While we may be past the worst of the credit and housing-market woes, there are still some skeletons in the closet that need to be dealt with. One such skeleton was dragged back out into the light today, when Friedman, Billings, Ramsey (FBR) downgraded Countrywide Financial (CFC: sentiment, chart, options) to "underperform" and cut its price target to $2 per share from $7. But the drubbing didn't stop there; citing continued deterioration in the company's loan book, FBR stated that it believes that Bank of America (BAC: sentiment, chart, options) should consider backing out of its proposal to buy CFC.

"BAC should completely walk away from the CFC deal, as CFC's loan portfolio will prove a drag on earnings and could force BAC to raise additional capital," FBR said ahead of the start of trading this morning.

The reports spooked CFC investors, who sent the shares skipping nearly 9% lower on the day. However, CFC did finish off its lows of the day, bouncing back a bit after Fitch placed the company on ratings watch evolving - down from ratings watch positive. Fitch said it believes the BAC acquisition of CFC "will likely close."