Shares of Countrywide Financial, the nation's largest mortgage lender, plunged 28 percent today despite the company's denial of rumors that...

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LOS ANGELES — Shares of Countrywide Financial, the nation’s largest mortgage lender, plunged 28 percent today despite the company’s denial of rumors that it was planning to file for bankruptcy protection.

In a prepared statement, the company said there was “no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company.”

Countrywide stock dipped as low as $5.76 before the New York Stock Exchange temporarily halted trading in advance of the company’s statement. The decline sent stocks overall lower.

When trading resumed, the shares rebounded somewhat, then slumped to close down $2.17 at $5.47.

The stock fell early in the day after a report in The New York Times said court records show the lender fabricated documents related to a bankruptcy case of a borrower in Pennsylvania.

Other Countrywide actions in borrowers’ bankruptcy cases have come under scrutiny in the past.

The U.S. Trustee launched an inquiry last fall to investigate whether the lender’s claims against two South Florida borrowers seeking bankruptcy protection violated bankruptcy laws.

Investors have been particularly anxious about Countrywide in recent days. Its stock is well below its 52-week high of $45.26.

Countrywide, like many in the mortgage industry, has suffered as more customers have defaulted on home loans, particularly on those made to borrowers with questionable repayment histories.

The Calabasas, Calif.-based company reported a $1.2 billion loss in the third quarter of last year, but management forecast a profitable fourth quarter and 2008.

Wall Street analysts are skeptical the company will be able to deliver on its projection, amid ongoing home-price declines, an expected new wave of mortgage defaults this year, and lingering problems with credit markets.