It can't really be that bad... the sequel trailer

The fallout from the mortgage mess may be quite far from playing itself out. In fact, we may well not have seen the worst of it yet. CNBC reports that when Bank of America bought Countrywide, they did not get possession of the paperwork for Countrywide's loans. When BofA issued mortgage-backed securities based on those loans they were essentially (if perhaps unwittingly) committing fraud by selling securities backed by legal documents that they didn't actually have.

Morgenson continues, in rather measured tones, considering the apparent ramifications of the statement:

"If Countrywide’s practice was to hold onto the note, then investors in this pool and others may question whether the security was constructed properly and legally and may be able to require Bank of America to buy back their securities."

If you like speculating, this seems like a good time to buy put options on BofA.