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

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

     For the transition period to __________ from _______________

     Commission file number of issuing entity: 333-121914-16

              Morgan Stanley Home Equity Loan Trust 2006-1
          (Exact name of issuing entity as specified in its Charter)

                      Morgan Stanley ABS Capital I Inc.
           (Exact name of depositor as specified in its Charter)

                     Morgan Stanley Mortgage Capital Inc.
             (Exact name of sponsor as specified in its Charter)

                                            Pooling-Tier REMIC-1  30-0350926
                                            Pooling-Tier REMIC-2  30-0350928
                                                Lower Tier REMIC  30-0350930
                                                Upper Tier REMIC  30-0350931
             New York                              Grantor Trust  32-6048944
           (State or other jurisdiction                  (I.R.S. Employer
         incorporation or organization                Identification Number)
               of issuing entity)                        of issuing entity)

          1585 Broadway
          New York, New York                                    10036
(Address of principal executive offices                     (Zip Code of
         of issuing entity)                                issuing entity)

            Issuing entity's telephone number, including area code:
                               (212) 761-4000

          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 is not contained herein, and will not be
     contained, to the best of the registrant's knowledge, in definitive proxy
     or information statements incorporated by reference in Part III of the
     Form 10-K or any amendment to this Form 10-K.         [ ]

     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" 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  [X] No

     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 of the last business day of
     the registrant's most recently completed second fiscal quarter

     Not Applicable.

     DOCUMENTS INCORPORATED BY REFERENCE

     See Item 15.

     PART I

     ITEM 1.  Business.

     Not Applicable.

     ITEM 1A.  Risk Factors.

     Not Applicable.

     ITEM 1B.  Unresolved Staff Comments.

     None.

     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 Operations.

     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
     Financial Disclosure.

     Not Applicable.

     ITEM 9A  Controls and Procedures.

     Not Applicable.

     ITEM 9B. Other Information.

     None.

     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 Related Stockholder Matters.

     Not Applicable.

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

     Not Applicable.

     ITEM 14.  Principal Accounting Fees and Services.

     Not Applicable.

     PART IV

     Item 1112(b)(2) of Regulation AB, Significant Obligor Financial
     Information.

     No single obligor represents 10% or more of the pool assets held by the
     issuing entity.

     Item 1114(b)(2) and Item 1115(b) of Regulation AB , Significant
     Enhancement Provider Information.

     None.

     Item 1117 of Regulation AB, Legal Proceedings.

     None.

     Item 1119 of Regulation AB, Affiliations and Certain Relationships and
     Related Transactions.

     None.

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

     See Exhibit 33 and 34.

     Item 1123 of Regulation AB, Servicer Compliance Statement.

     See Exhibit 35.

     ITEM 15. Exhibits, Financial Statement Schedules.

     (a) List the following documents filed as a part of the report:

         (1) Not Applicable.

         (2) Not Applicable.

         (3)

       Exhibit 4 was filed as part of the Registrant's Current
       Report on Form 8-K/A filed on April 26, 2006 and is incorporated by
       reference:

         Exhibit 4.1 Pooling and Servicing Agreement, dated as of January 1,
         2006, by and among the Company, as depositor, LaSalle Bank National
         Association, as custodian, HomEq Servicing Corporation, as servicer,
         First NLC Financial Services, LLC, as responsible party, Decision
         One Mortgage Company, LLC, as responsible party, and Deutsche Bank
         National Trust Company, as trustee.

       Exhibits 10 were filed as part of the Registrant's Current
       Report on Form 8-K filed on February 14, 2006 and are incorporated by
       reference:

         Exhibit 10.1 Fifth Amended and Restated Mortgage Loan Purchase and
         Warranties Agreement, dated as of December 1, 2005, by and between
         Morgan Stanley Mortgage Capital Inc., as purchaser, and Accredited
         Home Lenders, Inc., as loan seller (included as part of Exhibit S
         to Exhibit 4.1).

         Exhibit 10.2 Assignment and Recognition Agreement, dated as of January
         26, 2006, by and among the Company, as assignee, Morgan Stanley
         Mortgage Capital Inc., as assignor, and Accredited Home Lenders,
         Inc., as loan seller (included as part of Exhibit S to Exhibit 4.1).

         Exhibit 10.3 Mortgage Loan Sale and Servicing Agreement, dated as of
         October 1, 2005, by and among Morgan Stanley Mortgage Capital Inc.,
         as purchaser, Countrywide Home Loans Servicing LP, as servicer, and
         Countrywide Home Loans, Inc., as loan seller, as amended by Amendment
         Reg AB, dated as of January 26, 2006, by and among Morgan Stanley
         Mortgage Capital Inc., as purchaser, Countrywide Home Loans Servicing
         LP, as servicer, and Countrywide Home Loans, Inc., as loan seller
        (included as part of Exhibit T to Exhibit 4.1).

         Exhibit 10.4 Assignment and Recognition Agreement, dated as of January
         26, 2006, by and among the Company, as assignee, Morgan Stanley
         Mortgage Capital Inc., as assignor, Countrywide Home Loans Servicing
         LP, as servicer, and Countrywide Home Loans, Inc., as loan seller
        (included as part of Exhibit T to Exhibit 4.1).

         Exhibit 10.5 Second Amended and Restated Mortgage Loan Purchase and
         Warranties Agreement, dated as of November 1, 2005, by and between
         Morgan Stanley Mortgage Capital Inc., as purchaser, and Decision One
         Mortgage Company, LLC, as loan seller (included as Exhibit O to
         Exhibit 4.1).

         Exhibit 10.6 Amended and Restated Mortgage Loan Purchase and
         Warranties Agreement, dated as of September 29, 2005, by and between
         Morgan Stanley Mortgage Capital Inc., as purchaser, and First NLC
         Financial Services, LLC, as loan seller (included as Exhibit P to
         Exhibit 4.1).

         Exhibit 10.7 Second Amended and Restated Mortgage Loan Purchase and.
         Warranties Agreement, dated as of November 1, 2005, by and between
         Morgan Stanley Mortgage Capital Inc., as purchaser, and Meritage
         Mortgage Corporation, as loan seller (included as part of Exhibit Q
         to Exhibit 4.1).

         Exhibit 10.8 Assignment and Recognition Agreement, dated as of January
         26, 2006, by and among the Company, as assignee, Morgan Stanley
         Mortgage Capital Inc., as assignor, and Meritage Mortgage Corporation,
         as loan seller (included as part of Exhibit Q to Exhibit 4.1).

         Exhibit 10.9 Third Amended and Restated Mortgage Loan Purchase and
         Warranties Agreement, dated as of December 1, 2005, by and between
         Morgan Stanley Mortgage Capital Inc., as purchaser, and Wilmington
         Finance Inc., as loan seller, and AIG Federal Savings Bank, as loan
         seller (included as part of Exhibit R to Exhibit 4.1).

         Exhibit 10.10 Assignment and Recognition Agreement, dated as of
         January 26, 2006, by and among the Company, as assignee, Morgan
         Stanley Mortgage Capital Inc., as assignor, Wilmington Finance Inc.,
         as loan seller, and AIG Federal Savings Bank, as loan seller
        (included as part of Exhibit R to Exhibit 4.1).

         Exhibit 10.11 ISDA Master Agreement, dated as of January 26, 2006,
         by and between Morgan Stanley Mortgage Capital Inc., the swap provider,
         and Deutsche Bank National Trust Company, the trustee (included as part
         of Exhibit Z to Exhibit 4.1).

         Exhibit 10.12 Schedule to the Master Agreement, dated as of January
         26, 2006, by and between Morgan Stanley Mortgage Capital Inc., the
         swap provider, and Deutsche Bank National Trust Company, the trustee
        (included as part of Exhibit Z to Exhibit 4.1).

         Exhibit 10.13 Credit Support Annex, dated as of January 26, 2006, by
         and between Morgan Stanley Mortgage Capital Inc., the swap provider,
         and Deutsche Bank National Trust Company, the trustee (included as
         part of Exhibit Z to Exhibit 4.1).

         Exhibit 10.14 Confirmation, dated as of January 26, 2006, by and
         between Morgan Stanley Mortgage Capital Inc., the swap provider,
         and Deutsche Bank National Trust Company, the trustee (included as
         part of Exhibit Z to Exhibit 4.1).

         Exhibit 10.15 Guarantee, dated as of January 26, 2006, by Morgan
         Stanley (included as part of Exhibit Z to Exhibit 4.1).

         Exhibit 31 Section 302 Certification.

         Exhibit 33.1 Countrywide Home Loans Servicing LP's Annual Report on
         Assessment of Compliance for Year End December 31, 2006.

         Exhibit 33.2 HomEq Servicing Corporation's Annual Report on
         Assessment of Compliance for Year End December 31, 2006.

         Exhibit 33.3 Trustee's Annual Report on Assessment of Compliance
         for Year End December 31, 2006.

         Exhibit 33.4 Custodian's Annual Report on Assessment of Compliance
         for Year End December 31, 2006.

         Exhibit 34.1 Attestation Report on Assessment of Compliance with
         Servicing Criteria for Countrywide Home Loans Servicing LP's Report
         (Exhibit 33.1) for Year End December 31, 2006.

         Exhibit 34.2 Attestation Report on Assessment of Compliance with
         Servicing Criteria for HomEq Servicing Corporation's Report
         (Exhibit 33.2) for Year End December 31, 2006.

         Exhibit 34.3 Attestation Report on Assessment of Compliance with
         Servicing Criteria for Trustee's Report (Exhibit 33.3) for Year End
         December 31, 2006.
         Exhibit 34.4 Attestation Report on Assessment of Compliance with
         Servicing Criteria for Custodian's Report (Exhibit 33.4) for Year End
         December 31, 2006.

         Exhibit 35.1 Countrywide Home Loans Servicing LP's Annual Statement
         of Compliance for Year End December 31, 2006.

         Exhibit 35.2 HomEq Servicing Corporation's Annual Statement of
         Compliance for Year End December 31, 2006.

     (b) See (a) above.

     (c) Not Applicable.






                                      SIGNATURE

          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.


                             By: Morgan Stanley ABS Capital I Inc.,
                                 as Depositor

                                      By:  /s/ Steven Shapiro
                                           Steven Shapiro
                                           Vice President


     Date: March 30, 2007







     EXHIBIT INDEX

     Exhibit Document

       Exhibit 4 was filed as part of the Registrant's Current
       Report on Form 8-K/A filed on April 26, 2006 and is incorporated by
       reference:

      4.1  Pooling and Servicing Agreement, dated as of January 1,
           2006, by and among the Company, as depositor, LaSalle Bank National
           Association, as custodian, HomEq Servicing Corporation, as servicer,
           First NLC Financial Services, LLC, as responsible party, Decision
           One Mortgage Company, LLC, as responsible party, and Deutsche Bank
           National Trust Company, as trustee.

      Exhibits 10 were filed as part of the Registrant's Current
      Report on Form 8-K filed on February 14, 2006 and are incorporated by
      reference:

      10.1 Fifth Amended and Restated Mortgage Loan Purchase and
           Warranties Agreement, dated as of December 1, 2005, by and between
           Morgan Stanley Mortgage Capital Inc., as purchaser, and Accredited
           Home Lenders, Inc., as loan seller (included as part of Exhibit S
           to Exhibit 4.1).

      10.2 Assignment and Recognition Agreement, dated as of January
           26, 2006, by and among the Company, as assignee, Morgan Stanley
           Mortgage Capital Inc., as assignor, and Accredited Home Lenders,
           Inc., as loan seller (included as part of Exhibit S to Exhibit 4.1).

      10.3 Mortgage Loan Sale and Servicing Agreement, dated as of October 1,
           2005, by and among Morgan Stanley Mortgage Capital Inc., as
           purchaser, Countrywide Home Loans Servicing LP, as servicer, and
           Countrywide Home Loans, Inc., as loan seller, as amended by
           Amendment Reg AB, dated as of January 26, 2006, by and among
           Morgan Stanley Mortgage Capital Inc., as purchaser, Countrywide
           Home Loans Servicing LP, as servicer, and Countrywide Home Loans,
           Inc., as loan seller (included as part of Exhibit T to Exhibit 4.1).

      10.4 Assignment and Recognition Agreement, dated as of January 26, 2006,
           by and among the Company, as assignee, Morgan Stanley Mortgage
           Capital Inc., as assignor, Countrywide Home Loans Servicing LP,
           as servicer, and Countrywide Home Loans, Inc., as loan seller
          (included as part of Exhibit T to Exhibit 4.1).

      10.5 Second Amended and Restated Mortgage Loan Purchase and Warranties
           Agreement, dated as of November 1, 2005, by and between Morgan
           Stanley Mortgage Capital Inc., as purchaser, and Decision One
           Mortgage Company, LLC, as loan seller (included as Exhibit O to
           Exhibit 4.1).

      10.6 Amended and Restated Mortgage Loan Purchase and Warranties Agreement,
           dated as of September 29, 2005, by and between Morgan Stanley
           Mortgage Capital Inc., as purchaser, and First NLC Financial
           Services, LLC, as loan seller (included as Exhibit P to Exhibit 4.1).

      10.7 Second Amended and Restated Mortgage Loan Purchase and.
           Warranties Agreement, dated as of November 1, 2005, by and between
           Morgan Stanley Mortgage Capital Inc., as purchaser, and Meritage
           Mortgage Corporation, as loan seller (included as part of Exhibit Q
           to Exhibit 4.1).

      10.8 Assignment and Recognition Agreement, dated as of January
           26, 2006, by and among the Company, as assignee, Morgan Stanley
           Mortgage Capital Inc., as assignor, and Meritage Mortgage
           Corporation, as loan seller (included as part of Exhibit Q to
           Exhibit 4.1).

      10.9 Third Amended and Restated Mortgage Loan Purchase and Warranties
           Agreement, dated as of December 1, 2005, by and between Morgan
           Stanley Mortgage Capital Inc., as purchaser, and Wilmington Finance
           Inc., as loan seller, and AIG Federal Savings Bank, as loan seller
          (included as part of Exhibit R to Exhibit 4.1).

      10.10 Assignment and Recognition Agreement, dated as of January 26, 2006,
            by and among the Company, as assignee, Morgan Stanley Mortgage
            Capital Inc., as assignor, Wilmington Finance Inc., as loan seller,
            and AIG Federal Savings Bank, as loan seller (included as part of
            Exhibit R to Exhibit 4.1).

      10.11 ISDA Master Agreement, dated as of January 26, 2006, by and
            between Morgan Stanley Mortgage Capital Inc., the swap provider,
            and Deutsche Bank National Trust Company, the trustee (included
            as part of Exhibit Z to Exhibit 4.1).

      10.12 Schedule to the Master Agreement, dated as of January 26, 2006,
            by and between Morgan Stanley Mortgage Capital Inc., the
            swap provider, and Deutsche Bank National Trust Company, the trustee
           (included as part of Exhibit Z to Exhibit 4.1).

      10.13 Credit Support Annex, dated as of January 26, 2006, by and between
            Morgan Stanley Mortgage Capital Inc., the swap provider, and
            Deutsche Bank National Trust Company, the trustee (included as
            part of Exhibit Z to Exhibit 4.1).

      10.14 Confirmation, dated as of January 26, 2006, by and between Morgan
            Stanley Mortgage Capital Inc., the swap provider, and Deutsche
            Bank National Trust Company, the trustee (included as part of
            Exhibit Z to Exhibit 4.1).

      10.15 Guarantee, dated as of January 26, 2006, by Morgan Stanley
           (included as part of Exhibit Z to Exhibit 4.1).

      31   Section 302 Certification.

      33.1 Countrywide Home Loans Servicing LP's Annual Report on
           Assessment of Compliance for Year End December 31, 2006.

      33.2 HomEq Servicing Corporation's Annual Report on Assessment of
           Compliance for Year End December 31, 2006.

      33.3 Trustee's Annual Report on Assessment of Compliance for Year
           End December 31, 2006.

      33.4 Custodian's Annual Report on Assessment of Compliance for Year
           End December 31, 2006.

      34.1 Attestation Report on Assessment of Compliance with Servicing
           Criteria for Countrywide Home Loans Servicing LP's Report
           (Exhibit 33.1) for Year End December 31, 2006.

      34.2 Attestation Report on Assessment of Compliance with Servicing
           Criteria for HomEq Servicing Corporation's Report (Exhibit 33.2)
           for Year End December 31, 2006.

      34.3 Attestation Report on Assessment of Compliance with Servicing
           Criteria for Trustee's Report (Exhibit 33.3) for Year End
           December 31, 2006.

      34.4 Attestation Report on Assessment of Compliance with Servicing
           Criteria for Custodian's Report (Exhibit 33.4) for Year End
           December 31, 2006.

      35.1 Countrywide Home Loans Servicing LP's Annual Statement of
           Compliance for Year End December 31, 2006.

      35.2 HomEq Servicing Corporation's Report Annual Statement of
           Compliance for Year End December 31, 2006.