A Merrill Lynch analyst’s warning that Countrywide Financial Corp. could go bankrupt, coupled with alarming news from other lenders, helped kill a stock market rally Wednesday and reinforced fears that investors are no longer willing to fund mortgage lenders.

Countrywide’s stock dipped below $20 at one point Wednesday afternoon in furious trading over fears that a shortage of liquidity in secondary mortgage markets could force the company to curtail its lending.

The stock rallied to close at $21.29, down 13 percent for the day and 53 percent off its one-year high. The Dow Jones Industrial Average fell 167 points to a four-month low, erasing gains made earlier in the day.

Countrywide, the nation’s largest mortgage lender, said Tuesday that loan production dropped 14 percent in July compared to the previous month, to $39 billion, following warning that “unprecedented disruptions” in the secondary market could restrict the number of loans it can make.

Falling home prices and rising delinquencies and foreclosures among loans made on risky terms have raised uncertainties about the value of investment securities backed by mortgage loans. That’s reduced the amount of investment capital flowing into such securities, making it harder for some lenders to get the money they need to continue making loans.

In a research report released Wednesday, Merrill Lynch & Co. analyst Kenneth Bruce said the acceleration of margin calls and forced asset sales in capital markets could make it hard for Countrywide to finance its mortgage operations. If liquidations of assets occur in a weak market, Bruce said, “it is possible for (Countrywide) to go bankrupt.”

Countrywide officials did not immediately comment on the report.

In an Aug. 2 statement, Countrywide reassured investors that it had nearly $50 billion of “highly reliable” short-term funding available to continue funding loans. But in its most recent quarterly report, the company warned that “a prolonged period of secondary market illiquidity” could reduce loan production volumes, hurting its future earnings and Countrywide’s “financial condition.”

Unlike large banks, which can use depositor’s money to make loans, Countrywide is almost entirely dependent on the secondary markets to fund mortgages. In the first six months of the year, the Calabasas, Calif.-based lender sold 97 percent of its mortgage banking division’s loan production on the secondary market, or $226.2 billion in loans.

Other reports by lenders this week also highlighted problems in the secondary market.

Impac Mortgage Holdings Inc. said it racked up $274.2 million in losses in the first six months of the year, and that deteriorating conditions in the secondary and securitization markets have made it more difficult to sell loans to investors and prompted margin calls by creditors.

KKR Financial Holdings LLC, a former real estate investment trust that is attempting to liquidate its residential mortgage assets, reported a loss of $40 million on the sale of $5.1 billion in residential mortgage loans. KKR warned it could lose its entire $200 million stake in its remaining mortgage-backed securities, an indication that the mortgage loans that serve as collateral for the securities have declined in value.

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