Fitch Rates FHASI $251.6MM Mortgage P-T Certificates Series 2004-AR5

Business Wire, August 31, 2004

Pool IV consists of 10/1 hybrid ARMs. The loans have an initial fixed interest rate period of 10 years. Thereafter, the interest rate will adjust annually based on the weekly average yield on U.S. Treasury securities (one-year CMT) plus a gross margin. Approximately 62.73% of the mortgage loans in pool IV have interest-only payments scheduled during the 10-year fixed-rate period, with principal and interest payments commencing after the first rate adjustment date. The aggregate principal balance of this pool is $38,095,384 and consists of conventional, fully amortizing, ARM loans secured by first liens on single-family residential properties, substantially all of which have original terms to maturity of 30 years. The average principal balance of the loans in this pool is approximately $586,083. The mortgage pool has a weighted average OLTV of 68.24%. Rate/term and cash-out refinance loans account for 17.43% and 5.90% of the pool, respectively. Second homes and investor occupancies represent 1.13% and 1.18% of the pool, respectively. The states with the largest concentrations are California (47.53%), Virginia (14.74), and Tennessee (6.00%). All other states represent less than 5% of the pool as of the cut-off date.

None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at 'www.fitchratings.com'.

All the mortgage loans were originated or acquired in accordance with First Horizon Home Loan Corporation's underwriting guidelines. The trust, First Horizon Mortgage Pass-Through Trust 2004-AR5, was created for the sole purpose of issuing the certificates. For federal income tax purposes, an election will be held to treat the trust as two real estate mortgage investment conduits. The Bank of New York will act as trustee.