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                              ENDORSEMENT NO. 1 TO
                      FINANCIAL GUARANTY INSURANCE POLICY

FINANCIAL SECURITY                                              350 Park Avenue
ASSURANCE INC.                                         New York, New York 10022


TRUST:              The Trust created by the Pooling and Servicing Agreement,
                    dated as of March 1, 2003 among Morgan Stanley ABS Capital I
                    Inc., as Depositor, CDC Mortgage Capital Inc., as
                    Unaffiliated Seller, Fairbanks Capital Corp., as Servicer
                    and Deutsche Bank National Trust Company, as Trustee

CERTIFICATES:       $200,000,000 CDC Mortgage Capital Trust 2003-HE1, Mortgage
                    Pass-Through Certificates, Series 2003-HE1, Class A-1
                    Certificates

Policy No.:         51398-N

Date of Issuance:   March 28, 2003


     1. Definitions. For all purposes of this Policy, the terms specified below
shall have the meanings or constructions provided below. Capitalized terms used
herein and not otherwise defined herein shall have the meanings provided in the
Pooling and Servicing Agreement unless the context shall otherwise require.

     "Business Day" means any day other than (i) Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions, in (a) the State of New
York, New Jersey and Florida, (b) the state in which the Servicer's servicing
operations are located, or (c) the State in which the Trustee's operations are
located, are authorized or obligated by law, executive order or government
decree to be closed.

     "Guaranteed Distributions" means, with respect to each Distribution Date,
the distribution to be made to Holders of the Certificates in an aggregate
amount equal to (i) the Accrued Certificate Interest Distribution Amount with
respect to the Certificates for each Distribution Date, (ii) any Class A-1
Principal Parity Amount and (iii) the Class Certificate Balance of the
Certificates to the extent unpaid on the Final Scheduled Distribution Date or
earlier termination of the Trust pursuant to the terms of the Pooling and
Servicing Agreement, after giving effect to all other amounts due to the
Certificates, in each case in accordance with the original terms of the
Certificates when issued and without regard to any amendment or modification of
the Certificates or the Pooling and Servicing Agreement except amendments or
modifications to which Financial Security has given its prior written consent.
Guaranteed Distributions shall not include, nor shall coverage be provided under
this Policy in respect of, any taxes, withholding or other charge imposed by any
governmental authority due in connection with the payment of any Guaranteed
Distribution to a Holder.

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Policy No.: 51398-N                     Date of Issuance: March 28, 2003

     "Policy" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.

     "Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
dated as of March 1, 2003 among Morgan Stanley ABS Capital I Inc., as Depositor,
Fairbanks Capital Corp., as Servicer, CDC Mortgage Capital Inc., as Unaffiliated
Seller, and Deutsche Bank National Trust Company, as Trustee, as amended from
time to time with the consent of Financial Security.

     "Receipt" and "Received" mean actual delivery to Financial Security and to
the Fiscal Agent (as defined below), if any, prior to 12:00 noon, New York City
time, on a Business Day; delivery either on a day that is not a Business Day, or
after 12:00 noon, New York City time, shall be deemed to be receipt on the next
succeeding Business Day. If any notice or certificate given hereunder by the
Trustee is not in proper form or is not properly completed, executed or
delivered, it shall be deemed not to have been Received, and Financial Security
or its Fiscal Agent shall promptly so advise the Trustee and the Trustee may
submit an amended notice.

     "Term Of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) the unpaid principal balances of
all of the Certificates is zero, (ii) any period during which any payment on the
Certificates could have been avoided in whole or in part as a preference payment
under applicable bankruptcy, insolvency, receivership or similar law has
expired, and (iii) if any proceedings requisite to avoidance as a preference
payment have been commenced prior to the occurrence of (i) and (ii), a final and
nonappealable order in resolution of each such proceeding has been entered.

     "Trustee" means Deutsche Bank National Trust Company, in its capacity as
Trustee under the Pooling and Servicing Agreement and any successor in such
capacity.

     2. Notices and Conditions to Payment in Respect of Guaranteed
Distributions. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in respect
of Guaranteed Distributions out of the funds of Financial Security on the later
to occur of (a) 12:00 noon, New York City time, on the second Business Day
following such Receipt; and (b) 12:00 noon, New York City time, on the
Distribution Date to which such claim relates. Payments due hereunder in respect
of Guaranteed Distributions will be disbursed by wire transfer of immediately
available funds to the Class A-1 Insurance Payment Account established pursuant
to the Pooling and Servicing Agreement or, if no such Class A-1 Insurance
Payment Account has been established, to the Trustee.

     Financial Security shall be entitled to pay any amount hereunder in respect
of Guaranteed Distributions, including any acceleration payment, whether or not
any notice and certificate shall have been Received by Financial Security as
provided above, provided, however, that by acceptance of this Policy the Trustee
agrees to provide to Financial Security, upon Financial Security's request to
the Trustee, a notice and certificate in respect of any such payments made by
Financial Security. Financial Security shall be entitled to pay principal
hereunder on an accelerated basis if Financial Security shall so elect in its
sole discretion, at any time or from time to time, in whole or in part, at an
earlier Distribution Date than provided in the definition of

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Policy No.: 51398-N                     Date of Issuance: March 28, 2003

"Guaranteed Distributions," if such principal would have been payable under the
Pooling and Servicing Agreement were funds sufficient to make such payment
available to the Trustee for such purpose. Guaranteed Distributions insured
hereunder shall not include interest, in respect of principal paid hereunder on
an accelerated basis, accruing from after the date of such payment of principal.
Financial Security's obligations hereunder in respect of Guaranteed
Distributions shall be discharged to the extent funds are disbursed by Financial
Security as provided herein whether or not such funds are properly applied by
the Trustee.

     3. Notices and Conditions to Payment in Respect of Guaranteed Distributions
Avoided as Preference Payments. If any Guaranteed Distribution is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth Business
Day following Receipt by Financial Security from the Trustee of (A) a certified
copy of the order of the court or other governmental body which exercised
jurisdiction to the effect that the Holder is required to return principal or
interest distributed with respect to the Certificates during the Term of this
Policy because such distributions were avoidable as preference payments under
applicable bankruptcy law (the "Order"), (B) a certificate of the Holder that
the Order has been entered and is not subject to any stay and (C) an assignment
duly executed and delivered by the Holder, in such form as is reasonably
required by Financial Security and provided to the Holder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the Holder
relating to or arising under the Certificates against the debtor which made such
preference payment or otherwise with respect to such preference payment or (ii)
the date of Receipt by Financial Security from the Trustee of the items referred
to in clauses (A), (B) and (C) above if, at least four Business Days prior to
such date of Receipt, Financial Security shall have Received written notice from
the Trustee that such items were to be delivered on such date and such date was
specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trustee or any Holder directly (unless a Holder has previously
paid such amount to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order, in which case such payment shall be disbursed
to the Trustee for distribution to such Holder upon proof of such payment
reasonably satisfactory to Financial Security). In connection with the
foregoing, Financial Security shall have the rights provided pursuant to
Sections 4.05 and 4.06 of the Pooling and Servicing Agreement.

     4. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.

     5. Fiscal Agent. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trustee at the notice address specified in the
Pooling and Servicing Agreement specifying the name and notice address of the
Fiscal Agent. From and after the date of receipt of such notice by the Trustee,
(i) copies of all notices and documents required to be delivered to Financial
Security pursuant to this Policy shall be simultaneously delivered to the Fiscal
Agent and to Financial Security and shall not be deemed Received until Received
by both and (ii) all payments required to be made by Financial Security under
this Policy may be made directly by Financial Security or by the Fiscal Agent on
behalf of Financial Security. The Fiscal Agent is the agent of Financial

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Policy No.: 51398-N                     Date of Issuance: March 28, 2003

Security only and the Fiscal Agent shall in no event be liable to any Holder for
any acts of the Fiscal Agent or any failure of Financial Security to deposit, or
cause to be deposited, sufficient funds to make payments due under this Policy.

     6. Waiver of Defenses. To the fullest extent permitted by applicable law,
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.

     7. Notices. All notices to be given hereunder shall be in writing (except
as otherwise specifically provided herein) and shall be mailed by registered
mail or personally delivered or telecopied to Financial Security as follows:

                 Financial Security Assurance Inc.
                 350 Park Avenue
                 New York, NY 10022
                 Attention: Managing Director - Transaction Oversight
                 Re: CDC Mortgage Capital Trust 2003-HE1
                 Policy No.: 51398-N
                 Telecopy No.: (212) 339-3518
                 Confirmation: (212) 826-0100

Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.

     8. Priorities. In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.

     9. Exclusions From Insurance Guaranty Funds. This Policy is not covered by
the Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not covered by the Florida Insurance Guaranty
Association created under Part II of Chapter 631 of the Florida Insurance Code.
In the event Financial Security were to become insolvent, any claims arising
under this Policy are excluded from coverage by the California Insurance
Guaranty Association, established pursuant to Article 14.2 of Chapter 1 of Part
2 of Division 1 of the California Insurance Code.

     10. Surrender of Policy. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.

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     IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.

                                            FINANCIAL SECURITY ASSURANCE INC.

                                            By:
                                               --------------------------------
                                                     Authorized Officer









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Policy No.: 51398-N                    Date of Issuance: March 28, 2003


                                                                       EXHIBIT A
                                                                TO ENDORSEMENT 1

                         NOTICE OF CLAIM AND CERTIFICATE

                             (Letterhead of Trustee)

Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022

     Re: CDC Mortgage Capital Trust 2003-HE1 Mortgage Pass-Through Certificates,
         Series 2003-HE1

     The undersigned, a duly authorized officer of Deutsche Bank National Trust
Company (the "Trustee"), hereby certifies to Financial Security Assurance Inc.
("Financial Security"), with reference to Financial Guaranty Insurance Policy
No. 51398-N dated March 28, 2003 (the "Policy") issued by Financial Security in
respect of the CDC Mortgage Capital Trust 2003-HE1 Mortgage Pass-Through
Certificates, Series 2003-HE1 (the "Certificates"), that:

          (i) The Trustee is the Trustee for the Holders under the Pooling and
     Servicing Agreement.

          (ii) The sum of all amounts on deposit (or scheduled to be on deposit)
     in the Collection Account and available for distribution to the Holders
     pursuant to the Pooling and Servicing Agreement will be $___________ (the
     "Shortfall") less than the Guaranteed Distributions with respect to the
     Distribution Date.

          (iii) The Trustee is making a claim under the Policy for the Shortfall
     to be applied to distributions of principal or interest or both with
     respect to the Certificates.

          (iv) The Trustee agrees that, following receipt of funds from
     Financial Security, it shall (a) hold such amounts in trust and apply the
     same directly to the payment of Guaranteed Distributions on the
     Certificates when due; (b) not apply such funds for any other purpose; (c)
     not commingle such funds with other funds held by the Trustee and (d)
     maintain an accurate record of such payments with respect to each
     Certificate and the corresponding claim on the Policy and proceeds thereof
     and, if the Certificate is required to be surrendered or presented for such
     payment, shall stamp on each such Certificate the legend "$ [insert
     applicable amount] paid by Financial Security and the balance hereof has
     been cancelled and reissued" and then shall deliver such Certificate to
     Financial Security.

          (v) The Trustee, on behalf of the Holders, hereby assigns to Financial
     Security the rights of the Holders with respect to the Certificates to the
     extent of any payments under the Policy, including, without limitation, any
     amounts due to the Holders in respect of securities law violations arising
     from the offer and sale of the Certificates. The foregoing assignment is in
     addition to, and not in limitation of, rights of subrogation otherwise
     available to Financial Security in respect of such payments. The Trustee
     shall

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Policy No.: 51398-N                    Date of Issuance: March 28, 2003

     take such action and deliver such instruments as may be reasonably
     requested or required by Financial Security to effectuate the purpose or
     provisions of this clause (v).

                  (vi) The Trustee, on its behalf and on behalf of the Holders,
         hereby appoints Financial Security as agent and attorney-in-fact for
         the Trustee and each such Holder in any legal proceeding with respect
         to the Certificates. The Trustee hereby agrees that Financial Security
         may at any time during the continuation of any proceeding by or against
         the Issuer under the United States Bankruptcy Code or any other
         applicable bankruptcy, insolvency, receivership, rehabilitation or
         similar law (an "Insolvency Proceeding") direct all matters relating to
         such Insolvency Proceeding, including without limitation, (A) all
         matters relating to any claim in connection with an Insolvency
         Proceeding seeking the avoidance as a preferential transfer of any
         distribution made with respect to the Certificates (a "Preference
         Claim"), (B) the direction of any appeal of any order relating to any
         Preference Claim, at the expense of Financial Security but subject to
         reimbursement as provided in the Insurance Agreement and (C) the
         posting of any surety, supersedeas or performance bond pending any such
         appeal. In addition, the Trustee hereby agrees that Financial Security
         shall be subrogated to, and the Trustee on its behalf and on behalf of
         each Holder, hereby delegates and assigns, to the fullest extent
         permitted by law, the rights of the Trustee and each Holder in the
         conduct of any Insolvency Proceeding, including, without limitation,
         all rights of any party to an adversary proceeding or action with
         respect to any court order issued in connection with any such
         Insolvency Proceeding.

          (vii) Payment should be made by wire transfer directed to the Class
     A-1 Insurance Payment Account.

     Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.

     IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice of
Claim and Certificate as of the ____________ day of _____________, ____.


                              DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee

                              By:
                                    ------------------------------------------
                              Title:
                                    ------------------------------------------


For Financial Security or Fiscal Agent Use Only

Wire transfer sent on ____________________ by _______________________

Confirmation Number _____________________




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