Fitch Ratings has downgraded Residential Capital's (ResCap) RMBS servicer ratings. The rating agency said that servicer ratings also remain on Rating Watch Negative by Fitch, so there's a possibility of a further downgrade down the road.

According to the rating agency, the servicer rating downgrades are a result of ResCap’s weakening financial condition. Fitch downgraded ResCap’s Issuer Default Rating (IDR) to ‘C' from 'BB-' on May 2 after the firm's announced debt exchange offer.  ResCap’s corporate ratings are still on Rating Watch Negative pending the execution of the debt exchange offer.

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