Countrywide Financial Corp (NYSE: CFC) shares are down significantly on reports it is being investigated by the Federal Bureau of Investigation for securities fraud, specifically whether it didn’t disclose its true financial condition and the poor quality of its mortgage loans in required regulatory filings. This new FBI investigation is in addition to SEC and Congressional probes already looking into the company.

The headline-making FBI probe led to speculation that Bank of America Corp (NYSE: BAC) might try to significantly renegotiate or even abandon its purchase of Countrywide. In January, Bank of America agreed to purchase the mortgage lender for $4 billion.

Despite such speculation, Bank of America spokesperson Scott Silvestri said today that “the transaction is on track.”

California-based Countrywide was the largest U.S. mortgage lender and particularly vulnerable to the declining real estate market that has led to record defaults and decreased availability of investor capital. Its upcoming operating report for the month of February, expected within the next few days, will reveal how badly Countrywide was further hit by last month’s new round of capital market problems.

Before the news of the FBI probe, Countrywide shares were trading almost 25% below Bank of America’s agreed purchase price, showing that investors lacked confidence in the deal. The proposed agreement gives Countrywide shareholders 0.1822 Bank of America shares for each Countrywide share, which as of Friday’s closing price for Bank of America stock valued a Countrywide share at about $6.70. Countrywide’s actual closing price Friday was $5.07.

Though the gap between Countrywide’s trading price and the purchase price may attract some short-term traders, the huge uncertainties created by this new FBI investigation mean the smart money is staying clear of Countrywide for now.

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