Fitch cuts ResCap long-term issuer default rating

Fitch lowers ResCap's long-term issuer default rating after Ch. 11 bankruptcy filing

Associated Press

NEW YORK (AP) -- Fitch Ratings lowered the long-term issuer default ratings for Residential Capital on Tuesday, a day after Ally Financial's troubled mortgage business filed for Chapter 11 bankruptcy protection.

Residential Capital, or ResCap, made the filing in New York. It has been unable to make payments on debt taken out to finance soured home mortgages. The filing will separate the money-losing ResCap subsidiary from Ally's auto loan and banking businesses.

Fitch cut its rating to "D'' from "C'' on Residential Capital LLC. It reaffirmed the negative rating watch on Ally's "BB-" long-term issuer default rating and senior unsecured debt rating.

Ally Financial Inc., which is 74 percent owned by the U.S. government, was the financial arm of General Motors Co. until the banking industry meltdown in 2008. The company is based in Detroit.

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