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-HS2                Policy Number:  05030143

                                                       Control Number:  0010001

 

 

Insured Obligations:

$349,650,000  in  aggregate  principal  amount of Home Equity  Loan-Backed  Term

Notes,  Series 2005-HS2,  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  September  2020,  for the Class A-I-3  Notes,  the

payment date in July 2024, for the Class A-I-4 Notes and Class A-I-5 Notes,  the

payment date in December 2035.

 

"Group I Credit Enhancement Draw Amount" shall mean for the Class I Notes (1) an

amount,  if any, equal to on any Payment Date 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 and (d) the  Guaranteed

Payment Amount, if applicable; and (2) 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.

 

"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 sought to

be  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  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,  in form satisfactory to

Financial  Guaranty,  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.

 

If any  notice  received  by  Financial  Guaranty