2008-10-01 02:44:02 -

- Fitch Ratings has updated Wachovia Mortgage FSB's (Wachovia Mortgage) U.S. residential servicer ratings. The rating remains as stated below and is placed on Rating Watch Evolving:

--Primary servicer rating for prime product at 'RPS2'.

Fitch's recently completed operational review confirmed that Wachovia Mortgage's mortgage servicing operation continues to perform at a level consistent with the prior year. The ratings reflect Wachovia Mortgage's stable and experienced management team, focused training programs, and established loan administration and default management processes. . The ratings are also based on Wachovia Mortgage's long-term issuer default rating (IDR) rated 'A+' Rating Watch Evolving by Fitch. .

On Sept. 29, 2008, Citi Group, Inc. (Citi) announced that an agreement in principle had been

reached for Citi to acquire Wachovia Corporation's retail, corporate/investment and private banking operations. The FDIC-assisted transaction is expected to close on Dec. 31, 2008 and is subject to approval by Wachovia shareholders and the Federal Reserve. FDIC approval has already been received. The Rating Watch Evolving reflects the uncertainty of market conditions and the potential sale of Wachovia Mortgage's servicing operations to Citi. The Rating Watch Evolving also indicates that further rating actions are possible depending upon the outcome of the acquisition and the financial condition of Wachovia Mortgage.

In February 2008, Wachovia Mortgage Corporation, through a series of internal transactions, completed the transfer of its loan origination and servicing operations to an affiliate, Wachovia Mortgage, FSB. Wachovia Mortgage operates a centralized servicing platform in Raleigh, NC. Wachovia Mortgage outsources its early stage collections and customer service functions to internal Wachovia Bank resources located in Philadelphia, PA and Roanoke, VA. As of March 31, 2008, Wachovia Mortgage serviced 314,890 loans with an unpaid principal balance (UPB) of over $62 billion. The portfolio consists of 82% prime, 8% Alt-A and 8% second lien product by loan volume.

Since Fitch's prior visit, Wachovia Mortgage has continued to improve its processes and technology to increase efficiencies and productivity. Several of the changes include implementation of a call center and system navigation tool in its Raleigh call center, enhancements to its borrower web site, and the roll out of an interactive performance management tool for tracking employee and management goals across the platform.

Fitch has reviewed Wachovia Mortgage's servicing operation and believes that the company has the capacity, technology and staff to support its current servicing portfolio. Fitch will continue to monitor Wachovia Mortgage's ability to maintain its operational performance as the company navigates through the announced sale to Citi.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating U.S. Residential Mortgage Servicers', dated Nov. 29, 2006, available on the Fitch Ratings web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, New York
Stephanie Whited, 562-481-1368
Mary Kelsch, 212-908-0563
or
Media Relations:
Sandro Scenga, 212-908-0278