIRST HORIZON ASSET SECURITIES INC.


By:
	Name: Alfred Chang
	Title: Vice President



FIRST HORIZON HOME LOANS, a division of
First Tennessee Bank National Association


By:
	Name: Terry L. McCoy
	Title: Executive Vice President

227942 FHAMS 2007-AA2
Underwriting Terms Agreement