JPMorgan Eying WaMu?

Bank of America's (BAC Quote) $4 billion deal for troubled mortgage lender Countrywide Financial(JPM Quote) has not gone unnoticed by JPMorgan Chase(JPM Quote).

BofA's rescue of Countrywide, which pairs the second-largest U.S. bank with the top mortgage lender in the nation, may create a mortgage powerhouse if BofA can endure the pain inherent in Countrywide's subprime-damaged balance sheet.

The deal sees Charlotte, N.C.-based BofA acquiring Countrywide for about $7.16 a share in stock -- an offer that translates to 7.6% below Countrywide's closing price in Thursday trading.

The undeniable appeal the Calabasas, Calif.-based Countrywide holds for BofA is the mortgage lender's 9-million-strong borrower base and its steady flow of fees from some $1.5 trillion of mortgages. Such numbers are compelling, even given all the possible risk associated with the mortgage business.

For JPMorgan, the deal could embolden it to fill the gaps in its own platform. CEO Jamie Dimon has stated publicly that he wanted to both build out his mortgage business and grow in areas such as California, Florida, New England and the mid-Atlantic, where it does not have a footprint.

One such deal that could help to solve those problems is a JPMorgan buyout of troubled Washington Mutual(WM Quote), another major mortgage player whose stock price has plummeted over the past year amid the housing slump and credit tightness.