No Savior for Mortgage Biz

But even if Countrywide shares plunge and BofA decides not to convert the shares, it gets preferred stock paying 7.25% annually for two years -- a nice payout with the 10-year Treasury yielding less than 5%.

Shares of Countrywide have lost half their value this year. The company was forced earlier this month to draw down an $11.5 billion credit line after it was unable to get funding by selling mortgages in the secondary markets.

Countrywide's stock fell 2.9% Tuesday on news that sales of existing homes fell in July for a fifth consecutive month to the slowest pace in five years. The other stand-alone lenders were hit as well, with jumbo mortgage provider Thornburg dropping 5.76% and IndyMac sliding 3.51%.

IndyMac and Thornburg also have been hit hard by the collapse of the secondary market for mortgage securities, though so far these smaller mortgage players have been less exposed to the defaults and delinquencies that are scaring investors away from Countrywide's securities.

But buyers are likely staying away from IndyMac and its Alt-A mortgage business -- at the very least until market conditions improve, says Jason Arnold, an analyst at Royal Bank of Canada's RBC Capital Markets, who covers IndyMac and Thornburg.

"IndyMac, until recently, really didn't have a big need to partner with another institution in the past as compared to now. It seems like it would make sense for them to be looking at something like that," Arnold says. "The problem here is that the things are so tumultuous."