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Financial Guaranty Insurance Company
125 Park Avenue
New York, New York 10017
(212) 312-3000
(800) 352-0001
FINANCIAL GUARANTY INSURANCE POLICY
Issuer: Home Loan Trust 2006-HI5 Policy Number: 06030135
Control Number: 0010001
Insured Obligations:
$247,469,000 in aggregate principal amount of Home Loan-
Backed Notes, Series 2006-HI5, Class A-1, Class A-2, Class
A-3 and Class A-4 (collectively, the "Class A Notes")
Indenture Trustee: U.S. Bank National Association
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 Financial Guaranty
Insurance Policy
(this "Policy"), hereby unconditionally and irrevocably agrees
to pay each
Insured Payment (as defined below) to the Indenture Trustee
named above or its
successor, as indenture trustee for the Holders of the Class A
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:
"Deficiency Amount" shall mean for any Payment Date and any
class of the Class A
Notes, an amount, if any, equal to the sum of (i) the excess, if
any, of (A) (1)
the aggregate amount of Accrued Note Interest on such Payment
Date less (2) an
amount equal to any Prepayment Interest Shortfalls and Relief
Act Shortfalls on
the Home Loans during the related Collection Period, over (B)
the amount
available for interest distributions on the Class A Notes on
such Payment Date
pursuant to the Indenture, (ii) any Liquidation Loss Amount with
respect to the
Home Loans for such Payment Date, to the extent not distributed
as part of the
Liquidation Loss Payment Amount for the Class A Notes or covered
by a reduction
of the Outstanding Reserve Amount on such Payment Date and (iii)
the Guaranteed
Payment Amount, if applicable.
"Final Maturity Date" shall mean for each class of the Class A
Notes, the
payment date in December 2036.
"Guaranteed Payment Amount" shall mean with respect to each
class of Class A
Notes, the aggregate outstanding Note Balance of such Class of
Class A Notes on
the Final Maturity Date, after giving effect to all other
distributions of
principal on such Class A Notes on such Payment Date from all
sources other than
this Policy.
Form 9140
Page 1 of 5
Financial Guaranty Insurance Company
125 Park Avenue
New York, New York 10017
(212) 312-3000
(800) 352-0001
FINANCIAL GUARANTY INSURANCE POLICY
"Insured Payment" shall mean (a) with respect to any Payment
Date for the Class
A Notes (i) any Deficiency Amount; and (ii) any Preference
Amount (as defined in
this Policy), and (b) with respect to any other date, any
Preference Amount.
Financial Guaranty will pay a Deficiency Amount with respect to
the Class A
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 receipt
in New York, New York on a Business Day by Financial Guaranty of
a Notice from
the Indenture Trustee that a Deficiency Amount is due in respect
of the Class A
Notes and (ii) the Payment Date on which the related Deficiency
Amount is
payable to the Holders of the Class A Notes pursuant to the
Indenture, for
payment to the Holders of the Class A Notes in the same manner
as other payments
with respect to the Class A Notes are required to be made. Any
Notice received
by Financial Guaranty (i) after 12:00 noon (New York City time)
on a given
Business Day or (ii) on any day that is not a Business Day shall
be deemed to
have been received by Financial Guaranty on the next succeeding
Business Day. In
addition, if any Notice received by Financial Guaranty is not in
proper form or
is otherwise insufficient for the purpose of making a claim
under this Policy,
it will be deemed not to have been received by Financial
Guaranty, and Financial
Guaranty will promptly so advise the Indenture Trustee, and the
Indenture
Trustee may submit an amended Notice.
If any portion or all of any amount that is insured hereunder
that was
previously paid to a Holder of Class A 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 in an insolvency
proceeding (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 (New York City time)
on the second
Business Day following receipt by Financial Guaranty on a
Business Day 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 the Class A Notes relating to or arising
under such
Preference Amount and constituting an appropriate instrument, in
form reasonably
satisfactory to Financial Guaranty, appointing Financial
Guaranty as the agent
of the Indenture Trustee and/or such Holder in respect of such
Preference
Amount, including, without limitation, in any legal proceeding
relating to the
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 the Class
A Notes directly (unless the Holder has previously paid such
amount to such
receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in
such Final Order in which case payment shall be made to the
Indenture Trustee
for payment to the Holder upon delivery of proof of such payment
reasonably
satisfactory to
Form 9140
Page 2 of 5
Financial Guaranty Insurance Company
125 Park Avenue
New York, New York 10017
(212) 312-3000
(800) 352-0001
FINANCIAL GUARANTY INSURANCE POLICY
Financial Guaranty). Notwithstanding the foregoing, in no event
shall Financial
Guaranty be (i) required to make any payment under this Policy
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 balance of any Class A 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 to be paid
under this Policy.
Any of the documents required under clauses (w) through (z) of
the preceding
paragraph that are received by Finan
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