UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended  December 31, 2006
                          -----------------------------------------------

                                    or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from                    to
                              -------------------    --------------------

Commission file number  333-131607-10
                     -------------------

           HSI Asset Securitization Corporation Trust 2006-HE2
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          (Exact name of issuing entity as specified in its charter)


                 HSI Asset Securitization Corporation
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          (Exact name of depositor as specified in its charter)


                 HSBC Bank USA, National Association
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          (Exact name of sponsor as specified in its charter)

                                                  13-4356195
                                                  13-4356198
                                                  13-4356199
       New York                                   13-4356200
------------------------------          ---------------------------------
State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization                   Identification No.)


c/o Citimortgage, Inc
4050 Regent Blvd
Regent - North Building
Irving, TX                                                 75063
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(Address of principal executive offices)                       (Zip Code)


Registrant's telephone number, including area code  (469)-220-0916
                                                  -----------------------

Securities registered pursuant to Section 12(b) of the Act:   NONE.



Securities registered pursuant to section 12(g) of the Act:   NONE.




Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.

                      Yes                       No   X
                          -------                  -------

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.

                      Yes                       No   X
                          -------                  -------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                      Yes   X                   No
                          -------                  -------

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
                                                           -------
Not Applicable.


Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act. (Check one):

Large accelerated filer      Accelerated filer      Non-accelerated filer X
                       ----                   ----                       ----

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).

                      Yes                       No   X
                          -------                  -------

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrant's most recently
completed second fiscal quarter.

   Not Applicable


                      DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b)
or (c) under the Securities Act of 1933. The listed documents should be
clearly described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24, 1980).

   None.


                                    PART I


Item 1. Business.

Not Applicable.


Item 1A. Risk Factors.

Not Applicable.


Item 1B. Unresolved Staff Comments.

Not Applicable.


Item 2. Properties.

Not Applicable.


Item 3. Legal Proceedings.

Not Applicable.


Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable.


                                    PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.

Not Applicable.


Item 6. Selected Financial Data.

Not Applicable.


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.

Not Applicable.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.


Item 8. Financial Statements and Supplementary Data.

Not Applicable.


Item 9. Changes in and Disagreements With Accountants on Accounting and

Not Applicable.


Item 9A. Controls and Procedures.

Not Applicable.


Item 9A(T). Controls and Procedures.

Not Applicable.


Item 9B. Other Information.

Not Applicable.


                                     PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Not Applicable.


Item 11. Executive Compensation.

Not Applicable.


Item 12. Security Ownership of Certain Beneficial Owners and Management and

Not Applicable.


Item 13. Certain Relationships and Related Transactions, and Director
Independence.

Not Applicable.


Item 14. Principal Accounting Fees and Services.

Not Applicable.


              ADDITIONAL DISCLOSURE ITEMS FOR REGULATION AB



Item 1112(b) of Regulation AB. Significant Obligor Financial Information

  No single obligor represents more than 10% of the pool assets held
  by this transaction.


Item 1114(b)(2) of Regulation AB. Credit Enhancement and
Other Support, Except for Certain Derivative Instruments (Information
Regarding Significant Enhancement Providers Financial Information).

  No entity or group of affiliated entities provides any external credit
  enhancement or other support contemplated in Item 1114 of Regulation
  AB.


Item 1115(b) of Regulation AB.  Certain Derivative Instruments.

  No entity or group of affiliated entities providing derivative
  instruments contemplated in Item 1115 of Regulation AB is subject
  to the reporting thresholds specified in Item 1115.


Item 1117 of Regulation AB.  Legal Proceedings.

  Except as may be set forth immediately below, there are no known
  legal proceedings pending against any party specified in Item 1117
  of Regulation AB, or of which any property of the foregoing is
  subject, or any proceedings known to be contemplated by governmental
  authorities against any of the foregoing, that are material to
  security holders.


Item 1119 of Regulation AB.  Affiliation and Certain Relationships and
Related Transactions.

  Except as may be set forth immediately below and subject to the
  Instruction to Item 1119, there are no affiliations, relationships
  or related transactions specified in Item 1119 that are material
  to security holders. Certain information required by Item 1119 of
  Regulation AB has been omitted from this report in reliance on
  the Instruction to Item 1119.


Item 1122 of Regulation AB.  Compliance with Applicable Servicing Criteria.

  Except as may be set forth immediately below, all of the reports
  on assessment of compliance with the servicing criteria for
  asset-backed securities and their related attestation reports
  on assessment with servicing criteria for asset-backed securities
  required to be included in this report in accordance with Item 1122
  of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been
  included as an exhibit to this report.

  1122(d)(3)(i) - Delinquency Reporting.    For certain loans sub-serviced by
  Wells Fargo or for which servicing rights were acquired on a
  bulk-acquisition basis, Wells Fargo determined that it provided incomplete
  data to some third parties who use such data to calculate delinquency
  ratios and determine the status of loans with respect to bankruptcy,
  foreclosure or real estate owned. The incomplete reporting only affected
  securitizations that included delinquent loans. Instead of the actual due
  date being provided for use in calculating delinquencies, the date of the
  first payment due to the security was provided. Wells Fargo subsequently
  included additional data in the monthly remittance reports, providing the
  actual borrower due date and unpaid principal balance, together with
  instructions to use these new fields if such monthly remittance reports are
  used to calculate delinquency ratios.

  1122 (d)(4)(vii) - Notification of Intent to Foreclose.    Wells Fargo
  determined that, as required by certain servicing agreements, it did not
  provide investors with prior notification of intent to foreclose. While
  investors received monthly delinquency status reports that listed loans in
  foreclosure, such reports were received after such loans had been referred
  to an attorney. A new process is being implemented to send such
  notifications if contractually required, unless an investor opts out in
  writing.


Item 1123 of Regulation AB.  Servicer Compliance Statement.

  Except as may be set forth immediately below, all of the servicing
  compliance statements required to be included in this report in
  accordance with Item 1123 of Regulation AB have been included as
  an exhibit to this report.


                                     PART IV

Item 15. Exhibits, Financial Statement Schedules.

  (a) Exhibits
       (4.1)  Pooling and Servicing Agreement, dated as of November 1,
              2006, among HSI Asset Securitization Corporation, as depositor,
              Wells Fargo Bank, N.A., a national banking association, as
              custodian, CitiMortgage, Inc., as master servicer, Citibank,
              N.A., as securities administrator, OfficeTiger Global RealEstate
              Services Inc., as credit risk manager, and Deutsche Bank
              National Trust Company, a national banking association, as
              trustee (incorporated by reference to Exhibit 4.1 to the Issuing
              Entity's Current Report on Form 8-K dated December 5,2006 and
              filed with the Securities and Exchange Commission on January 8,
              2007).

      (10.1)  Mortgage Loan Purchase Agreement, dated as of November 1, 2006,
              between HSI Asset Securitization Corporation, a Delaware
              corporation, and HSBC Bank USA, National Association, a national
              banking association (incorporated by reference to Exhibit 99.1
              to the Issuing Entity's Current Report on Form 8-K dated
              December 5, 2006 and filed with the Securities and Exchange
              Commission on January 8, 2007).

      (10.2)  Reconstituted Servicing Agreement, entered into as of the 1st
              day of November, 2006, by and between HSBC Bank USA, National
              Association, HSI Asset Securitization Corporation and Wells
              Fargo Bank, N.A., as servicer, and is acknowledged by
              CitiMortgage, Inc., as master servicer and Deutsche Bank
              National Trust Company (incorporated by reference to Exhibit
              99.2 to the Issuing Entity's Current Report on Form 8-K dated
              December 5, 2006 and filed with the Securities and Exchange
              Commission on January 8, 2007).
      (10.3)  Assignment, Assumption and Recognition Agreement made as of
              November 1, 2006, among HSBC Bank USA, National Association, HSI
              Asset Securitization Corporation, Countrywide Home Loans
              Servicing LP, Countrywide Home Loans, Inc., CitiMortgage, Inc.,
              as master servicer and Deutsche Bank National Trust Company, not
              individually but solely as trustee on behalf of the HSI Asset
              Securitization Corporation Trust 2006-HE2 (incorporated by
              reference to Exhibit 99.3 to the Issuing Entity's Current Report
              on Form 8-K dated December 5, 2006 and filed with the Securities
              and Exchange Commission on January 8, 2007).

      (10.4)  Assignment, Assumption and Recognition Agreement made as of
              December 1, 2006, among HSBC Bank USA, National Association, HSI
              Asset Securitization Corporation, Countrywide Home Loans
              Servicing LP and Countrywide Home Loans, Inc., CitiMortgage,
              Inc., as master servicer and Deutsche Bank National Trust
              Company, not individually but solely as trustee on behalf of the
              HSI Asset Securitization Corporation Trust 2006-HE2
              (incorporated by reference to Exhibit 4.1 to the Issuing
              Entity's Current Report on Form 8-K dated December 5, 2006 and
              filed with the Securities and Exchange Commission on January 8,
              2007).

      (10.5)  Confirmation relating to Interest Rate Swap Agreement between
              ABN AMRO Bank N.V. and Citibank, N.A., not individually, but
              solely as Securities Administrator on behalf of the Supplemental
              Interest Trust with respect to HSI Asset Securitization
              Corporation Trust 2006, HE2, Mortgage Pass-Through Certificates,
              Series 2006-HE2 (incorporated by reference to Exhibit 99.5 to
              the Issuing Entity's Current Report on Form 8-K dated December
              5, 2006 and filed with the Securities and Exchange Commission on
              January 8, 2007).

      (10.6)  Confirmation relating to Interest Rate Cap Agreement between ABN
              AMRO Bank N.V. and Citibank, N.A., not individually, but solely
              as Securities Administrator on behalf of the Supplemental
              Interest Trust with respect to HSI Asset Securitization
              Corporation Trust 2006, HE2, Mortgage Pass-Through Certificates,
              Series 2006-HE2 (incorporated by reference to Exhibit 99.6 to
              the Issuing Entity's Current Report on Form 8-K dated December
              5, 2006 and filed with the Securities and Exchange Commission on
              January 8, 2007).

      (31)  Rule 13a-14(d)/15d-14(d) Certifications.

      (33)  Reports on Assessment of Compliance with Servicing Criteria for
            Asset-Backed Securities.
            (a) Citibank, N.A., as Securities Administrator
            (b) Citimortgage, Inc., as Master Servicer
            (c) Countrywide Home Loans Servicing LP, as Servicer
            (d) Wells Fargo Bank, N.A., as Servicer
            (e) Wells Fargo Bank, N.A., as Custodian

      (34)  Attestation Report on Assessment of Compliance with Servicing
            Criteria for Asset Backed Securities.
            (a) Citibank, N.A., as Securities Administrator
            (b) Citimortgage, Inc., as Master Servicer
            (c) Countrywide Home Loans Servicing LP, as Servicer
            (d) Wells Fargo Bank, N.A., as Servicer
            (e) Wells Fargo Bank, N.A., as Custodian

      (35)  Servicer Compliance Statement.
            (a) Citimortgage, Inc., as Master Servicer
            (b) Countrywide Home Loans Servicing LP., as Servicer
            (c) Wells Fargo Bank N.A., as Servicer

      (99)  Aggregate Statement of Principal and Interest Distributions
            to Certificate Holders for the year ended December 31, 2006

  (b) Not applicable

  (c) Not Applicable.



                                    SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

(Registrant)    HSI Asset Securitization Corporation
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Signed:  Citimortgage Inc., as Master Servicer

By /s/ Tommy Harris
      -----------------------------------------------------
       Tommy Harris
       Senior Vice President




Date   March 30, 2007
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SARBANES-OXLEY CERTIFICATION
HSI Asset Securitization Corporation Trust 2006-HE2
Mortgage Pass-Through Certificates
Series 2006-HE2

            This Certification is being made pursuant to Section 3.05 and
Section 8.12 of the Pooling and Servicing Agreement dated as of November 1,
2006 (the "Pooling and Servicing Agreement") relating to the above
referenced Series, among HSI Asset Securitization Corporation, as depositor,
CitiMortgage, Inc., as master servicer, Citibank, N.A., as securities
administrator, Wells Fargo Bank, N.A., as custodian, OfficeTiger Global Real
Estate Services Inc., as Credit Risk Manager and Deutsche Bank National Trust
Company, as trustee.  Capitalized terms used but not defined herein shall have
the meanings assigned in the Pooling and Servicing Agreement.

            1.  I have reviewed this annual report on Form 10-K, and all
reports on Form 10-D required to be filed in respect of the period covered by
this report on Form 10-K of HSI Asset Securitization Corporation Trust
2006-HE2 (the "Exchange Act periodic reports");

            2.  Based on my knowledge, the Exchange Act periodic reports,
taken as a whole, do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;

            3.  Based on my knowledge, all of the distribution, servicing and
other information required to be provided under Form 10-D for the period
covered by this report is included in the Exchange Act periodic reports;

            4.  I am responsible for reviewing the activities performed by
the master servicer and based on my knowledge and the compliance review
conducted in preparing the servicer compliance statement required in this
report under Item 1123 of Regulation AB, and except as disclosed in the
Exchange Act periodic reports, the master servicer has fulfilled its
obligations under the pooling and servicing agreement, in all material
respects; and

            5.  All of the reports on assessment of compliance with servicing
criteria for asset-backed securities and their related attestation reports on
assessment of compliance with servicing criteria for asset-backed securities
required to be included in this report in accordance with Item 1122 of
Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as
an exhibit to this report, except as otherwise disclosed in this report.  Any
material instances of noncompliance described in such reports have been
disclosed in this report on Form 10-K.

      In giving the certifications above, I have reasonably relied on
information provided to me by the following parties:  Citibank, N.A.,
Countrywide Home Loans Servicing LP and Wells Fargo Bank, N.A.


      CITIMORTGAGE, INC.
      as Master Servicer

By: /s/ Tommy Harris
   ------------------------
Name:     Tommy Harris
Title:    Master Servicing Division
          Senior Vice President
Date:     3/30/2007