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                                                                  Exhibit 99.4



                                                                 MORGAN STANLEY


<TABLE>
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<S>          <C>                                                       <C>         <C>
Date:        January 31, 2006

To:          Morgan Stanley Mortgage Loan Trust 2006-1AR               From:       Morgan Stanley Capital Services Inc.

Attn:        Wells Fargo Bank, National Association                    Contact:    Kelvin Borre
            9062 Old Annapolis Road
            Columbia, MD 21045
            Attention:   Client Manager, MSM 2006-1AR

Fax:          (410) 715-4513                                            Fax:        (212) 507-3837

Tel:         (410) 884-2000                                            Tel:        (212) 761-1426
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</TABLE>

Re: Cap Ref. No. KQBBO, Class 1-A-1 and Class 1-A-2

      The purpose of this letter agreement is to confirm the terms and
conditions of the Swap Transaction entered into between Morgan Stanley Capital
Services Inc. and Wells Fargo Bank, National Association, solely in its
capacity as securities administrator (the "Securities Administrator") on
behalf of the Morgan Stanley Mortgage Loan Trust 2006-1AR pursuant to the
Pooling and Servicing Agreement (the "PSA"), dated as of January 1, 2006,
among Morgan Stanley Capital I Inc. (the "Depositor"), the Securities
Administrator as master servicer and securities administrator and LaSalle Bank
National Association as trustee (the "Trustee"), on the Trade Date specified
below (the "Transaction"). This letter agreement constitutes a "Confirmation"
as referred to in the ISDA Master Agreement below.

      The definitions and provisions contained in the 2000 ISDA Definitions
(as published by the International Swaps and Derivatives Association, Inc.)
are incorporated into this Confirmation. In the event of any inconsistency
between those definitions and this Confirmation, this Confirmation will
govern.

      1. This Confirmation evidences a complete, binding agreement between you
and us as to the terms of the Transaction to which this Confirmation relates.
In addition, this Confirmation supplements, forms a part of, and is subject to
an agreement in the form of the ISDA Master Agreement (Multicurrency-Cross
Border), with such modifications as are specified herein, as if we had
executed an Agreement in such form on the Trade Date of the first such
Transaction between us (the "Agreement"). All provisions contained or
incorporated by reference in the Agreement shall govern this Confirmation
except as expressly modified below. In the event of any inconsistency between
the provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of this Transaction.

      2. The terms of the particular Transaction to which this Confirmation
relates are as follows:

Party A:                            Morgan Stanley Capital Services Inc.

Party A Credit Support:             Payments guaranteed by Morgan Stanley

Party B:                             Morgan Stanley Mortgage Loan Trust 2006-1AR

Trade Date:                         January 26, 2006

Notional Amount:                    See Schedule A attached hereto

Effective Date:                     February 25, 2006

Termination Date:                    October 25, 2014


<PAGE>


                                                                 MORGAN STANLEY


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<S>                                                   <C>
Fixed Amounts:
-------------

   Fixed Amount Payer:                                 Party B

   Fixed Amount Payer Payment Date:                   January 30, 2006

   Fixed Amount:                                      USD $1,600,000 (Party A hereby acknowledges receipt of payment in full of
                                                      this amount)

Floating Amounts:
----------------

   Floating Amount:                                   The product of (a) the Floating Rate,(b) the Floating Rate Day Count
                                                     Fraction, (c) the "Notional Amount" (as set forth in Schedule A hereto
                                                     for the related Floating Rate Payer Payment Date) and (d) the
                                                     "Multiplier" (as set forth in Schedule A hereto for the related Floating
                                                     Rate Payer Period End Date).

   Floating Rate Payer:                               Party A

   Strike Rate:                                       For the Calculation Period related to a Floating Rate Payer Payment Date, the
                                                     "Strike Rate" (as set forth in Schedule A hereto for such Floating Rate
                                                     Payer Period End Date).

   Floating Rate Payer Payment Dates:                 Early Payment -- For each Calculation Period, the first Business Day prior to
                                                     each Floating Rate Payer Period End Date.

   Floating Rate Payer Period End Date(s):            The 25th of each month in each year from (and including) March 25, 2006
                                                     to (and including) the Termination Date with no adjustment to Period End
                                                      Dates.

                                                     For the avoidance of doubt, the initial Calculation Period will accrue
                                                     from and including the Effective Date to but excluding March 25, 2006
                                                     and that the final Calculation Period will accrue from and including
                                                     September 25, 2014 to but excluding the Termination Date.

   Floating Rate:                                     For the Calculation Period related to a Floating Rate Payer Payment
                                                     Date, the excess, if any, of (x) the lesser of (a) USD-LIBOR-BBA with a
                                                     Designated Maturity of 1 month and (b) the "Ceiling Rate" (as set forth
                                                     in Schedule A hereto for the related Floating Rate Payer Period End
                                                      Date) over (y) the Strike Rate.

   Floating Rate Day Count Fraction:                  30/360

   Reset Dates:                                       The first day of Each Calculation Period.

   Compounding:                                        Inapplicable

   Business Days:                                     New York


                                                                 -2-
<PAGE>


                                                                 MORGAN STANLEY


   Calculation Agent:                                 Party A; provided, however, that if an Event of Default occurs with
                                                     respect to Party A, then Party B shall be entitled to appoint a
                                                      financial institution which would qualify as a Reference Market-maker to
                                                     act as Calculation Agent.

        3. Account Details:

Payments to Party A:                                   Citibank, New York
                                                     ABA No. 021 000 089
                                                     For: Morgan Stanley Capital Services Inc.
                                                      Account No. 4072 4601

Operations Contact:                                   Jean Barnum
                                                     Tel 212 761-2630
                                                     Fax 410 534-1431

Payments to Party B:                                  Wells Fargo Bank, National Association
                                                     ABA No. 121-000-248
                                                     Account Name: Corporate Trust Clearing
                                                      Account No. 3970771416 for further credit to 50890501,
                                                     MSM 2006-1AR
                                                     Ref: MSM 2006-1AR, Class 1-A-1 and Class 1-A-2

        4. Modifications to the Agreement:
</TABLE>

The parties hereby agree to amend the Agreement referenced in paragraph 1
above as follows:

(a)    "Cross Default" applies to Party A but not to Party B.

(b)    Fully-Paid Transactions. Notwithstanding the terms of Sections 5 and 6
      of the Agreement if Party B has satisfied in full all of its payment
      obligations under Section 2(a)(i) of the Agreement, then unless Party A
      is required pursuant to appropriate proceedings to return to Party B or
      otherwise returns to Party B upon demand of Party B any portion of such
      payment, (a) the occurrence of an event described in Section 5(a) of the
      Agreement with respect to Party B shall not constitute an Event of
      Default or Potential Event of Default with respect to Party B as the
      Defaulting Party and (b) Party A shall be entitled to designate an Early
      Termination Event pursuant to Section 6 of the Agreement only as a
      result of a Termination Event set forth in either Section 5(b)(i) or
      Section 5(b)(ii) of the Agreement with respect to Party A as the
      Affected Party or Section 5(b)(iii) of the Agreement with respect to
      Party A as the Burdened Party. For purposes of the Transaction to which
       this Confirmation relates, Party B's only obligation under Section
      2(a)(i) of the Agreement is to pay the Fixed Amount on the Fixed Rate
      Payer Payment Date.

(c)    "Threshold Amount" means, with respect to a party, U.S. $10,000,000 (or
      the equivalent in another currency, currency unit or combination
      thereof).

(d)    Payments on Early Termination. "Market Quotation" and "Second Method"
      will apply for the purpose of Section 6(e) of this Agreement.

(e)    "Termination Currency" means United States Dollars.

(f)    Party A and Party B Payer Tax Representations. For the purpose of
      Section 3(e), each of Party A and Party B makes the following
      representation:

      It is not required by any applicable law, as modified by the practice of
      any relevant governmental revenue authority, of any Relevant
      Jurisdiction to make any deduction or withholding for or on account of
      any Tax from any payment (other than interest under Section 2(e),
      6(d)(ii) or 6(e)) to be made by it to the other


                                     -3-
<PAGE>


                                                                 MORGAN STANLEY


      party under this Agreement. In making this representation, it may rely
      on (i) the accuracy of any representation made by the other party
      pursuant to Section 3(f); (ii) the satisfaction of the agreement of the
      other party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy
      and effectiveness of any document provided by the other party pursuant
      to Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the
      agreement of the other party contained in Section 4(d), provided that it
      shall not be a breach of this representation where reliance is placed on
      clause (ii) and the other party does not deliver a form or document
      under Section 4(a)(iii) by reason of material prejudice to its legal or
      commercial position.

(g)    Payee Tax Representations

      (i)    For the purpose of Section 3(f), Party A makes the following
            representation:

            It is a corporation duly organized and incorporated under the laws
            of the State of Delaware and is not a foreign corporation for
            United States tax purposes.

      (ii)   For the purpose of Section 3(f), Party B makes the following
            representation:

            It is a trust duly formed under the laws of the State of New York
            and is not a foreign corporation for United States tax purposes.

(h)    Governing Law; Jurisdiction. This Agreement, each Credit Support
      Document and each Confirmation will be governed by and construed in
      accordance with the laws of the State of New York, without reference to
      choice of law doctrine. Section 13(b) is amended by: (1) deleting "non-"
      from the second line of clause (i); and (2) deleting the final
      paragraph.

(i)    Waiver of Jury Trial. Each party waives, to the fullest extent permitted
      by applicable law, any right it may have to a trial by jury in respect
      of any Proceedings relating to this Agreement or any Credit Support
      Document.

(j)    "Affiliate" has the meaning specified in Section 14, but excludes Morgan
      Stanley Derivative Products Inc.

(k)    Additional Representations. Section 3 is hereby amended by adding at the
      end thereof the following Subparagraphs:

      (i)    It is an "eligible contract participant" within the meaning of
            Section 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a), as
            amended by the Commodity Futures Modernization Act of 2000.

      (ii)   It has entered into this Agreement (including each Transaction
            evidenced hereby) in conjunction with its line of business
            (including financial intermediation services) or the financing of
            its business.

      (iii) It is entering into this Agreement, any Credit Support Document to
            which it is a party, each Transaction and any other documentation
            relating to this Agreement or any Transaction as principal (and
            not as agent or in any other capacity, fiduciary or otherwise).

      (iv)   ERISA Representation. It continuously represents that it is not
            (i) an employee benefit plan (hereinafter an "ERISA Plan"), as
            defined in Section 3(3) of the Employee Retirement Income Security
            Act of 1974, as amended ("ERISA"), subject to Title I of ERISA or
            a plan subject to Section 4975 of the Internal Revenue Code of
            1986, as amended, or subject to any other statute, regulation,
            procedure or restriction that is materially similar to Section 406
            of ERISA or Section 4975 of the Code (together with ERISA Plans,
            "Plans"), (ii) a person acting on behalf of a Plan or (iii) a
            person any of the assets of whom constitute assets of a Plan,
            unless its entry into and performance under this agreement satisfy
            the requirements for exemptive relief under Prohibited
            Transactions Exemption 90-24, as amended. It will provide notice
            to the other party in the event that it is aware that it is in
            breach of any aspect of this representation or is aware that with
             the


                                     -4-
<PAGE>


                                                                 MORGAN STANLEY


            passing of time, giving of notice or expiry of any applicable
            grace period it will breach this representation.

(l)    Relationship Between Parties. Each party will be deemed to represent to
      the other party on the date on which it enters into a Transaction that
      (absent a written agreement between the parties that expressly imposes
      affirmative obligations to the contrary for that Transaction):

      (i)    Non-Reliance. In the case of Party A, it is acting for its own
            account, and in the case of Party B, it is acting as Trustee.
            Party A has made its own independent decisions to enter into that
            Transaction and as to whether that Transaction is appropriate or
            proper for it based upon its own judgment and upon advice from
            such advisers as it has deemed necessary and, with respect to
            Party B, as directed under the PSA. It is not relying on any
            communication (written or oral) of the other party as investment
            advice or as a recommendation to enter into that Transaction; it
            being understood that information and explanations related to the
            terms and conditions of a Transaction shall not be considered
            investment advice or a recommendation to enter into that
            Transaction. No communication (written or oral) received from the
            other party shall be deemed to be an assurance or guarantee as to
            the expected results of that Transaction.

      (ii)   Assessment and Understanding. It is capable of assessing the
            merits of and understanding (on its own behalf or through
            independent professional advice), and understands and accepts, the
            terms, conditions and risks of that Transaction. It is also
            capable of assuming, and assumes, the risks of that Transaction.

      (iii) Status of Parties. Party A and Party B are not acting as a
            fiduciary for or an adviser to each other in respect of that
            Transaction.

      (iv)   Fiduciary Capacity. It is expressly understood and agreed by the
            parties hereto that (i) this Confirmation is executed and
            delivered by Wells Fargo Bank, National Association, not in its
            individual capacity but solely as Securities Administrator on
            behalf of the Trustee under the PSA in the exercise of the powers
            and authority conferred to and vested in it thereunder, (ii) each
            of the representations, undertakings and agreements herein made on
            behalf of the trust created under the PSA is made and intended not
            as personal representation, undertaking or agreement of the
            Securities Administrator, but is made and intended for the purpose
            of binding only such trust and (iii) under no circumstances shall
            Wells Fargo Bank, National Association in its individual capacity
            be personally liable for the payment of any indebtedness or
            expenses or be personally liable for the breach or failure of any
            obligation, representation, warranty or covenant made or
            undertaken under this Confirmation.


                                     -5-
<PAGE>


                                                                 MORGAN STANLEY


(m)    Addresses for Notices. For the purpose of Section 12(a):

      (i)    Address for notices or communications to Party A:

            Morgan Stanley Capital Services Inc.
            1585 Broadway, 3rd Floor
            New York, New York 10036
            Attention: Chief Legal Officer

            Facsimile No.: 212-507-4622

      (ii)   Address for notices or communications to Party B:

            Address:    Wells Fargo Bank, National Association
                       9062 Old Annapolis Road
                       Columbia, Maryland 21045

            Attention: Client Manager - MSM 2006-1AR

            Facsimile No.: (410) 715-2380       Telephone No.: (410) 884-2000

(n)    Set-Off. Notwithstanding any provision of this Agreement or any other
      existing or future agreement, each party irrevocably waives any and all
      rights it may have to set off, net, recoup or otherwise withhold or
      suspend or condition payment or performance of any obligation between it
      and the other party hereunder against any obligation between it and the
      other party under any other agreements. The provisions for Set-Off set
      fort in Section 6(e) of the Agreement shall not apply for purposes of
      this Transaction.

(o)    Notices. Section 12(a) is amended by adding in the third line thereof
      after the phrase "messaging system" and before the ")" the words, ";
      provided, however, any such notice or other communication may be given
      by facsimile transmission if telex is unavailable, no telex number is
      supplied to the party providing notice, or if answer back confirmation
      is not received from the party to whom the telex is sent."

(p)    Obligations. Section 2 is amended by adding the following to the end
      thereof:

      "(f) Party B shall deliver or cause to be delivered to Party A IRS Form
      W-9 (or successor thereto) as soon as is practicable after the Effective
      Date."

(q)    Covenant to Provide Additional Hedge Counterparty Information. If
      requested by the Depositor for the purpose of compliance with Item
      1115(b) of Regulation AB with respect to any Transaction under this
      Agreement, Party A shall upon five days written notice either (A) (a)
      provide the financial data required by Item 1115(b)(1) or (b)(2) of
       Regulation AB (as specified by the Depositor to Party A) with respect to
      Party A (or any entity that guarantees Party A) and any affiliated
      entities providing derivative instruments to Party B (the "Company
      Financial Information"), in a form appropriate for use in the Prospectus
      Supplement and in an EDGAR-compatible form; (b) if applicable, cause its
      accountants to issue their consent to filing or incorporation by
      reference of such financial statements in the Exchange Act Reports of
      Party B and (c) within 5 Business Days of the release of any updated
      financial data, provide current Company Financial Information as
      required under Item 1115(b) of Regulation AB to the Depositor in an
      EDGAR-compatible form and if applicable, cause its accountants to issue
      their consent to filing or incorporation by reference of such financial
      statements in the Exchange Act Reports of Party A or (B) assign this
      Agreement as provided below.

      It shall be an Additional Termination Event, with Party A the sole
      Affected Party, if Party A has failed to deliver any Company Financial
      Information when and as required under this Part 4(q) hereof, which
      continues unremedied for the lesser of ten calendar days after the date
      on which such information, report, certification or accountants' consent
      was required to be delivered or such period in which the applicable


                                     -6-
<PAGE>


                                                                  MORGAN STANLEY


      Exchange Act Report for which such information is required can be timely
      filed (without taking into account any extensions permitted to be
      filed), and Party A has not, at its own cost, within the period in which
      the applicable Exchange Act Report for which such information is
      required can be timely filed caused another entity (which meets any
      ratings related requirement of the applicable rating agencies at such
      time) to replace Party A as party to this Agreement that (i) has agreed
      to deliver any information, report, certification or accountants'
      consent when and as required under this Part 4(q) hereof, (ii) satisfies
      the requirements of each Rating Agency and (iv) is approved by the
      Depositor (which approval shall not be unreasonably withheld).

      As used in this Agreement the following words shall have the following
      meanings:

      "Depositor" shall mean Morgan Stanley Capital I Inc.

      "EDGAR" shall mean the Commission's Electronic Data Gathering, Analysis
      and Retrieval system.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as
      amended and the rules and regulations promulgated thereunder

      "Exchange Act Reports" shall mean all Distribution Reports on Form 10-D,
      Current Reports on Form 8-K and Annual Reports on Form 10-K that are to
      be filed with respect to Party B pursuant to the Exchange Act.

      "Prospectus Supplement" shall mean the prospectus supplement prepared in
      connection with the public offering and sale of the Offered
      Certificates.

      "Rating Agency" shall mean each of Standard & Poor's, a division of The
      McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc. If any
      such organization or a successor is no longer in existence, "Rating
      Agency" shall be such nationally recognized statistical rating
      organization, or other comparable Person, as is designated by the
      Depositor, notice of which designation shall be given to the Trustee.
      References herein to a given rating category of a Rating Agency shall
      mean such rating category without giving effect to any modifiers.

      "Regulation AB" shall mean the Asset Backed Securities Regulation AB, 17
      C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to
      time, and subject to such clarification and interpretation as have been
      provided by the Commission in the adopting release (Asset-Backed
      Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
      1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be
      provided by the Commission or its staff from time to time.


                                      -7-
<PAGE>


                                                                 MORGAN STANLEY


Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us.

Best Regards,

MORGAN STANLEY CAPITAL SERVICES INC.





By:   /s/ David N. Moore
    --------------------------------------------------------
      Name: David N. Moore
      Title: Vice President





WELLS FARGO BANK, NATIONAL ASSOCIATION,
  acting not in its individual capacity but


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