Fitch Rates Acacia CDO 10 'AAA/AAA/AAA/AA-/BBB'.

NEW YORK -- Fitch Ratings assigns the following ratings to Acacia CDO 10, Ltd. and Acacia CDO 10, Inc. (collectively referred to as the co-issuers):

--$260,000,000 class A-1 first priority senior secured floating rate notes due 2046 'AAA';

--$40,000,000 class A-2 second priority senior secured floating rate notes due 2046 'AAA';

--$30,000,000 class B third priority senior secured floating rate notes due 2046 'AAA';

--$50,000,000 class C fourth priority mezzanine secured floating rate deferrable interest notes due 2046 'AA-';

--$25,000,000 class D fifth priority mezzanine secured floating rate deferrable interest notes due 2046 'BBB'.

The ratings of the class A-1, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C and D notes address the likelihood that investors will receive ultimate interest and deferred interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date.

The ratings are based upon the credit quality of the underlying assets and the credit enhancement provided to the capital structure through subordination and excess spread. Additionally, the ratings address the experience and capabilities of RWT Holdings, Inc., (RWT Holdings) a subsidiary of Redwood Trust, Inc., as the collateral manager. Redwood Trust, Inc. has a Fitch CDO asset manager rating of 'CAM2'.

The net proceeds from the issuance of the notes will be used to purchase

a high-grade portfolio consisting of approximately 83.5% in residential mortgage-backed securities (RMBS), 10.7% in commercial mortgage-backed securities (CMBS), and 5.8% in collateralized debt obligations (CDOs). The collateral supporting the structure will have a maximum Fitch weighted average rating factor (WARF) of 12.50 ('BB+/BB'). RWT Holdings has 180 days in which to ramp-up the portfolio. The reinvestment period will be up to three years after deal closing. Quarterly payments on the notes will begin in September 2006.

The collateral manager, RWT Holdings, will purchase all investments for the portfolio on behalf of the co-issuers, which are special purpose companies incorporated under the laws of the Cayman Islands and State of Delaware, respectively. The collateral manager will manage the portfolio in accordance with specific investment restrictions as outlined in the governing documents.

For more information on this transaction, refer to the presale report titled 'Acacia CDO 10, Ltd.', available on the Fitch Ratings web site at www.fitchratings.com. For more information on the collateral manager, refer to the press release titled 'Fitch Assigns Redwood Trust, Inc. a 'CAM2' CDO Asset Manager Rating', 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.