Terms for MGIC Mortgage Insurance Coverage

                                                                    EXHIBIT 10.4

Mortgage Guaranty Insurance Corporation                            [LOGO - MGIC]


Steven M. Thompson
Vice President
Risk Management


December 13, 2006


Ms. Carla Walker
Wells Fargo Bank, N.A. as Securities Administrator for the
Wells Fargo Home Equity Asset-Backed Securities 2006-3 Trust
Wells Fargo Center
6th and Marquette
Minneapolis, Minnesota 55479


RE:   Terms for MGIC Mortgage Insurance Coverage ("Coverage") on Approximately
      $89 Million in Principal Balances of Loans (the "Insurable Loans") to be
      included in the Trust known as the Wells Fargo Home Equity Asset-Backed
      Securities 2006-3 Trust (the "Trust")


Dear Ms. Walker :


Mortgage Guaranty Insurance Corporation ("MGIC") has reviewed the information
provided by Wells Fargo Bank, N.A. ("Wells Fargo") concerning the Insurable
Loans and is providing pricing and terms to issue non-borrower-paid first lien
Coverage under the Master Policy (as defined below) on the loans contained
within the portfolio. This proposal is subject to due diligence findings and the
following terms and conditions:



1.    Portfolio Size. MGIC has identified the following Insurable Loans from the
      Final File (as defined below) submitted by Wells Fargo:


                Original LTV >60%(1)             $   Volume  
                --------------------             ---------------
                        431                      $89,012,804.42

      The actual size of the final portfolio of Insurable Loans may be slightly
      different based on loan removals, additions and substitutions due to
      prepayments, delinquencies, and/or additional screening of loan
      eligibility.


----------------------

(1)   For purposes of this letter, an Insurable Loan's "Original LTV" means the
      ratio, expressed as a percentage, of the initial principal balance of the
      Insurable Loan at origination to the Value of the related property at
      origination.

MGIC Plaza, P.O. Box 488, Milwaukee, Wisconsin 53201-0488, (414) 347-6893
WATS (800) 558-9900, FAX (414) 347-6854


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2.    Loan Coverage. Non-borrower-paid Coverage will be issued by MGIC on each
      Insurable Loan that meets the applicable Eligibility Criteria (as set
      forth in Section 10 below). The Coverage percent for an Insurable Loan is
      calculated as the Original LTV minus sixty percent (60%) divided by the
      Original LTV ratio, with the result rounded to the next highest whole
      number. Example:


               Original LTV = 87.49  (expressed as a percentage)
               Original LTV = .8749  (expressed as a ratio)

               Coverage percentage  = (87.49 - 60)/.8749) = 31.4207 = 32

3.    Premium. Wells Fargo, not in its individual capacity but solely in its
      capacity as Insured for the Trust, shall pay or cause to be paid in
      arrears a nonrefundable monthly premium for the Coverage calculated at an
      annualized premium rate of 146 basis points, applied to the unpaid
      principal balances of insured loans determined as of the beginning of the
      prior calendar month. For purposes of this letter, "Insured Loan" means an
      Insurable Loan as to which Coverage under the Master Policy (as defined
      below) is issued by MGIC.

      Wells Fargo shall provide or cause to be provided to MGIC on a monthly
      basis via computer file (in a mutually acceptable format), the following
      information for each Insured Loan as shall have been provided to Wells
      Fargo by the Servicer of the Insured Loan: the unpaid principal balance,
      MGIC certificate number, lender loan number, and premium due for each
      Insured Loan.

      The premium rate quoted in this paragraph does not include premium taxes
      that are required to be paid by the Insured in the States of Kentucky and
      West Virginia. The Final File includes Insurable Loans in the States of
      Kentucky and West Virginia. The tax rates generally range from 1.0% - 17%
      of the premium paid, and such rates shall be provided with respect to any
      Insured Loans on a loan-level basis to the Insured or its designee by
      MGIC, and such amount shall be added to the payment of the premium paid to
      MGIC who will cause such taxes to be paid.

      With respect to all Insured Loans, Wells Fargo represents and warrants
      that (a) the borrower will not be charged a separate or identified amount
      as payment or reimbursement for premiums for Coverage and that such
      premiums will be paid by the Insured from funds of the Trust or persons
      other than the borrower, and (b) that the Coverage will either not be
      subject to the Homeowners Protection Act of 1998 or will be "non-borrower
      paid mortgage insurance" thereunder. In addition, with respect to any
      Insured Loan secured by a property in New York State for which, at the
      effective date of Coverage or at any time while the Master Policy is in
      effect for such Insured Loan, the ratio of the unpaid principal balance of
      such Insured Loan to the Value of the related property at origination is
      less than 75%, Wells Fargo represents and warrants that all premiums for
      Coverage will not be paid by the borrower, including, for example, by a
      higher interest rate or other charges. It is acknowledged that these
      representations and warranties are relied upon by MGIC in insuring such
      Insured Loans because they relate to the maintenance of Coverage of such
      Insured Loans under the Master Policy.

4.    Effective Date of Coverage. Coverage for all Insured Loans shall take
      effect as of December 1, 2006. The initial monthly premium shall be due on
      January 25, 2007. Monthly renewal premiums shall be due thereafter on the
      25th day (or if that day is not a business day, the next business day) of
      each month while the Coverage is in effect.

      Renewal payments are paid in arrears representing payment for coverage in
      the prior calendar month. For any loan that prepays in full between the
      2nd and the end of that calendar month, a full month's premium payment
      will be due for that month representing the final premium due on such
      loan. If a loan is prepaid in full on the 1st day of a calendar month, no
      premium payment will be due for that month.

5.    Named Insured. Wells Fargo, solely in its capacity as Securities
      Administrator, shall be the named insured under the Master Policy and all
      Certificates covering the Insured Loans. The obligations of the "Insured"
      under this letter and under the Master Policy will be performed by the
      Securities Administrator or the Servicer on behalf of the Securities
      Administrator.

6.    Bulk Certificate. MGIC will provide to the Insured one bulk insurance
      Certificate for all of the Insured Loans, together with a summary of the
      coverage information on a loan-by-loan basis in an electronic format and
      thereafter a certificate number for each Insured Loan. MGIC will not be
      obligated to issue individual Certificates for each Insured Loan.

7.    Restrictions on Cancellation. The premium rates for the Insured Loans were
      calculated based upon a review of information pertaining to the Insurable
      Loans as described in Section 1 above. Wells Fargo acknowledges that the
      terms of the Master Policy (as defined below), including the restrictions
      on cancellation and assignment, were relied upon by MGIC in establishing
      such premium rates. Wells Fargo also agrees that the Coverage to be issued
      under the Master Policy is non-assignable except as provided for in the
      Master Policy.

      For purposes of Section 3.6 of the Master Policy, MGIC approves assignment
      of coverage on all Insured Loans as a group from the Securities
      Administrator to any successor Securities Administrator, provided, in each
      such case, that the Securities Administrator promptly notifies MGIC of
      such assignment.

8.    Cancellation of MGIC Coverage of An Insured Loan Upon Repurchase from the
      Trust. In the event of the repurchase of an Insured Loan from the Trust by
      Wells Fargo or its affiliate due a defect or breach as provided by a
      mortgage loan purchase agreement or Pooling and Servicing Agreement, Wells
      Fargo shall notify MGIC of such repurchase, upon which MGIC Coverage on
      such Insured Loan shall automatically be terminated effective as of such
      event, and any Default existing at the time of such termination and any
      future Default on such Insured Loan will not be covered under the Master
      Policy, and a refund of all premium paid with respect thereto shall be
      made.

9.    Cancellation of Policy and Coverage of Insured Loans Upon Termination of
      Trust. As provided in Section 2.9 of the Master Policy, except as
      otherwise provided below, in the event of a Redemption, or if the Trust is
      terminated for any other reason, or if there are no longer any Insured
      Loans that are security for, or represented by, the Trust, the Master
      Policy and the Coverage of all Insured Loans under the Master Policy shall
      automatically be terminated effective upon such event, without further
      action being required by either the Insured or MGIC, and any Default on
      any Insured Loan existing at the time of such termination (other than
      Defaults for which a Claim had been filed prior to the date of such
      termination) and any future Default on an Insured Loan will not be covered
      under the Master Policy, nor will any refund of premium be paid.

      Notwithstanding the foregoing, in the event of a Redemption, the Coverage
      of Loans insured under the Policy shall not automatically terminate and
      shall be permitted to be assigned to Wells Fargo if all of the Loans then
      insured under the Policy, including, but not limited to, all such Loans
      then in Default, are purchased by Wells Fargo, or any affiliate of Wells
      Fargo, within thirty (30) days after the effective date of the Redemption
      and MGIC is promptly notified of such purchase. Thereafter, no further
      assignment of Coverage shall be allowed by MGIC to any future new
      transferee for any Insured Loan.

10.   Loan Eligibility Criteria. Under the terms of the Master Policy,
      "Eligibility Criteria" may be established on the Insured Loans by MGIC
      upon notice to the Insured. This letter will serve as such notice for
      purposes of the Master Policy and will apply to all Insured Loans. All
      Insured Loans must meet all of the Eligibility Criteria as of the
      effective date of Coverage or as of such other date as otherwise noted
      below:

      a)    CLTVs (Combined LTVs). With respect to any Insured Loan, The CLTV
            (as defined below) may not exceed the Original LTV, except for loans
            for which the CLTV is specifically disclosed to exceed the Original
            LTV on the Final File. The CLTV may not exceed 100% in any case.

            The combined loan-to-value ratio ("CLTV") is defined as the ratio,
            expressed as a percentage, of the sum, as of the date of Insured
            Loan closing, of (1) the loan amount of the Insured Loan and (2) the
            outstanding principal balance of any other loan or loans secured by
            the property which are either (a) subordinated to the lien of the
            Insured Loan or (b) a second lien loan, divided by the Value of the
            property.

      b)    Section 32 (HOEPA) loans. No Insured Loan can be a loan which would
            be required to comply with Section 226.32 of the federal
            truth-in-lending regulations (commonly referred to as a "HOEPA
            loan").

      c)    Compliance with Applicable Laws. Each Insured Loan complied in all
            material respects with all applicable federal, state or other laws
            and regulations, including but not limited to any laws relating to
            fair lending or predatory lending practices, and such Insured Loan
            must comply with all of such laws and regulations.

      d)    Bankruptcies and Foreclosures.

            Foreclosures - No borrower on any Insured Loan may have been the
            subject of a foreclosure proceeding within the 24 months prior to
            the closing of the Insured Loan.

            Bankruptcies - No borrower on any Insured Loan may have been a
            debtor who was the subject of a bankruptcy proceeding during the 24
            months prior to the closing of the Insured Loan.

      e)    Delinquencies. Each Insured Loan is less than 30 days delinquent as
            of the effective date of Coverage.

            In the 12 months prior to the effective date of Coverage, payments
            on any Insured Loan may not have been (1) thirty days delinquent on
            more than one occasion or (2) sixty days delinquent on any occasion.

      f)    Single Property. Insured Loans may be secured by only one property.

      g)    Loan Instrument Type. Insured Loans must be positively amortizing or
            interest-only loans. Negatively amortizing loans are not eligible.

      h)    Manufactured Homes. Insured Loans cannot be secured by manufactured
            homes.

      i)    Property Type and Units. Insured Loans must be secured by 1-4 family
            residential properties located in the United States. Eligible
            property types include single-family detached and attached
            (including condominiums, PUDs, and cooperative housing).

      j)    Properties with Physical Damage. The property securing the Insured
            Loan is undamaged by water, fire, earthquake, earth movement other
            than earthquake, windstorm, flood, tornado or similar casualty
            (excluding casualty from the presence of hazardous wastes or
            hazardous substances, as to which the Insured makes no
            representations), in a matter which would adversely affect the value
            of such property as security for the Insured Loan or the use for
            which the premises were intended and to the best of the Insured's
            knowledge, there is no proceeding pending or threatened for the
            total or partial condemnation of the property.

      k)    Property Valuation. For an Insured Loan, the Value as represented on
            the Final File must have been obtained as the result of an appraisal
            as documented on the Universal Residential Appraisal Report or its
            equivalent and not as the result of an alternative valuation
            methodology such as an automated valuation model unless the use of
            such alternative evaluation methodology is disclosed in the Final
            File.

11.   Master Policy. All Coverage issued hereunder shall be subject to the terms
      and conditions of Mortgage Guaranty Master Policy for Multiple Loan
      Transactions [MGIC form #71-70275 (2/06) with #71-70276 (2/05)] (the
      "Master Policy").

12.   Accuracy of Information on Final File; Representations and Warranties and
      Covenants. It is understood that information relating to the Insured Loans
      will be delivered to MGIC by electronic format, and that MGIC will not
      individually underwrite each Insured Loan. Wells Fargo will deliver or
      cause to be delivered to MGIC a final data file of Insurable Loans that
      meet the Eligibility Criteria and the other requirements for Coverage
      under this letter in a form mutually agreed to by the parties (the "Final
      File"), a copy of which will be attached to the Certificate for Insured
      Loans. The Final File will constitute an Application for Coverage under
      the Master Policy and this letter and any other information provided to
      MGIC will be considered part of that Application.

      MGIC has been advised that the Insured loans were made and underwritten by
      the originator(s) in accordance with the underwriting requirements in
      effect at the time of origination of the Insured Loans (the "Underwriting
      Requirements"). Wells Fargo represents and warrants to MGIC that each
      Insured Loan meets (a) the Eligibility Criteria set forth in Section 10
      above and (b) in all material respects, the Underwriting Requirements.

      In extending this offer to insure, MGIC is relying on the truth and
      accuracy of the information relating to the Insured Loans provided by
      Wells Fargo, and MGIC has no obligation to insure loans which do not meet
      the requirements of this letter. Wells Fargo acknowledges and agrees that
      (a) the mortgage loan information for each Insurable Loan contained on the
      Final File provided to MGIC prior to issuance of Coverage and the
      representations, warranties and covenants in this letter are material to
      MGIC's decision as to whether to issue such Coverage on such Insurable
      Loan, (b) MGIC is relying on such information and representations,
      warranties and covenants in issuing such Coverage on such Insurable Loan,
      and (c) the submission of inaccurate information or the breach of such
      representations, warranties or covenants which is material to the
      acceptance or pricing of the risk with respect to any Insured Loan may
      result in rescission or cancellation of Coverage on the affected Insured
      Loan, with a refund of all premium paid with respect thereto. Wells Fargo
      represents and warrants to MGIC that all mortgage loan information
      provided to MGIC relevant to MGIC's insurance decision on an Insurable
      Loan, including but not limited to information contained on the Final File
      provided by Wells Fargo prior to issuance of Coverage, is materially true,
      correct, and accurate; however, MGIC's rights and remedies for a breach
      thereof shall be limited to MGIC's rights and remedies under the Master
      Policy and no other rights or remedies of MGIC shall be implied or created
      by this letter.

13.   Servicing of Insured Loans Under the Master Policy. Wells Fargo and the
      Insured acknowledge that (1) under Section 3.4 of the Master Policy if
      there is a change of Servicer, Coverage of an Insured Loan continues
      provided that prior written notice of the new Servicer is given to MGIC
      and the new Servicer is approved in writing by MGIC in advance of such
      change of Servicer, and that (2) under Section 4.6 of the Master Policy a
      Claim occurring on an Insured Loan when the Servicer for such Insured Loan
      is not approved by MGIC is excluded from Coverage under the Master Policy.

14.   GLB; Consumer Privacy. MGIC and Wells Fargo each represents to the other
      that it shall comply with all privacy and data protection laws, rules, and
      regulations which are or which may in the future be applicable to the
      information disclosed by Wells Fargo pursuant to this agreement or in
      connection with any transactions or activities covered by this agreement.
      Without limiting the generality of the preceding sentence, MGIC agrees
      that it will keep confidential and will not use nor disclose to any other
      party, except as necessary to fulfill its obligations under this agreement
      or as permitted by applicable law or regulation, any nonpublic personal
      information, if any, which it receives from or on behalf of Wells Fargo in
      connection with the activities or transactions covered by this Agreement
      ("NPI"). For purposes of this provision, the term "nonpublic personal
      information" shall have the meaning set forth in Section 509 of the
      Gramm-Leach-Bliley Act (P.L. 106-102) (15 U.S.C. Section 6801 et seq.) and
      implementing regulations thereof. MGIC represents and warrants that it
      has, and will continue to have for so long as it retains NPI, adequate
      administrative, technical, and physical safeguards designed (i) to insure
      the security and confidentiality of customer records and information, (ii)
      to protect against any anticipated threats or hazards to the security or
      integrity of such records, and (iii) to protect against unauthorized
      access to or use of such records or information which could result in
      substantial harm or inconvenience to any customer. MGIC shall immediately
      notify Wells Fargo if MGIC discovers there has been a material breach in
      its security safeguards required by this agreement, and such breach
      results in the security of NPI being compromised for any reason (which
      notice shall provide information related to the details of such event and
      a description of the information), and MGIC shall take all reasonable and
      appropriate steps to protect such NPI in such event. MGIC shall at all
      times during the term of the Coverage, keep proper books and records of
      account, and shall maintain records and information sufficient to show
      compliance with the terms of this Section.

15.   Counterparts and Facsimile Signatures. This letter agreement may be
      executed in separate counterparts, each of which shall be deemed an
      original but all of which together will constitute but one agreement, and
      will become effective when each party has executed one or more
      counterparts and delivered same to the other parties. This letter
      agreement may also be executed by facsimile signatures, which will be as
      effective as original signatures. All capitalized terms in this letter,
      unless defined herein, shall have the respective meanings as set forth in
      the Master Policy.

16.   Securities Administrator Capacity. It is expressly understood and agreed
      by the parties hereto that insofar as this Agreement is executed on behalf
      of the Trust, (i) this Agreement is executed and delivered by Wells Fargo
      Bank, N.A., not in its individual capacity but solely as Securities
      Administrator under the Pooling and Servicing Agreement in the exercise of
      the powers and authority conferred and vested in it, (ii) Wells Fargo
      Bank, N.A., not in its individual capacity but solely as Securities
      Administrator under the Pooling and Servicing Agreement, has delegated all
      of its rights and responsibilities under this Agreement to Wells Fargo
      Bank, N.A., as Servicer under the Pooling and Servicing Agreement, (iii)
      each of the representations, undertakings and agreements herein made on
      the part of the Trust is made and intended not as representations,
      warranties, covenants, undertakings and agreements by Wells Fargo Bank,
      N.A. in its individual capacity but is made and intended for the purpose
      of binding only the Trust and (iv) under no circumstances shall Wells
      Fargo Bank, N.A. in its individual capacity be personally liable for the
      payment of any indebtedness or expenses of the Trust or be liable for the
      breach or failure of any obligation, representation, warranty or covenant
      made or undertaken by the Trust under this Agreement.


17.   Notices. Copies of all notifications which are addressed to the Insured
      shall be sent to the attention of:

         Ms. Carla Walker
         9062 Old Annapolis Road
         Columbia, Maryland  21045
         -------------------------

If the foregoing terms and conditions accurately reflect the agreement between
MGIC and Wells Fargo, please acknowledge this letter as your request for
insurance of the Insured Loans and your acceptance of its terms by signing it in
the space provided below at your earliest convenience. In order for this letter
to be binding on MGIC, it must be signed and returned to me within 30 days
subsequent to the date of this letter, and the Master Policy must be issued no
later than 60 days subsequent to the date of this letter.



Please call me if you have any questions.


Sincerely,


/s/ Steven M. Thompson


Steven M. Thompson
Vice President
Risk Management


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Mortgage Guaranty Insurance Corporation                            [LOGO - MGIC]


The foregoing terms, conditions and provisions are hereby accepted, acknowledged
and agreed to by Wells Fargo Bank, National Association as Securities
Administrator for the Trust.



WELLS FARGO BANK, NATIONAL ASSOCIATION, SOLELY AS SECURITIES ADMINISTRATOR FOR
WELLS FARGO HOME EQUITY ASSET-BACKED SECURITIES 2006-3 TRUST


By:      /s/ Carla S. Walker                           Dated:  December 13, 2006
   --------------------------------------                      -----------------
Name:      Carla S. Walker


Title:     Vice President



Terms for MGIC Mortgage Insurance Coverage on Loans to be included in the Trust
known as the Wells Fargo Home Equity Asset-Backed Securities 2006-3 Trust


<PAGE>


Mortgage Guaranty Insurance Corporation                            [LOGO - MGIC]
250 E. Kilbourn Avenue
P.O. Box 488, Milwaukee, Wisconsin 53201-0488


                ------------------------------------------------
                          Declaration Page for Use With
                       Mortgage Guaranty Master Policy for
                           Multiple Loan Transactions
                ------------------------------------------------

--------------------------------------------------------------------------------
Mortgage Guaranty Insurance Corporation (a stock insurance company hereinafter
called the "Company") agrees to pay to the Insured identified below, in
consideration of the premium or premiums to be paid as specified in this Policy
and in reliance on the Insured's Application for coverage under this Policy any
Loss due to the Default by a Borrower on a Loan, subject to the terms and
conditions in this Policy.
--------------------------------------------------------------------------------


Insured's Name and Mailing Address:                      Master Policy Number: 
Wells Fargo Bank, N.A. as Securities Administrator           22-400-4-3707
WFHET Asset-Backed Certificates, Series 2006-3       
Wells Fargo Center, Sixth and Marquette                Effective Date of Policy:
Minneapolis, Minnesota  55479                              December 1, 2006
                                                      
Security: Wells Fargo Home Equity Asset-Backed Securities 2006-3 Trust
--------------------------------------------------------------------------------

Includes Terms and Conditions #71-70276 (2/05)

Includes Endorsement(s):  none





--------------------------------------------------------------------------------

In Witness Whereof, the Company has caused its Corporate Seal to be hereto
affixed and these presents to be signed by its duly authorized officers in
facsimile to become effective as its original seal and signatures and binding on
the Company.


                              [LOGO-CORPORATE SEAL]

                  /s/ Patrick Sinha         /s/ Jeffrey Thane
                        President               Secretary


                     MORTGAGE GUARANTY INSURANCE CORPORATION


                             /s/ Steven M. Thompson
              -----------------------------------------------------
                            Authorized Representative
                       Steven M. Thompson, Vice President

--------------------------------------------------------------------------------


<PAGE>


                                Table of Contents
         Mortgage Guaranty Master Policy for Multiple Loan Transactions

1     Definitions

      1.1     Application
      1.2     Appropriate Proceedings
      1.3     Borrower
      1.4     Borrower's Own Funds
      1.5     Borrower's Title
      1.6     Certificate
      1.7     Certificate Effective Date
      1.8     Certificate Number
      1.9     Certificate Schedule
      1.10    Claim
      1.11    Claim Amount
      1.12    Collateral
      1.13    Conveyance of Title
      1.14    Default
      1.15    Eligibility Criteria
      1.16    Environmental Condition
      1.17    Good and Merchantable Title
      1.18    Insured
      1.19    Loan
      1.20    Loan File
      1.21    Loss
      1.22    Original LTV
      1.23    Per Loan Loss Percentage
      1.24    Perfected Claim
      1.25    Person
      1.26    Physical Damage
      1.27    Policy
      1.28    Possession of the Property
      1.29    Primary First Layer Policy
      1.30    Property
      1.31    Residential
      1.32    Security
      1.33    Servicer
      1.34    Settlement Period
      1.35    Value

2     Obtaining Coverage and Payment of Premiums

      2.1     Obtaining Coverage
      2.2     Representations of the Insured
      2.3     Company's Remedies for Misrepresentation
      2.4     Initial Premium and Term of Coverage
      2.5     Renewal of Certificate and Termination for Non-Payment of Renewal
              Premium
      2.6     Special Procedures for Receipt and Deposit of Initial and Renewal
              Premiums
      2.7     Cancellation by the Insured of a Certificate
      2.8     Cancellation of Policy
      2.9     Cancellation of Policy and Coverage of Loans Upon Termination of
              Security or Removal of Loans from Security
      2.10    Refund of Premium for Certain Circumstances
      2.11    Post Underwriting Review and Copies of Loan Files

3     Changes in Various Loan Terms, Servicing and Insured; Coordination and
      Duplication of Benefits

      3.1     Loan Modifications
      3.2     Open End Provisions
      3.3     Assumptions
      3.4     Servicing
      3.5     Change of Insured of this Policy
      3.6     Assignment of Coverage of a Loan under this Policy
      3.7     Coordination and Duplication of Insurance Benefits
      3.8     Indebtedness and Liens with Respect to Collateral

4     Exclusions From Coverage

      4.1     Balloon Payment
      4.2     Effective Date
      4.3     First Payment Default
      4.4     Incomplete Construction
      4.5     Fraud, Misrepresentation and Negligence
      4.6     Non-Approved Servicer
      4.7     Physical Damage (Other than Relating to Pre-Existing Environmental
              Conditions)
      4.8     Pre-Existing Environmental Conditions
      4.9     Down Payment
      4.10    First Lien Status
      4.11    Payment of the Full Benefit of the Primary
              First Layer Policy
      4.12    Non-Eligible Loans
      4.13    Breach of the Insured's
              Obligations or Failure to Comply with Terms

5     Conditions Precedent to Payment of Claim

      5.1     Notice of Default
      5.2     Monthly Reports
      5.3     Company's Option to Accelerate Filing of a Claim
      5.4     Voluntary Conveyance
      5.5     Appropriate Proceedings
      5.6     Mitigation of Damages
      5.7     Advances
      5.8     Claim Information and Other Requirements
      5.9     Acquisition of Borrower's Title Not Required
      5.10    Sale of a Property by the Insured Before End of Settlement Period
      5.11    Foreclosure Bidding Instructions Given by the Company
      5.12    Effect of Unexpired Redemption Period on Payment of a Claim
      5.13    Collection Assistance

6     Loss Payment Procedure

      6.1     Filing of Claim
      6.2     Calculation of Claim Amount
      6.3     Payment of Loss; Company's Options
      6.4     Claim Settlement Period
      6.5     Payment by the Company After the Settlement Period
      6.6     Discharge of Obligation

7     Additional Conditions

      7.1     Proceedings of Eminent Domain
      7.2     Pursuit of Deficiencies
      7.3     Subrogation
      7.4     Policy for Exclusive Benefit of the Insured
      7.5     Effect of Borrower Insolvency or Bankruptcy on Principal Balance
      7.6     Arbitration of Disputes; Suits and Actions Brought by the Insured
      7.7     Release of Borrower; Defenses of Borrower
      7.8     Amendments; No Waiver; Rights and Remedies; Use of Term
              "Including"
      7.9     No Agency
      7.10    Successors and Assigns
      7.11    Applicable Law and Conformity to Law
      7.12    Notice
      7.13    Reports and Examinations
      7.14    Electronic Media

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                              Terms and Conditions

1     Definitions

      1.1   Application means all documents, materials, statements,
            representations, warranties, data and other information,
            irrespective of the Person or Persons who prepared same, submitted
            to the Company by or on behalf of the Insured in connection with the
            Insured's request for insurance under this Policy.

      1.2   Appropriate Proceedings means any legal or administrative action by
            the Insured affecting either a Loan or title to a Property,
            including:

            (a)   Preserving a deficiency recovery by making a bid at the
                  foreclosure sale and pursuing a deficiency judgment until the
                  end of the Settlement Period, where appropriate and
                  permissible and where directed by the Company; or

            (b)   Enforcing the terms of the Loan as allowed by the laws where
                  the Property is located or those laws affecting either the
                  Loan or, if applicable, the Collateral; or

            (c)   Acquiring Borrower's Title or Good and Merchantable Title to
                  the Property, as either may be required under this Policy, but
                  excluding such title as may be acquired by a voluntary
                  conveyance from the Borrower; or

            (d)   Asserting the Insured's interest in the Property in a
                  Borrower's bankruptcy.

      1.3   Borrower means any Person legally obligated to repay the debt
            obligation created by a Loan, including any co-signer or guarantor
            of the Loan.

      1.4   Borrower's Own Funds means any funds used by the Borrower for the
            purpose of making installment payments, but will not include funds
            provided directly or indirectly by any Person (other than the
            Borrower) who is or was a party to the Loan or to the related
            Property transaction, unless expressly set forth in the Application.

      1.5   Borrower's Title means such title to a Property as was vested in the
            Borrower at the time of a conveyance to the Insured arising out of
            or pursuant to a foreclosure of the Loan; provided, however, if the
            Insured so elects, the redemption period need not have expired.
            Borrower's Title as conveyed to the Insured may be, but need not be,
            the equivalent of Good and Merchantable Title, and the deed
            evidencing Borrower's Title need not be recorded unless required by
            applicable law.

      1.6   Certificate means the document issued by the Company pursuant to
            this Policy extending the coverage indicated therein to one or more
            Loans as listed on a Certificate Schedule. A Certificate may take
            the form, without limitation, of a facsimile, electronic computer
            file, or other agreed-upon data interchange medium. As used in this
            Policy, the term "Certificate" shall mean the Certificate and the
            Certificate Schedule attached thereto and listing the Certificate
            Number assigned to each Loan to which coverage is extended.

      1.7   Certificate Effective Date means 12:01 a.m. on the date upon which
            coverage of a Loan under this Policy begins, as specified in the
            Certificate.

      1.8   Certificate Number means the identification number issued by the
            Company for a Loan to which coverage is extended as shown on the
            Certificate Schedule for such Loan.

      1.9   Certificate Schedule means a list of Loans to which coverage has
            been extended under this Policy, and which is attached to the
            Certificate.

      1.10  Claim means the timely filed written request, made on a form or in a
            format provided or approved by the Company, to receive the benefits
            of this Policy.

      1.11  Claim Amount means the amount calculated in accordance with Section
            6.2 of this Policy.

      1.12  Collateral means

            (a)   the stock or membership certificate issued to a
                  tenant-stockholder or resident-member by a completed fee
                  simple or leasehold cooperative housing corporation; and

            (b)   the proprietary lease relating to one (1) unit in the
                  cooperative housing corporation executed by such
                  tenant-stockholder or resident-member and any other rights of
                  such stockholder or member relating to any of the foregoing.

      1.13  Conveyance of Title means the transfer of title to the Property
            through

            (a)   voluntary conveyance to the Insured of Borrower's Title;

            (b)   Appropriate Proceedings or exercise of rights of redemption;
                  or

            (c)   approved sale of the Property.

      1.14  Default means the failure by a Borrower

            (a)   to pay when due any monthly or other regular periodic payment
                  under the terms of a Loan; or

            (b)   to pay all amounts due on acceleration of the Loan by the
                  Insured after breach by the Borrower of a due-on-sale
                  provision in the Loan, granting the Insured the right to
                  accelerate the Loan upon transfer of title to, or an interest
                  in, the Property and to institute Appropriate Proceedings.

            Violation by the Borrower of any other term or condition of the Loan
            which is a basis for Appropriate Proceedings shall not be considered
            to be a Default.

            A Loan is deemed to be in Default for that month as of the close of
            business on the installment due date for which a scheduled monthly
            or other regular periodic payment has not been made or as of the
            close of business on the due date stated in the notice of
            acceleration given pursuant to the due-on-sale provision in the
            Loan. The Loan will be considered to remain in Default until filing
            of a Claim so long as such periodic payment has not been made or
            such basis for Appropriate Proceedings remains. For example, a Loan
            is "four (4) months in Default" if the monthly installments due on
            January 1 through April 1 remain unpaid as of the close of business
            on April 1 or if a basis for acceleration and Appropriate
            Proceedings exists for a continuous period of four months.

      1.15  Eligibility Criteria means the requirements established by the
            Company for the insurability of a Loan under this Policy and of
            which the Company has notified the Insured prior to issuance of the
            Policy.

      1.16  Environmental Condition means the presence of environmental
            contamination, including nuclear reaction or radioactive waste,
            toxic waste, poisoning, or mold, contamination or pollution of the
            Property or of the earth or water subjacent to the Property or of
            the atmosphere above the Property; or the presence, on or under a
            Property, of any "Hazardous Substance" as that term is defined by
            the federal Comprehensive Environmental Response, Compensation, and
            Liability Act (42 U.S.C. Sec. 9601 et. seq., as amended from time to
            time) or as defined by any similar state law, or of any "Hazardous
            Waste" or "Regulated Substance" as those terms are defined by the
            federal Resource Conservation and Recovery Act (42 U.S.C. sec. 6901,
            et seq., as amended from time to time) or as defined by any similar
            state law. Environmental Condition does not mean the presence of
            radon, lead paint, or asbestos.

      1.17  Good and Merchantable Title means title to a Property (or, with
            respect to the Collateral securing a Loan, the title to both the
            Collateral and the Property), free and clear of all liens,
            encumbrances, covenants, conditions, restrictions, easements and
            rights of redemption, except for any of the following or as
            permitted in writing by the Company:

            (a)   Any lien established by public bond, assessment or tax, when
                  no installment, call or payment of or under such bond,
                  assessment or tax is delinquent;

            (b)   Any municipal and zoning ordinances and exceptions to title
                  waived by the regulations of federal mortgage insurers and
                  guarantors with respect to mortgages on one-to-four family
                  residences in effect on the date on which the Loan was closed
                  and all documents were executed;

            (c)   With respect to Collateral, a first mortgage lien on the
                  entire real estate owned by the cooperative housing
                  corporation which has been disclosed to the Person originating
                  the Loan secured by the Collateral; and

            (d)   Any other impediments which will not have a materially adverse
                  effect on either the transferability of the Property or the
                  sale thereof (or, if applicable, the transferability or sale
                  of the Collateral) to a bona fide purchaser.

            Good and Merchantable Title will not exist if (i) there is any lien
            pursuant to the Comprehensive Environmental Response, Compensation,
            and Liability Act, or similar federal or state law, as in effect
            from time to time, providing for liens in connection with the
            removal and clean-up of environmental conditions, or if notice has
            been given of commencement of proceedings which could result in such
            a lien, or (ii) there are limitations on ingress and egress to the
            Property or on use of utilities. Any action or proceeding after a
            foreclosure sale relating to establishing a deficiency judgment will
            not be considered in determining whether the Insured has acquired
            Good and Merchantable Title.

      1.18  Insured means:

            (a)   the Person designated on the face of this Policy; or

            (b)   any Person to whom coverage has been assigned as permitted by
                  Sections 3.5 or 3.6 resulting in a change in the Insured named
                  on a Certificate for a Loan in accordance with this Policy.

      1.19  Loan means any note, bond, or other evidence of indebtedness secured
            by a mortgage, deed of trust, or other similar instrument, which
            constitutes or is equivalent to a first lien or charge on a Property
            and which the Company has approved for insurance and to which
            coverage under this Policy has been extended.

      1.20  Loan File means, with respect to a Loan, copies of all documents and
            information (irrespective of form or medium) created or received by
            any Person in connection with the origination or closing of the
            Loan, including the Borrower's loan application, purchase contract,
            appraisal or other evidence of valuation, credit report,
            verifications of employment, income and deposit, and HUD-1 or other
            settlement statement.

      1.21  Loss means the liability of the Company with respect to a Loan for
            payment of a Perfected Claim which is calculated in accordance with
            Section 6.3. A Loss will be deemed to have occurred when a Default
            on a Loan occurs, even though the amount of Loss is not then either
            presently ascertainable or due and payable.

      1.22  Original LTV means the ratio of the principal balance of a Loan at
            its origination to the Value of the Property.

      1.23  Per Loan Loss Percentage means the indicated percentage as set forth
            for a Loan on the applicable Certificate.

      1.24  Perfected Claim means a Claim received by the Company which contains
            all information or proof required by the Company and for which all
            requirements of this Policy applicable to payment of a Claim are
            satisfied.

      1.25  Person means any individual, corporation, partnership, association
            or other entity.

      1.26  Physical Damage means any tangible injury to a Property, whether
            caused by accident, natural occurrence, or any other reason,
            including damage caused by defects in construction, land subsidence,
            earth movement or slippage, fire, flood, earthquake, riot, vandalism
            or any Environmental Condition.

      1.27  Policy means this contract of insurance and all Applications,
            endorsements, schedules, and Certificates, which are incorporated in
            this Policy, related to Loans insured under this Policy.

      1.28  Possession of the Property means, if the Company elects to acquire
            the Property, physical and undisputed occupancy and control of the
            Property at the time of acquisition, or in the case of a Loan
            secured by Collateral, subject to the terms of the proprietary lease
            from the cooperative housing corporation.

      1.29  Primary First Layer Policy means the policy or guarantee issued by a
            mortgage guaranty insurance company approved for insurance of
            mortgage loans sold to either the Federal National Mortgage
            Association ("Fannie Mae"), or the Federal Home Loan Mortgage
            Corporation ("Freddie Mac"), which for a Loan provides coverage (a)
            in at least the coverage percent set forth for such Loan on the
            applicable Certificate, (b) that is issued under a form of policy
            issued by such company, approved by Fannie Mae or Freddie Mac and in
            general use for the mortgage loans sold to Fannie Mae or Freddie
            Mac, as applicable, and (c ) that is maintained in full force and
            effect until cancellation thereof is required under applicable law.
            Upon the Company's request, from time to time, the Insured shall
            provide to the Company a copy of the form of each Primary First
            Layer Policy under which it obtains coverage.

      1.30  Property means a Residential real property and all improvements
            thereon which secure a Loan, together with all easements and
            appurtenances, all rights of access, all rights to use common areas,
            recreational and other facilities, and all of their replacements or
            additions. In the case of a Loan secured by Collateral, Property
            means the Residential real property, including all improvements
            thereon, which is owned by the cooperative housing corporation, and
            which is leased to the Borrower who holds an ownership or membership
            interest in such cooperative housing corporation, which lease and
            interest secure the related Loan, together with all easements and
            appurtenances, all rights of access, all rights to use common areas,
            recreational and other facilities, and all replacements or additions
            to any of the foregoing.

            For purposes of this Policy, wherever the term "Property" is used in
            reference to the stock or membership certificate, the lease, or any
            other asset or right related thereto (but not the physical condition
            or structure of the Property), it shall be deemed to be changed to
            "Collateral", including for purposes of provisions relating to
            foreclosure, Appropriate Proceedings, or redemption; acquisition of
            title or other status of title, lien or ownership (including
            Borrower's Title and Good and Merchantable Title); or acquisition,
            disposition or Conveyance of Title by any Person.

      1.31  Residential means a type of building or a portion thereof which is
            designed for occupancy by not more than four (4) families, or a
            single-family condominium, or a unit in a planned unit development.
            In the case of a cooperative housing corporation, Residential means
            a type of building or a portion thereof which is designed for
            occupancy by more than one family, with ownership by a cooperative
            housing corporation.

      1.32  Security means a bond, certificate or other security instrument for
            which a Loan is security or in which a Loan is otherwise included
            and which is identified on the face of this Policy.

      1.33  Servicer means that Person acting on behalf of the Insured of a Loan
            (or on behalf of the Insured's designee, if any) to service the
            Loan. The Servicer acts as a representative of the Insured of the
            Loan (and the Insured's designee, if any) and will bind the Insured
            and its designee for all purposes of this Policy, including
            providing information to the Company, receiving any notices, paying
            premiums, accepting Loss payments, and performing any other acts
            under this Policy. For purposes of the Policy, the term "Servicer"
            shall include the master servicer for a Loan of whom the Company has
            been notified, as well as any servicer acting on behalf of the
            master servicer of whom the Company has been notified. References in
            this Policy to a Servicer's obligations will not be construed as
            relieving the Insured or its designee of responsibility