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.
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"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.
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