SURETY BOND

 

Financial Guaranty Insurance Company

125 Park Avenue

New York, New York 10017

(212) 312-3000 (800) 352-0001

 

SURETY BOND

 

Form 9140

Page 1 of 4

 

Issuer: Home Equity Loan Trust 2005-HS1             Policy Number:  05030097

                                                    Control Number:  0010001

 

 

Insured Obligations:

$550,000,000  in  aggregate  principal  amount of Home Equity  Loan-Backed  Term

Notes,  Series 2005-HS1,  Class A-I-1, Class A-I-2, Class A-I-3, Class A-I-4 and

Class A-I-5 (collectively,

the "Class I Notes")

 

Indenture Trustee:  JPMorgan Chase Bank, N.A.

 

Financial Guaranty Insurance Company  ("Financial  Guaranty"),  a New York stock

insurance  company,  in  consideration  of the right of  Financial  Guaranty  to

receive  monthly  premiums as provided in the  Insurance  Agreement  (as defined

below) and subject to the terms of this Surety Bond, hereby  unconditionally and

irrevocably  agrees  to pay each  Group I Credit  Enhancement  Draw  Amount  (as

defined  below)  to the  Indenture  Trustee  named  above or its  successor,  as

indenture  trustee for the Holders of the Class I Notes, to the extent set forth

in the Indenture (as defined  below).  Capitalized  terms used and not otherwise

defined  herein shall have the meanings  assigned to such terms in Appendix A to

the Indenture as in effect and executed on the date hereof.

 

The following terms used herein shall have the meanings assigned to them below:

 

"Final  Maturity  Date"  shall mean for the Class  A-I-1  Notes and Class  A-I-2

Notes,  the payment date in July 2020,  for the Class A-I-3  Notes,  the payment

date in February  2021,  for the Class A-I-4  Notes and Class A-I-5  Notes,  the

payment date in September 2035.

 

"Group I Credit  Enhancement Draw Amount" shall mean an amount, if any, equal to

on any  Payment  Date for the Class I Notes,  the sum of (a) the amount by which

the  Interest  Distribution  Amount for the Class I Notes on such  Payment  Date

exceeds  the amount on deposit in the Payment  Account  available  for  interest

payments on the Class I Notes on such Payment  Date,  (b) any  Liquidation  Loss

Amount (other than any Excess Loss Amount) with respect to the Group I Loans for

such Payment Date, to the extent not distributed as part of the Liquidation Loss

Distribution Amount for the Class I Notes or covered by a reduction of the Group

I Overcollateralization  Amount on such Payment Date, (c) any Excess Loss Amount

with  respect  to the Group I Loans on such  Payment  Date,  (d) the  Guaranteed

Payment Amount, if applicable; and (e) any Preference Amount (as defined in this

Surety Bond).

 

"Guaranteed  Payment  Amount"  shall mean with  respect to each class of Class I

Notes, the aggregate outstanding Security Balance of such Class of Class I Notes

on  the  related  Final  Maturity  Date,   after  giving  effect  to  all  other

distributions of principal on such Class I Notes on such Payment Date.

 

 

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"Deficiency  Amount"  shall mean for any Payment Date the sum of the amounts set

forth in clauses  (a),  (b),  (c) and (d) of the  definition  of "Group I Credit

Enhancement Draw Amount."

 

Financial  Guaranty  will pay a  Deficiency  Amount with  respect to the Class I

Notes by 12:00 noon (New York City time) in immediately  available  funds to the

Indenture  Trustee on the later of (i) the second Business Day following the day

on which Financial  Guaranty shall have Received Notice that a Deficiency Amount

is due in  respect of the Class I Notes and (ii) the  Payment  Date on which the

related  Deficiency  Amount  is  payable  to the  Holders  of the  Class I Notes

pursuant to the Indenture,  for disbursement to the Holders of the Class I Notes

in the same  manner  as other  payments  with  respect  to the Class I Notes are

required to be made.

 

Upon such payment, Financial Guaranty shall be fully subrogated to the rights of

the  Holders  of the Class I Notes to  receive  the  amount  so paid.  Financial

Guaranty's  obligations with respect to the Class I Notes hereunder with respect

to each Payment Date shall be discharged  to the extent funds  consisting of the

related Deficiency Amount are received by the Indenture Trustee on behalf of the

Holders of the Class I Notes for  payment to such  Holders,  as  provided in the

Indenture  and  herein,  whether or not such funds are  properly  applied by the

Indenture Trustee.

 

If any  portion  or all of  any  amount  that  is  insured  hereunder  that  was

previously distributed to a Holder of Class I Notes is recoverable and recovered

from such Holder as a voidable preference by a trustee in bankruptcy pursuant to

the U.S.  Bankruptcy Code, pursuant to a final  non-appealable  order of a court

exercising  proper  jurisdiction  (a "Final Order") (such  recovered  amount,  a

"Preference Amount"),  Financial Guaranty will pay on the guarantee described in

the first paragraph  hereof,  an amount equal to each such Preference  Amount by

12:00 noon on the next  Payment  Date after the second  Business  Day  following

Receipt by Financial Guaranty of (w) a certified copy of the Final Order, (x) an

opinion of counsel  satisfactory to Financial  Guaranty that such order is final

and not subject to appeal, (y) an assignment, in form reasonably satisfactory to

Financial Guaranty,  irrevocably  assigning to Financial Guaranty all rights and

claims of the Indenture  Trustee and/or such Holder of Class I Notes relating to

or arising under such Preference Amount and appointing Financial Guaranty as the

agent of the Indenture  Trustee and/or such Holder in respect of such Preference

Amount, and (z) a Notice  appropriately  completed and executed by the Indenture

Trustee or such Holder,  as the case may be. Such  payment  shall be made to the

receiver,  conservator,  debtor-in-possession  or trustee in bankruptcy named in

the Final  Order  and not to the  Indenture  Trustee  or Holder of Class I Notes

directly  (unless the Holder has  previously  paid such amount to such receiver,

conservator,  debtor-in-possession or trustee named in such Final Order in which

case payment  shall be made to the  Indenture  Trustee for  distribution  to the

Holder  upon  proof  of  such  payment  reasonably   satisfactory  to  Financial

Guaranty).  Notwithstanding the foregoing,  in no event shall Financial Guaranty

be (i)  required  to make any  payment  under this Surety Bond in respect of any

Preference  Amount to the extent such Preference  Amount is comprised of amounts

previously paid by Financial Guaranty  hereunder,  or (ii) obligated to make any

payment in respect of any Preference Amount,  which payment represents a payment

of the  principal  amount  of any  Class I Notes,  prior  to the time  Financial

Guaranty otherwise would have been required to make a payment in respect of such

principal,  in which  case  Financial  Guaranty  shall  pay the  balance  of the

Preference Amount when such amount otherwise would have been required.