UNDERWRITING AGREEMENT

Dear Sirs:

Morgan Stanley ABS Capital I Inc., a Delaware corporation (the “ Company ”), proposes to sell to you, Morgan Stanley & Co. Incorporated as representative (the “ Representative ”) of yourself and Countrywide Securities Corporation (“ CSC ”, together with the Representative, the “ Underwriters”), Morgan Stanley ABS Capital I Inc. Trust 2006-HE7, Mortgage Pass-Through Certificates, Series 2006-HE7 in the original principal amount and with the designation described on Schedule A attached hereto (the “ Offered Certificates ”). The Offered Certificates will be issued pursuant to a pooling and servicing agreement dated as of October 1, 2006 (the “ Pooling and Servicing Agreement ”) among Morgan Stanley ABS Capital I Inc. (the “ Depositor ”), Countrywide Home Loans Servicing LP, New Century Mortgage Corporation (the “ Servicers ”), NC Capital Corporation, WMC Mortgage Corp., Decision One Mortgage Company, LLC (the “ Responsible Parties ”), Wells Fargo Bank, N.A., LaSalle Bank National Association (the “ Custodians ”) and Deutsche Bank National Trust Company (the “ Trustee ”). In addition to the Offered Certificates, the Depositor will authorize for issuance the Mortgage Pass-Through Certificates, Series 2006-HE7, Class X, Class P, Class R and Class R-X Certificates pursuant to the Pooling and Servicing Agreement (together with the Offered Certificates, the “ Certificates ”).

The Company has filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement, including information that is contained in the Prospectus (as defined below) relating to the Offered Certificates and is deemed to be part of and included in such registration statement, and has filed with, or mailed for filing to, the Commission a prospectus supplement specifically relating to the Offered Certificates pursuant to Rule 424 under the Securities Act of 1933 (the “ Securities Act ”). The term “ Registration Statement ” means such registration statement as such registration statement, including the exhibits thereto and information that is contained in the Prospectus and is deemed to be part of and included in such registration statement, may have been amended or supplemented at the date of the Prospectus. The prospectus first required to be filed to satisfy the condition set forth in Rule 172(c) and pursuant to Rule 424(b) under the Securities Act, is hereinafter called the “ Base Prospectus ”; such form of supplement to the Base Prospectus relating to the Certificates, in the form first required to be filed to satisfy the condition set forth in Rule 172(c) and pursuant to Rule 424(b) under the Securities Act (including the Base Prospectus as so supplemented) is hereinafter called the “ Prospectus Supplement ”; and the Base Prospectus and the Prospectus Supplement, together, are hereinafter called the “ Prospectus ”. Capitalized terms not otherwise defined in this Agreement are used herein as defined in the Pooling and Servicing Agreement.

At or prior to the time when sales to investors of the Offered Certificates were first made (the “ Time of Sale ”), the Company had prepared the following information (collectively, the “ Time of Sale Information ”): the Morgan Stanley ABS Capital I Inc. Trust 2006-HE7 Free Writing Prospectus, dated October 10, 2006, the Company’s Prospectus, dated September 21, 2006, and any other “free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act (as defined herein)) (a “ Free Writing Prospectus ”) listed on Schedule B hereto. If, subsequent to the date of this Agreement, the Company and the Underwriters determine that such information included an untrue statement of material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and have terminated their old purchase contracts and entered into new purchase contracts with purchasers of the Offered Certificates, then “ Time of Sale Information ” will refer to the information available to purchasers at the time of entry into the first such new purchase contract, including any information that corrects such material misstatements or omissions (“ Corrective Information ”) and “ Time of Sale ” will refer to the time and date on which such new purchase contracts were entered into.

A.    The Company represents and warrants to, and agrees with, the Underwriters that:

(a)    The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission, and the Prospectus Supplement and each Free Writing Prospectus required to be filed by the Company pursuant to Section III.B.(e) shall have been filed or transmitted for filing by means reasonably calculated to result in a filing with the Commission pursuant to Rule 424(b) under the Securities Act or Rule 433 under the Securities Act, as applicable.

(b)    (i)Each part of the Registration Statement, when such part became or was deemed to become effective, did not contain, and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement and the Prospectus comply, and, as amended or supplemented, if applicable, will comply, as of its effective date or deemed effective date pursuant to Rule 430B under the Securities Act, in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder and (iii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph I(b) do not apply to the information contained in the Registration Statement, the Prospectus, the Time of Sale Information or any revision or amendment thereof or supplement thereto based upon and in conformity with information furnished in writing to the Company by any Underwriter specifically for use in connection with the preparation of the Registration Statement, the Prospectus, the Time of Sale Information or any revision or amendment thereof or supplement thereto (such statements being collectively referred to as “ Underwriter Statements ”).

(c)    The Time of Sale Information, at the Time of Sale, did not, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with the Underwriter Statements.

(d)    Other than the Prospectus, the Company (including its agents and representatives other than the Representative in its capacity as such) has not made, used, prepared, authorized, approved or referred to and will not make, use, prepare, authorize, approve or refer to any “written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Offered Certificates other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act, (ii) the Time of Sale Information, and (iii) each other written communication of the Company or its agents and representatives approved in writing in advance by the Underwriters or in any other manner mutually agreed by the Underwriters and the Company (each such communication referred to in clause (ii) and this clause (iii) constituting an “issuer free writing prospectus”, as defined in Rule 433(h) under the Securities Act, being referred to as an “ Issuer Free Writing Prospectus ”). Each such Issuer Free Writing Prospectus complied or, if used after the date hereof, will comply in all material respects with the Securities Act, has been filed or will be filed in accordance with Section III (to the extent required thereby) and did not at the Time of Sale, and at the Closing Date will not, contain any untrue statements of a material fact or (when read in conjunction with the other Time of Sale Information) omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with any Underwriter Statements.

(e)    The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and the Time of Sale Information and to enter into and perform its obligations under this Agreement and the Pooling and Servicing Agreement.

(f)    This Agreement has been duly authorized, executed and delivered by the Company.

(g)    The Pooling and Servicing Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and to general principles of equity regardless of whether enforcement is sought in a proceeding in equity or at law.

(h)    The direction by the Company to the Trustee to execute, authenticate and deliver the Offered Certificates has been duly authorized by the Company, and the Offered Certificates, when executed and authenticated in the manner contemplated in the Pooling and Servicing Agreement, and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, will be validly issued and outstanding and entitled to the benefits of the Pooling and Servicing Agreement.

(i)    Neither the execution and delivery by the Company of, nor the performance by the Company of its obligations under, this Agreement or the Pooling and Servicing Agreement, will contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company that is material to the Company or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement and the Pooling and Servicing Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Offered Certificates.

(j)    There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus or the Time of Sale Information.

(k)    There are no legal or governmental proceedings pending or threatened to which the Company is a party or to which any of the properties of the Company are subject that are required to be described in the Registration Statement, the Prospectus or the Time of Sale Information or necessary in order to make the statements therein in the light of the circumstances under which they were made, not misleading and that are not so described, nor are there any statutes, regulations, contracts or other documents required to be described in the Registration Statement, the Prospectus or the Time of Sale Information or to be filed as exhibits to the Registration Statement that are not described or filed as required.

(l)    Each preliminary prospectus filed as part of the Registration Statement as originally filed or as a part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied as to form, when so filed, in all material respects with the Securities Act and the rules and regulations of the Commission thereunder.

(m)    The Company is not an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(n)    The Company is not, and on the date on which the first bona fide offer of the Offered Certificates is made (within the meaning of Rule 164(h)(2) under the Securities Act) will not be, an “ineligible issuer”, as defined in Rule 405 under the Securities Act.

The Company hereby agrees to sell the Offered Certificates to the Underwriters, and the Underwriters, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, severally agree to purchase the Offered Certificates from the Company, for a purchase price which is 99.70% of the sum of the original principal amounts of the Offered Certificates as set forth on Schedule A hereto.

A.    The Underwriters propose to make a public offering of the Offered Certificates as soon as this Agreement is entered into. The terms of the public offering of the Offered Certificates are set forth in the Prospectus and the Time of Sale Information.

B.    In connection with the offering of the Certificates, the Underwriters may prepare and provide to prospective investors Free Writing Prospectuses (as defined below), or portions thereof, which the Company is required to file with the Commission in electronic format and will use reasonable efforts to provide to the Company such Free Writing Prospectuses, or portions thereof, in either Microsoft Word® or Microsoft Excel® format and not in a PDF, except to the extent that the Company, in its sole discretion, waives such requirements, subject to the following conditions (to which such conditions the Underwriters agree (provided that the Underwriters shall not be responsible for any breach of the following conditions by any other Underwriter or underwriter)):

(a)    Unless preceded or accompanied by the Prospectus, the Underwriters shall not convey or deliver any written communication to any person in connection with the initial offering of the Offered Certificates, unless such written communication (1) is made in reliance on Rule 134 under the Securities Act, (2) constitutes a prospectus satisfying the requirements of Rule 430B under the Securities Act or (3) constitutes Time of Sale Information or a Free Writing Prospectus that does not constitute Time of Sale Information. Without the Company’s prior written consent, the Representative shall not convey or deliver in connection with the initial offering of the Offered Certificates any “ABS informational and computational material,” as defined in Item 1101(a) of Regulation AB under the Securities Act (“ ABS Informational and Computational Material ”), in reliance upon Rules 167 and 426 under the Securities Act. Without the Company’s and the Representative’s prior written consent, CSC shall not convey or deliver in connection with the initial offering of the Offered Certificates any ABS Informational and Computational Material, in reliance upon Rules 167 and 426 under the Securities Act.

(b)    The Underwriters shall deliver to the Company, no later than two business days prior to the date of first use thereof or such later date as may be agreed to by the Company, (a) any Free Writing Prospectus that was prepared by or on behalf of any Underwriter (an “ Underwriter Free Writing Prospectus ”) and contains any “issuer information”, as defined in Rule 433(h) under the Securities Act and footnote 271 of the Commission’s Securities Offering Reform Release No. 33-8591 (“ Issuer Information ”), and (b) any Free Writing Prospectus or portion thereof that contains only a description of the final terms of the Offered Certificates. CSC shall not prepare or distribute any Underwriter Free Writing Prospectus without the prior written consent of Representative. Notwithstanding the foregoing, any Free Writing Prospectus that contains only ABS Informational and Computational Materials may be delivered by any Underwriter to the Company not later than the later of (A) two business days prior to the due date for filing of the Prospectus pursuant to Rule 424(b) under the Securities Act or (B) the date of first use of such Free Writing Prospectus.

(c)    The Underwriters represent and warrant to the Company that the Free Writing Prospectuses to be furnished to the Company by the Underwriters pursuant to Section III.B.(b) will constitute all Free Writing Prospectuses of the type described therein that were furnished to prospective purchasers of Offered Certificates by the Underwriters in connection with its offer and sale of the Offered Certificates.

(d)    The Underwriters represent and warrant to the Company that each Free Writing Prospectus required to be provided by it to the Company pursuant to Section III.B.(b), when read in conjunction with the Time of Sale Information, did not, as of the Time of Sale, and will not as of the Closing Date, include any untrue statement of a material fact or omit any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; provided however, that the Underwriters make no representation to the extent such misstatements or omissions were the result of any inaccurate Issuer Information, which information was not corrected by Corrective Information subsequently supplied by the Company to the Underwriters within a reasonable period of time prior to the Time of Sale.

(e)    The Company agrees to file with the Commission the following: (A) any Issuer Free Writing Prospectus; (B) any Free Writing Prospectus or portion thereof delivered by the Underwriters to the Company pursuant to Section III.B.(b); and (C) any Free Writing Prospectus for which the Company or any person acting on its behalf provided, authorized or approved information that is prepared and published or disseminated by a person unaffiliated with the Company or any other offering participant that is in the business of publishing, radio or television broadcasting or otherwise disseminating communications. Notwithstanding the foregoing, the Company shall not be required to file (1) Issuer Information contained in any Underwriter Free Writing Prospectus or Free Writing Prospectus of any other offering participant other than the Company, if such information is included or incorporated by reference in a prospectus or Free Writing Prospectus previously filed with the Commission that relates to the offering of the Offered Certificates, or (2) any Free Writing Prospectus or portion thereof that contains a description of the Offered Certificates or the offering of the Offered Certificates which does not reflect the final terms thereof.

(f)    Any Free Writing Prospectus required to be filed pursuant to Section III.B.(e) by the Company shall be filed with the Commission not later than the date of first use of the Free Writing Prospectus, except that: (A) any Free Writing Prospectus or portion thereof required to be filed that contains only the description of the final terms of the Offered Certificates shall be filed by the Company with the Commission within two days of the later of the date such final terms have been established for all classes of Offered Certificates and the date of first use; (B) any Free Writing Prospectus or portion thereof required to be filed that contains only ABS Informational and Computational Material shall be filed by the Company with the Commission not later than the later of the due date for filing the final Prospectus relating to the Offered Certificates pursuant to Rule 424(b) under the Securities Act or two business days after the first use of such Free Writing Prospectus; and (C) any Free Writing Prospectus required to be filed pursuant to Section III.B.(e)(C) shall, if no payment has been made or consideration has been given by or on behalf of the Company for the Free Writing Prospectus or its dissemination, be filed by the Compan