Nov. 7 (Bloomberg) -- GMAC LLC, the lending arm of General Motors Corp., and its Residential Capital mortgage unit were downgraded by Standard & Poor’s Ratings Services, which cited “the dire situation for both entities.”

Standard & Poor’s changed its long-term counterparty credit grade on GMAC LLC to CCC from B-, and ResCap was lowered to CCC- from CCC+, the ratings company said today in a statement. The changes follow Detroit-based GMAC’s $2.5 billion third-quarter loss, caused largely by a $1.9 billion deficit at ResCap.

“We do not anticipate the financial pressure at Residential Capital dissipating in the intermediate term,” S&P analyst John Bartko wrote in today’s report. “A strategic solution appears the only option within this time frame.”

GMAC was slammed by slumps in the housing market, where foreclosures are running at record levels, and in auto sales, which GM labeled the worst since 1945 when it reported October results this week. There is “substantial doubt” that ResCap can survive without more support from GMAC after posting losses totaling $9.1 billion over the past eight quarters, GMAC said Nov. 5.

GMAC is the primary lender to customers of GM, the biggest U.S. automaker, which holds a 49 percent stake. Cerberus Capital Management, the New York private-equity firm, owns 51 percent.

GMAC has cut off auto loans to customers who don’t have the highest credit ratings and curtailed operations. To stabilize the company and get loans flowing again, GMAC has said it may ask bondholders to swap their investments for new debt that could be more secure.

“If GMAC employs a debt exchange that we deem to be a distressed exchange, we would lower our rating on GMAC to ‘selective default,’” S&P said in the report today.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: November 7, 2008 12:34 EST