DBRS Assigns BBB Rtg to ResCap Proposed Senior Note Issuance

Dominion Bond Rating Service (“DBRS”) has assigned a BBB rating to Residential Capital Corporation’s (“ResCap” or the “Company”) proposed senior note issuance. At the same time, DBRS has maintained all ratings “Under Review with Developing Implications”, where they were placed on October 11, 2005. ResCap expects that the issuance will be US$1.75 billion.

ResCap intends to use the proceeds of this proposed issuance for general corporate purposes and may use a portion of the proceeds for repayment of General Motors Acceptance Corporation (“GMAC”) debt; as such, this will marginally increase leverage. DBRS believes that this is more than offset by the additional funding flexibility and funding diversification gained by this proposed issuance. The proposed issuance ranks pari passu with currently outstanding Senior Unsecured Debt of ResCap and is unconditionally guaranteed by certain of the Company’s subsidiaries.

The continuing review reflects General Motors Corporation’s (“GM”) ongoing discussions regarding potentially divesting controlling interest in GMAC, and is examining its strategic options regarding ResCap. The timing and ultimate resolution of this review will likely be impacted by who the purchaser will be and whether or not ResCap is divested separately. If ResCap’s or GMAC’s ownership linkage to GM is substantially altered, DBRS could be in a position to lower, maintain, or increase ResCap’s rating, dependent on the deal structure, the strength of the financial partner(s), support from the financial partner(s), ResCap’s performance on its own merits, and the impact of any support agreements. Moreover, should this transaction not proceed in a timely fashion, DBRS may potentially lower this rating as well as the rating on GMAC several notches to bring it more in-line with the rating of GM, in accordance with DBRS’s captive finance policy.

The ratings are based on ResCap’s overall acceptable performance. As one of the largest providers of residential mortgages in the U.S., ResCap’s significant market presence and franchise strength gives the Company the size and scale, which are vital for success in the highly competitive mortgage industry. ResCap’s 2005 worldwide originations increased 19.4% to US$175.6 billion, which has driven continued positive earnings momentum (on an absolute basis), but profitability measures remain challenged by the competitive environment. Net income for 2005 increased 5.4% to US$1.02 billion, yet return on average assets fell to 0.96%, which is considered limited on a risk-adjusted basis. The Company benefits from earnings diversification provided by its international operations and business lending activities, which is an advantage over many of its peers.

Capitalization and leverage are appropriate for the rating. ResCap’s equity at US$7.4 billion at September 30, 2005, was positively impacted earlier in 2005 when GMAC converted US$2 billion of inter-company debt to equity. The Company’s success in increasing unsecured funding through separate issuances, which total three including the proposed issuance, has improved its liquidity profile and enhanced financial flexibility. ResCap has considerable funding ties to GMAC, which ResCap continues to reduce. Affiliated borrowings at year-end 2005 were US$4.13 billion subordinated notes and approximately US$1.8 billion of international revolvers.