<PAGE>   1
                                                                  Exhibit 10(gg)

                          TRANSITION SERVICES AGREEMENT

      This Transition Services Agreement (this "Agreement"), dated as of March
25, 1999 is entered into by and among Source One Mortgage Services Corporation,
a Delaware corporation ("Seller"), and Citicorp Mortgage, Inc., a Delaware
corporation ("Purchaser").

                                    RECITALS

      A. Seller, Fund American Enterprises Holdings, Inc., a Delaware
corporation and the direct or indirect owner of all of the common stock of
Seller, and Purchaser have entered into an Asset Purchase Agreement, dated as of
March 23, 1999 (the "Asset Purchase Agreement"), pursuant to which Purchaser
will (i) acquire from Seller substantially all of the assets used in the
Business and (ii) assume certain obligations and liabilities of Seller related
to the Business.

      B. Seller and Purchaser desire to enter into this Agreement in order to
facilitate an efficient transition of the Business of Seller to Purchaser and to
assist Seller following the Closing Date.

      NOW, THEREFORE, in consideration of the premises and the covenants,
conditions and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

      Section 1. DEFINED TERMS. Capitalized terms not otherwise defined in this
Agreement shall have the meanings assigned to them in the Asset Purchase
Agreement.

      Section 2. SERVICES RENDERED. Purchaser or its designee shall provide
services to Seller as described herein and in the schedules hereto for the
compensation, duration and subject to any limits set forth in the applicable
schedule. The party providing a service hereunder may be referred to herein as a
"providing party" and the party receiving a service hereunder may be referred to
herein as a "receiving party." The description of the services to be provided
hereunder, the expected timing of the provision thereof, and the manner of
performance of any services hereunder do not in any way modify or amend any
party's obligations under the Asset Purchase Agreement or any Related Document.

            (a) SPECIAL SERVICES.

                  (i) SCHEDULE I hereto sets forth services to be provided by
Purchaser to Seller that require the specific employment of specialized
personnel at the providing entity and are charged at the hourly rates set forth
on SCHEDULE V. Prior to the Closing Date, services of the type set forth in
SCHEDULE I were performed by Seller using Seller's personnel.

                  (ii) The hourly rates listed in SCHEDULE V have been set based
upon the Seller's representation that such amounts are calculated in a manner
consistent with the Seller's past practices with respect to their own internal
cost allocations. 

<PAGE>   2

            (b) SERVICING ADMINISTRATION. SCHEDULE II hereto sets forth services
(the "Servicing Administration Services") to be provided by Purchaser to the
Seller that the Seller requires Purchaser's assistance to perform in respect of
(i) certain of Seller's obligations under the Asset Purchase Agreement and (ii)
trailing document and pay-off follow-up services with respect to loans paid off
prior to the Closing Date.

            (c) FREE SERVICES. SCHEDULE III hereto sets forth services to be
provided by Purchaser to Seller without charge to Seller.

      Section 3. [Reserved.]

      Section 4. SCHEDULE AMENDMENTS. The parties contemplate that from time to
time a need may arise for transition services not specifically contemplated
under this Agreement or the Schedules hereto that both parties deem to be
reasonable and appropriate to be provided hereunder, in which event the parties
may, but shall have no duty to, amend the appropriate schedule as necessary. The
amended schedule shall be initialed by a duly authorized individual from each of
Purchaser and Seller.

      Section 5. MANNER OF PERFORMANCE AND ACKNOWLEDGMENT. Purchaser agrees that
it shall cause its personnel providing services under this Agreement to perform
such services with the same degree of care, skill, confidentiality and diligence
with which its personnel perform similar services for Purchaser and in a manner
consistent with the level of care given to Purchaser's business. Purchaser shall
provide all services under this Agreement in accordance with the reasonable
written instructions provided by the authorized representatives of Seller, or
their designees, or, in the absence of such instructions, as such services have
been performed for Seller in the past. Purchaser shall cease providing any
services upon the reasonable written instructions of the Seller's authorized
representatives or designees to that effect. Purchaser shall be entitled to rely
upon any written instructions received from such authorized representatives or
designees. The parties hereto acknowledge that services provided hereunder are
not being provided at standard commercial rates for such services but (without
limiting the prices set forth on the Schedules hereto) are being provided at
amounts considered for these purposes to be at cost to most efficiently permit
the transition to occur; the parties further acknowledge that Purchaser is not
in the business of providing the services rendered under this Agreement. Seller
shall reimburse Purchaser for reasonable third-party costs and expenses charged
to Purchaser in connection with Purchaser's performance of its duties under this
Agreement.

      Section 6. PRORATION, INVOICING AND PAYMENT.

            (a) PRORATION. In any month during which any services with monthly
fees set forth on the applicable Schedule are provided for less than a complete
month, such fees shall be prorated on a daily basis based on the actual number
of days in the month that such services are provided.

            (b) INVOICING. The Purchaser shall submit an invoice to the Seller
prior to the tenth day of each month for all services provided hereunder by the
Purchaser during the prior calendar month. Amounts invoiced shall be calculated
or otherwise determined in accordance


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<PAGE>   3

with the applicable Schedules. Upon termination of this Agreement, each
providing party shall submit a final invoice to the respective receiving parties
within thirty (30) days of such termination.

            (c) PAYMENT. Each invoice received by the Seller shall constitute a
"claim" under Section 12.04 of the Asset Purchase Agreement. Prior to the first
anniversary of the Closing Date, such invoice shall be subject to, and shall be
paid in accordance with, the procedures set forth in Section 12.04 of the Asset
Purchase Agreement for claims under Section 3.01(a) thereof regarding deductions
from the holdback amount. On and after the first anniversary of the Closing
Date, such invoice shall be subject to, and shall be paid in accordance with,
the procedures set forth in Section 12.04 of the Asset Purchase Agreement for
claims under Sections 12.02 and 12.03 (without regard to any provisions of
Section 12.04 which reference the expiration of any indemnification obligation
or the tolling of any indemnification period under those sections). If the
Seller disputes any invoice pursuant to the provisions of Section 12.04(b), the
Purchaser shall nevertheless continue to perform all of its obligations under
this Agreement pending resolution thereof. If the Seller fails to timely pay
invoices (other than with respect to amounts disputed in good faith pursuant to
Section 12.04(b)), the Purchaser may, at any time not less than 30 days after
the Purchaser has furnished notice to the Seller of its intent to do so, cease
to provide the compensated services to be provided by the Purchaser under this
Agreement until all undisputed amounts have been paid.

      Section 7. RECORDS MAINTENANCE AND AUDITS. Purchaser shall make available
to Seller or its representatives access to or copies of Purchaser's records for
the purpose of verifying the accuracy of the invoices submitted by Purchaser
regarding amounts due such party.

      Section 8. INDEMNIFICATION. Purchaser agrees to indemnify and hold Seller
harmless for one year following the provision of services under this Agreement
from and against any and all claims, actions, liabilities, losses, damages,
costs or expenses (including court costs and attorneys' fees) arising out of
Purchaser's or its affiliates' gross negligence or willful misconduct in the
provision by Purchaser or its affiliates of any services under this Agreement.
This indemnity shall survive any termination of this Agreement.

      Section 9. RELATIONSHIP OF PARTIES. Purchaser shall act as an independent
contractor, and nothing herein shall at any time be construed to create the
relationship of employer and employee, partnership, principal and agent, broker
or finder, or joint venturers as between Seller and Purchaser. Except as
expressly provided herein, no party shall have any right or authority, and no
party shall attempt to enter into any contract, commitment or agreement nor
incur any debt or liability of any nature, in the name or on behalf of any other
party.

      Section 10. CONFIDENTIALITY. Each party acknowledges that in connection
with its performance under this Agreement, it may gain access to confidential
material and information which is identified by the other party as confidential
and proprietary to the other party. Each party agrees to maintain the
confidentiality of all such information. The requirements under this Section 10
shall survive for a period of eighteen (18) months following the provision of
the service out of which such confidential information was acquired.


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      Section 11. [Reserved.]

      Section 12. TERMINATION. At any time, either party may terminate any one
or more of the individual services being provided by Purchaser enumerated in
this Agreement due to the non-performance of the other party of its obligations
hereunder by giving the other party written notice to that effect.

      Section 13. ASSIGNMENT. No party shall assign, in whole or in part, any of
the rights, obligations or benefits arising under this Agreement without the
prior written consent of the other parties; provided, that any party may at any
time assign any of its rights or benefits arising under this Agreement to any of
its affiliates capable of fulfilling the obligations hereunder upon written
notice thereof to the other parties.

      Section 14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflict of laws rules or choice of laws rules thereof.

      Section 15. NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be in writing, including by telecopy, and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made (a) if delivered by hand (including by courier), when delivered,
(b) in the case of mail, three Business Days after deposit in United States
first class mail, postage prepaid, and (c) in the case of telecopy notice, when
receipt has been confirmed by the transmitting telecopy operator. In each case
notice shall be sent to the address of the party to be notified, as follows, or
to such other address as may be hereafter designated by the respective parties
hereto in accordance with these notice provisions:

      If to the Purchaser, to:

            Citicorp Mortgage, Inc.
            15851 Clayton Road
            Ballwin, Missouri 63011
            Telecopy:  (314) 916-7201
            Attention: Legal Department

      With a copy to:

            Citigroup Inc.
            Corporate Legal Department
            425 Park Avenue B 2nd Floor
            New York, New York  10043
            Telecopy:  (212) 793-4401
            Attention: Stephen Dietz


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      If to the Seller or Parent, to:

            Source One Mortgage Services Corporation
            114 Goodwives Road
            Darien, Connecticut  06820
            Telecopy: (203) 655-6044
            Attention:  James H. Ozanne

      With a copy to:

            Fund American Enterprises Holdings, Inc.
            80 South Main Street
            Hanover, New Hampshire 03755
            Telecopy: (603) 643-4562
            Attention: Terry L. Baxter

      Section 16. SEVERABILITY. In the event that any portion of this Agreement
shall be found by a court of competent jurisdiction to be illegal, unenforceable
or invalid, that portion of this Agreement will be null and void and the
remainder of this Agreement will be binding on the parties as if the illegal,
unenforceable or invalid provisions had never been contained therein.

      Section 17. WAIVER. No waiver by any party of any term or any breach of
this Agreement shall be construed as a waiver of any other term or breach
hereof, or of the same or a similar term or breach on any other occasion.

      Section 18. AMENDMENT. Except as contemplated by Section 4, no
modification or amendment of this Agreement shall be binding upon any party
unless in writing and signed by all parties hereto.

      Section 19. ENTIRE AGREEMENT. This Agreement, together with the Asset
Purchase Agreement and all Schedules and Exhibits attached hereto and thereto,
constitutes the entire agreement between the parties pertaining to the subject
matter hereof, and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties hereto regarding the
subject matter hereof.

      Section 20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                  [Remainder of Page Intentionally Left Blank]


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                          SOURCE ONE MORTGAGE SERVICES
                                             CORPORATION


                                          By:___________________________________
                                          Name:_________________________________
                                          Title:________________________________


                                          CITICORP MORTGAGE, INC.


                                          By:___________________________________
                                          Name:_________________________________
                                          Title:________________________________


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                          Schedule I C Special Services

Purchaser shall cause its personnel to perform the following services, and shall
be reimbursed on an hourly basis in accordance with the rates set forth in
SCHEDULE V.

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                               Service Description
--------------------------------------------------------------------------------

PERSONNEL SERVICES - A.  Purchaser shall cause its personnel, with respect to
Seller's obligations related to the calendar year 1998 and any stub period
between January 1, 1999 and the Closing Date of the Asset Purchase Agreement
(the "Reporting Period"), to (i) provide or assist in providing complete
payroll services to Seller and (ii) perform all related subsequent year-end
and stub period reporting to individuals, regulators and agencies, as applicable
(collectively, the "Payroll Services").
--------------------------------------------------------------------------------

PERSONNEL SERVICES - B. Purchaser shall cause its personnel, with respect to
Seller's obligations related to the Reporting Period, to (i) administer or
assist in the administration of all Seller employee benefit programs including,
without limitation, Seller 401(k) Plan, medical benefits, life and disability
insurance benefits, flexible spending accounts and Deferred Compensation Plan,
(ii) perform all related subsequent year-end and stub period reporting to
individuals, regulators and agencies, as applicable, (iii) assist in the
transition of former employees of Seller off of Seller's benefit programs
(including any required reporting obligations), and (iv) assist in the 401(k)
audit for the 1998 plan year as soon as practicable after the Closing Date
(collectively, the "Benefit Plan Services").
--------------------------------------------------------------------------------

PERSONNEL SERVICES - C.  Purchaser shall cause its personnel, with respect to
Seller's obligations related to the Reporting Period, to assist Seller in
performing its reporting obligations under the Securities Exchange Act of
1934, as amended.
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PERSONNEL SERVICES - D. Purchaser shall cause its personnel, with respect to
Seller's obligations after the Closing Date, to assist Seller in performing its
obligations under Section 10.05(b) of the Asset Purchase Agreement.
--------------------------------------------------------------------------------

PERSONNEL SERVICES - E. Purchaser shall cause its personnel to fulfill, under
third-party servicing sale agreements, the transfer of servicing obligations.
--------------------------------------------------------------------------------

PERSONNEL SERVICES - F. Purchaser shall cause its personnel to provide certain
functions to the Seller following the Closing Date. These services include, but
are not limited to, assistance with the following:

                  Preparation of Seller's full 1998, and 1999 short period, tax
            returns (including, but not limited to, income and franchise tax
            returns)

                  Responses to federal and state tax audits, including
            recalculation of servicing amortization

                  Final resolution of loan repurchases (including, but not
            limited to, dealing with the initial seller/correspondent)




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<PAGE>   8

                     Schedule II C Servicing Administration

Purchaser shall cause its personnel to provide the following services. Where
flat fees are indicated below, such fees are best estimates of the projected
cost of providing the related services. To the extent such services vary
materially from those estimates, the parties agree to renegotiate these fees.

1.    TAX REPORTING SERVICES. Purchaser shall cause its personnel to provide
      such tax information reporting services as may be required for the 1999
      tax year, including but not limited to annual reporting on tax forms 1098
      and 1099, for every loan Seller serviced or subserviced during calendar
      year 1999. Such services include customer call support, IRS tape
      generation, customer year-end information, IRS corrections and follow-up.
      These services shall be provided at a rate of $0.58 per loan (estimated
      total fee of $61,224.00).

2.    TRAILING DOCUMENTS. Purchaser shall cause its personnel to fulfill
      Seller's obligations to follow-up on and resolve existing trailing
      documents as of the Closing Date (the "Trailing Documents"). Seller shall
      pay for certain full-time employees in accordance with SCHEDULE VI for the
      periods set forth therein. Following such periods, Purchaser shall offer
      to provide assistance with Seller's obligations with respect to any
      remaining Trailing Documents on an hourly rate basis under "Miscellaneous
      Support" below. With respect to the services provided pursuant to this
      item 2, Purchaser's indemnity of Seller shall survive for a period of 365
      days following the provision of the service from which a claim arises.

3.    PAYOFF FOLLOW UP. Purchaser shall cause its personnel to fulfill Seller's
      obligations to complete mortgage loan payoffs, including processing any
      filing releases and satisfaction, processing escrow refund checks,
      cancellation of mortgage guarantee insurance policies, and customer call
      support for paid in full loans as of the Closing Date. These services
      shall be provided at a rate of $9.35 per loan (estimated total fee of
      $140,250.00).

4.    ASSIGNMENTS. Purchaser shall cause its personnel to fulfill Seller's
      obligations under the Asset Purchase Agreement to prepare and record
      Assignments of Mortgage. Seller shall pay for the cost of preparing and
      recording such Assignments of Mortgage. Purchaser will charge Seller the
      hourly rates set forth on SCHEDULE V for performing these services.

5.    FILE STORAGE. Purchaser will provide storage, access and retrieval
      capabilities with respect to stored inactive loan files for loans that
      were serviced by Seller and that became inactive prior to the Closing
      Date. Such storage will continue in accordance with the time periods set
      forth on SCHEDULE IV. These services shall be provided at a monthly rate
      of $0.25 per box. Final destruction of such records (at the times
      indicated on SCHEDULE IV) shall be provided at a rate of $0.77 per box.


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<PAGE>   9

6.    MISCELLANEOUS SUPPORT. Purchaser shall cause its personnel to provide
      certain functions to the Seller following the Closing Date. Purchaser will
      charge Seller the hourly rates set forth on SCHEDULE V for performing
      these services. These services include, but are not limited to, assistance
      with the following:

                  Research and follow-up on prior year-end reporting

                  Research and follow-up on NSF and misapplied payments

                  Final bank reconciliations

                  Responses to audit requests

                  Research and follow-up on loan-level litigation, which will
            require, as necessary and by way of example and not limitation,
            Purchaser's personnel to participate in litigation as witnesses

                  Research and follow-up on inactive loans

                  Research and follow-up on investor repurchase requests

                  Final agency pool reconciliations (Test of Expected P&I
            balanced to the custodial bank accounts) for all pools delivered
            prior to Closing Date

                  Final FHLMC, FNMA and GNMA pool to security balance
            reconciliations for all pools delivered prior to Closing Date

                  Research and follow-up on outstanding custodial account items

                  Research and follow-up on outstanding checks (e.g., escrow
            refunds, GNMA security holder remittances, tax and insurance
            disbursements)

                  Research and final resolution of investor loan-level
            discrepancies

                  Research and final resolution of outstanding customer
            investigations

7.    SPECIAL PROJECTS. Seller may make requests for other services or for
      special reports or information, and Purchaser will provide an estimate of
      the cost and completion date.


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                          SCHEDULE III - Free Services

1.    UPDATED MORTGAGE LOAN SCHEDULE. Purchaser shall cause its personnel to
      perform, on behalf of Seller, Seller's obligations under Section 10.15 of
      the Asset Purchase Agreement.

2.    PRORATION OF CHASE AMOUNT. Within five (5) business days after the Closing
      Date, Purchaser shall calculate the proration of the Chase Amount as
      required by Section 3.01(a)(ii) of the Asset Purchase Agreement and shall
      deliver Schedule 3.01(a)(ii) of the Asset Purchase Agreement to Seller.

3.    OTHER SCHEDULES. To the extent that Seller is unable to prepare schedules
      or updates thereto required under the Asset Purchase Agreement on and
      after the Closing Date, Purchase shall cause its personnel to perform, on
      behalf of Seller, Seller's obligations to prepare such schedules or
      updates.


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                      SCHEDULE IV - File Retention Schedule

The following are the agency guidelines that currently exist for retention of
archive records, i.e., Payoffs and Foreclosures.

FHA

All servicing files must be retained for a minimum of the life of the mortgage
plus three years. Each claim review file must be retained for at least three
years after final or the latest supplemental claim settlement.

VA

VA regulations do not require holders to retain records for any fixed period of
time after a Claim is paid, although, it is recommended that they be retained
for three years.

GNMA

GNMA has no specific requirements that relate to retention of archive storage
records.

FNMA

After a mortgage is liquidated, the servicer must keep the individual mortgage
records for at least four years, measured from the date of payoff or the date
that any applicable claim proceeds are received.

FHLMC

The servicer must maintain the mortgage file while FHLMC retains an interest in
the applicable mortgage and for at least three years from the date FHLMC's
interest in the mortgage is satisfied. If the mortgage was foreclosed upon, the
servicer must maintain the mortgage file for at least six years from the date
FHLMC's interest in the mortgage was satisfied.

The following are the SOMSC's guidelines that currently exist for retention of
archive records, i.e., Payoffs and Foreclosures.

DEPARTMENT                    TYPE                        RETENTION
----------                    ----                        ---------

Foreclosure                 Completed              GNMA/FNMA B Four Years

                                                   FHLMC B Six Years

                            Reinstated             GNMA/FNMA/FHLMC B Three Years

Payoffs                     Paid In Full           GNMA/FNMA/FHLMC B Four Years

A detailed listing of the archive records exists detailing the destruction dates
for each box.


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                            SCHEDULE V - Hourly Rates

The fee for any services performed on an hourly rate will be based upon the
division of the related personnel, and whether such personnel are management or
staff, based upon the following rates:

-------------------------------------------------------------------------------
        Division            Management Hourly Rate       Staff Hourly Rate
-------------------------------------------------------------------------------
        Financial                   $37.00                    $22.00
-------------------------------------------------------------------------------
        Servicing                   $32.00                    $14.00
-------------------------------------------------------------------------------
  Front Line Production             $54.00                    $16.50
-------------------------------------------------------------------------------
  Back Room Operations              $32.00                    $14.50
-------------------------------------------------------------------------------
     Human Resources                $52.00                    $24.00
-------------------------------------------------------------------------------
          Legal                     $52.00                    $19.00
-------------------------------------------------------------------------------
   Records Management               $20.00                    $11.00
-------------------------------------------------------------------------------
      Acquisitions                  $26.00                    $12.00
-------------------------------------------------------------------------------


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                 SCHEDULE VI - Trailing Document Cost Structure

-------------------------------------------------------------------------------
Documents
-------------------------------------------------------------------------------

Insuring:
                                        $60,350
                                        $21,900 one time
                                        cost

                                        $82,250         

FTE 60 additional days
-------------------------------------------------------------------------------
Source One Loan File Set Up:

                                        $19,000
                                        

-------------------------------------------------------------------------------
Document Retrieval & Corrections:

                                        $140,000

                                        TBD one time cost

-------------------------------------------------------------------------------
Shipping
-------------------------------------------------------------------------------
Document Control:

                                        $252,900

                                        $50,000 one time cost

-------------------------------------------------------------------------------
Records Management
-------------------------------------------------------------------------------
New Production:                         Hourly rates in
                                        accordance with
                                        SCHEDULE V

                                        $ 67,768           
                                        $ 17,702           
                                        


Loan Sale Exceptions:
-------------------------------------------------------------------------------
Investor Reporting Misc. Follow Up
-------------------------------------------------------------------------------
                                        Hourly rates in    
                                        accordance with    
                                        SCHEDULE V         

-------------------------------------------------------------------------------
Financial
-------------------------------------------------------------------------------
                                        Hourly rates in    
                                        accordance with    
                                        SCHEDULE V         

-------------------------------------------------------------------------------
SubPrime
-------------------------------------------------------------------------------
                                        $ 19,500           



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