Countrywide Financial Corp, the largest U.S. mortgage lender, said on Wednesday that foreclosures and late payments rose in December to the highest on record, sending its shares tumbling for a second day to their lowest in nearly 13 years.

The shares were down 66 cents, or 11.9 percent, at $4.89 in afternoon trading, after earlier falling to $4.43, their lowest since April 1995.

Analysts attributed the decline to deteriorating credit quality reflected in Countrywide's monthly operating report, and renewed concern that the lender might not survive the housing crunch, and could seek bankruptcy protection.

Countrywide shares had fallen 27.4 percent on Tuesday, though the company said bankruptcy rumors lacked substance.

Virtually no one in the market is willing to cast a vote of confidence in this company's ability to extricate itself from its current heap of trouble, options analyst Rebecca Engmann Darst of Interactive Brokers Group wrote in a report.

Like many rivals, Calabasas, California-based Countrywide has been hurt by falling home prices, rising defaults and tight capital markets.

It now primarily makes smaller home loans considered less likely to default, after losing $1.2 billion in the third quarter. Chief Executive Angelo Mozilo has called the nation's housing slump the worst since the Great Depression.

Countrywide said the foreclosure rate for the 9.03 million mortgages on which it collects and processes payments doubled to 1.44 percent from 0.70 percent a year earlier, and rose from November's 1.28 percent. The delinquency rate rose to 7.20 percent of unpaid balances from 4.60 percent a year earlier.

December's rates were the highest since 2002, the earliest period for which data are available. Countrywide's mortgage servicing portfolio grew to $1.48 trillion, as homeowners prepaid fewer loans.

The extent of the deterioration is a surprise and does not bode well for the fourth-quarter results of companies with mortgage credit exposure that may have to further add to reserves, wrote Lehman Brothers Inc. analyst Bruce Harting.

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Shares of other mortgage lenders fell. In afternoon trading, Washington Mutual Inc was down $1.27, or 10 percent, at $11.46, while IndyMac Bancorp Inc sank $1.28, or 22.6 percent, to $4.38.

Washington Mutual and IndyMac have also suffered mounting credit losses, and stopped making many home loans now considered too risky. Neither returned calls seeking comment.

Countrywide said it funded $23.4 billion of home loans in December, up 1 percent from November, though average daily loan applications fell 17 percent to $1.54 billion.

Total mortgage lending fell 44 percent from $41.7 billion a year earlier. Subprime loans sank to $6 million from $3.74 billion.

Countrywide also said its banking unit ended the year with $61 billion of deposits, up $2.3 billion from November. The company is offering yields above 5 percent on some accounts to attract cash after credit markets seized up.

Management is pleased with the progress we have made in positioning the company to navigate the current challenging environment, Chief Operating Officer David Sambol said.

Still, analysts have said Countrywide, which in August got a $2 billion infusion from Bank of America Corp, may need more capital, perhaps from outside the United States.

Rumors of bankruptcy are still surrounding Countrywide, said William Lefkowitz, options strategist at brokerage firm vFinance Investments.

Countrywide also said it has cut 10,986 jobs since the end of July, achieving its goal of eliminating 10,000 to 12,000 jobs by the end of 2007. The company said it ended December with 50,600 employees, down from 61,586 in July.

(Additional reporting by Doris Frankel in Chicago; Editing by Derek Caney and Dave Zimmerman)

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