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SURETY BOND

Bonds Commercial Paper

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HOME EQUITY LOAN TRUST 2005-HS1 | Financial Guaranty Insurance Company

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Title: SURETY BOND
Governing Law: New York     Date: 10/11/2005

SURETY BOND, Parties: home equity loan trust 2005-hs1 , financial guaranty insurance company
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Financial Guaranty Insurance Company

125 Park Avenue

New York, New York 10017

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

 

 

SURETY BOND

 

 

Issuer: Home Equity Loan Trust 2005-HS1               Policy Number:   05030098

                                                      Control Number:   0010001

 

 

Insured Obligations:

$303,750,000 in principal amount of Home Equity   Loan-Backed Term Notes,   Series

2005-HS1,   Class A-II and Variable Funding Notes with a Maximum Variable Funding

Balance of $35,441,794 (collectively, the "Class II 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 II Credit   Enhancement   Draw   Amount   (as

defined   below),   to the   Indenture   Trustee,   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:

 

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

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

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

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

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

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

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

Loss Distribution Amount for the Class II Notes or covered by a reduction of the

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

Amount with respect to the Group II Loans, (d) the Guaranteed Payment Amount, if

applicable, and (e) any Preference Amount (as defined in this Surety Bond).

 

"Guaranteed   Payment   Amount"   means   with   respect   to the Class II Notes,   the

aggregate outstanding Security Balance on the Class II Notes on the Payment Date

in October 2035, after giving effect to all other   distributions of principal on

the Class II Notes on such Payment Date.

 

 

<PAGE>

 

"Deficiency   Amount" for any Payment Date means the sum of the amounts set forth

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

Enhancement Draw Amount."

 

Financial   Guaranty   will pay a Group II Credit   Enhancement   Draw   Amount   with

respect to the Class II 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 II Notes and (ii) the

Payment Date on which the related Deficiency Amount is payable to the Holders of

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

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

Class II Notes are required to be made.

 

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

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

Guaranty's obligations with respect to the Class II 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 II 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   II   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 II

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 II 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 II 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.

 

 

<PAGE>


 
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