March 1 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S. mortgage lender, said payments were late on almost 20 percent of the subprime loans it manages for clients.

Delinquencies of 30 days or more on ``nonprime'' loans, or those to borrowers whose credit ratings fell short of the highest criteria, widened to 19 percent as of Dec. 31 from 15 percent a year earlier, Countrywide said in a regulatory filing. The data reflect loans not owned by Countrywide where the company performs billing and record-keeping.

A surge in bad mortgages has forced more than 20 lenders to close or seek buyers in the past year. Loan losses spurred a management shakeup at the U.S. unit of HSBC Holdings Plc, Europe's biggest bank by market value, and shares of U.S. lenders including New Century Financial Corp. and NovaStar Financial Inc. have fallen 50 percent or more this year.

``Investors are trying to sort out the subprime market for possible domino effects,'' said Mark Batty, a financial services analyst at PNC Wealth Management. ``A lot of this relates to just poor underwriting. Over time, those underwriters will be flushed out of the market and you'll see better underwriting standards.''

Shares of Calabasas, California-based Countrywide fell 90 cents, or 2.4 percent, to $37.44 in New York Stock Exchange composite trading. They've declined 12 percent this year.

Late payments on loans managed for clients stood at 17 percent at the end of September, according to Countrywide's last quarterly filing with the Securities and Exchange Commission.

Pulling Back

Chief Executive Officer Angelo Mozilo said last month the company pulled back from subprime loans in 2006.

``If you look at our market share, we lost some for the first time in years, but it's all in the subprime area,'' he said in a Feb. 8 interview, adding the company holds only higher- quality prime loans at its bank. ``We were a dominant player, and now subprime is a pretty small portion of our business.''

One reason was that rivals were paying salespeople in the business too much, and ``the other reason was we wouldn't take the toxic waste,'' he said.

Countrywide gave delinquency rates for the overall loan servicing portfolio when it reported fourth-quarter earnings. The data didn't break out each category. Servicing involves tasks such as billing, collections and record-keeping on behalf of other companies or investors who own the loans.

Market Share

Countrywide collected payments on $1.28 trillion in mortgages as of Dec. 31, of which $116.3 billion, or about 9 percent, were below prime. The company is the largest subprime mortgage servicer in the U.S., with a 9.7 percent share, according to newsletter Inside B&C Lending.

Mortgages are considered seriously delinquent when payments are 90 days overdue. The new data on the servicing portfolio didn't provide a figure on those long-term delinquencies, which often signal that a borrower may default entirely.

The percentage of all mortgage loans serviced by Countrywide that were at least 30 days past due rose to 5.02 percent as of Dec. 31 from 4.61 percent a year earlier, Countrywide reported in January. Loans 90 days past due fell to 1.09 percent of the total from 1.15 percent.

Subprime loans include those made to borrowers with poor credit ratings or heavy debt burdens. Bankers regard them as the riskiest mortgage loans and the most likely to default if a borrower loses a job or falls into ill health.

``Usually when subprime blows up, it's when the economy starts to weaken and unemployment rises,'' Batty said. ``This period has been unusual because it's been driven by poor underwriting and a decline in home prices. It seems it's a function of a series of events that aren't typical of the normal problems you see in the subprime market.''

To contact the reporter on this story: Will Edwards in Charlotte, North Carolina, at wiedwards@bloomberg.net.

Last Updated: March 1, 2007 16:34 EST