Countrywide Financial, the distressed mortgage-lending arm of Bank of America, could file for bankruptcy, according to a leading stock analyst.Financial analyst Mike Mayo, who works for Credit Agricole, released a report this week saying the company might file for bankruptcy because it is still technically separate from Bank of America, according to a Wall Street Journal report. 

Bank of America acquired Countrywide Financial for $4 billion in 2008, at the same time picking up a much larger stake in the home loan industry than it had previously held. The bank’s mortgage portfolio is severely troubled at the moment, with more than 85% of its loans in danger of delinquency and a 50-state inquiry into the possibility of incorrect paperwork on foreclosures.

Faced with these problems, Mayo said bankruptcy could be a feasible option for the mortgage lender. His report said that the acquisition of Countrywide was responsible for most of Bank of America’s foreclosure issues, which are costing the bank public relations capital and actual revenue. The report also said Bank of America would have a strong disincentive to file for Countrywide’s bankruptcy because it could hurt the bank’s image. This disincentive made the bankruptcy option “a long shot,” according to the paper.

Countrywide Financial, now called Bank of America Home Loans, was a massive mortgage lender that was bought by Bank of America in 2008. At one point, Countrywide serviced about one-fifth of the nation’s home loans. Former Countrywide executive Angelo Mozilo and Bank of America recently settled a suit for $67.5 million for filing false documents with the Securities and Exchange Commission.

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