Fitch Places DVI Equipment Securitizations on Rating Watch Negative.

Business Editors

CHICAGO--(BUSINESS WIRE)--May 20, 2004

Fitch Ratings places certain classes of DVI, Inc. equipment transactions on Rating Watch Negative. These rating actions affect classes of notes in eight transactions totaling $964 million in securities. These actions are based on Fitch's review of servicer reports for the period ending April 30, 2004. On March 5, 2004, Fitch took rating actions on various DVI, Inc. equipment transactions. The March 5, 2004 rating actions reflected substantial reductions in expected credit enhancement that would be available to support each class of outstanding securities. Fitch's conservative performance expectations incorporated several stress scenarios, including applying escalating default rates to delinquency buckets and applying stressed recovery rates to both defaulted leases and expected defaults on delinquent lease balances. A review of recent servicer reports indicates that in spite of the conservative expectations applied by Fitch at the time of the March rating actions, actual recovery rates are below expectations. Additionally, actual delinquency rates, particularly later stage delinquencies, are higher than expected and may result in higher than expected default rates.

On Feb. 4, 2004, DVI was terminated as servicer and replaced by US Bank Portfolio Services (USBPS) as successor servicer for each of the securitizations under the terms of each transaction's Contribution and Servicing Agreements. Since the appointment of USBPS, defaults have continued, but the rate of defaults has generally decreased. However certain transactions continue to experience high monthly defaults. Additionally, total delinquencies remain at or near levels prior to the servicing transition and delinquencies over 90 days remain a very high component of total delinquencies. Furthermore, recoveries to date on previously defaulted contracts have been minimal.

Fitch expects to discuss performance trends, recovery expectations and additional information requests with USBPS in the near future. Based on those discussions and review of additional information, Fitch may affirm or downgrade or in the absence of receipt of adequate information withdraw its ratings.

The following eight DVI medical equipment transactions (24 classes; $964 million) of are placed on Rating Watch Negative by Fitch as follows:

DVI Receivables VIII, L.L.C., series 1999-1

-- Class A-5 'BBB';

-- Class B 'BB';

-- Class C 'B';

-- Class D 'B-'.

DVI Receivables X, L.L.C., series 1999-2

-- Class A-4 'B';

-- Class B 'B-'.

DVI Receivables XI, L.L.C., series 2000-1

-- Class A-4 'B';

-- Class B 'B-'.

DVI Receivables XII, L.L.C., series 2000-2

-- Class A-4 'B-'.

DVI Receivables XIV, L.L.C., series 2001-1

-- Class A-3 'BB';

-- Class A-4 'BB-';

-- Class B 'B'.

DVI Receivables XVI, L.L.C., series 2001-2

-- Class A-3 and A-4 'BB+';

-- Class B 'BB-';

-- Class C 'B'.

DVI Receivables XVIII, L.L.C., series 2002-2

-- Class A-3A and A-3B 'BB-';

-- Class B 'B-'.

DVI Receivables XIX, L.L.C., series 2003-1

-- Class A-2A, A-2B, A-3A and A-3B 'B';

-- Class B 'B-'.