Fitch Ratings has turned thumbs down on mortgage securities backed by subprime loans.
The ratings firm chagned its 2007 ratings outlook to negative from stable in a report issued today.
Noting the downturn in the housing market and the softening economy, Fitch said further downgrades of these securities are likely in the future because it sees rising deliquencies among subprime borrowers.
Fitch said serious subprime deliquencies have increased almost 50% year-over-year while the rate of downgrades has increased in recent months.
Subprime loans are made to the least credit-worth borrowers, or those with low credit scores. Such loans are packaged into what's known as mortgage-backed securities, or MBS, that investors buy and trade.
Ratings agencies like Fitch and Moody's grade the quality of the securities for investors.