BofA fell 5% in early trading Friday to a 52-week low below $12, as analysts questioned whether the bank is adequately prepared for legal challenges tied to its handling of foreclosures — an area where BofA has something short of a sparkling track record.

S&P Equity Research cut its rating on the Charlotte-based bank to hold from strong buy Friday, saying it has “a lower level of confidence (than we do for JPMorgan Chase) that BAC has adequately prepared for, and reserved for, future mortgage repurchase demands from the GSE’s and investors, and for the potential administrative and legal costs of the rising foreclosure crisis.”

Four big U.S. banks have suspended foreclosure proceedings after Ally Bank, a taxpayer-backed lender that runs the GMAC mortgage business, said last month it was probing irregularities in foreclosure cases.

Wall Street initially shrugged off the news, but it has turned into a scandal this week with the announcement that the attorneys general in all 50 states are probing whether the banks illegally evicted homeowners.

BofA has the biggest U.S. mortgage business, thanks to its 2008 acquisition of the Countrywide subprime loan factory. CEO Ken Lewis said at the time the deal would give BofA a competitive advantage in the U.S. mortgage business, but the bank’s exposure to foreclosure claims is now weighing on an already weak stock.

BofA shares have dropped 11% since Tuesday, compared with around 7% for the other big mortgage banks, JPMorgan Chase and Wells Fargo .

JPMorgan Chase CEO Jamie Dimon this week told investors he didn’t believe the costs of dealing with the foreclosure problems will be “material” for the bank beyond the billions it has already set aside to handle housing-related costs. But Dimon did concede the bank might end up paying penalties to settle probes by state attorneys general, and the bank did add $1.3 billion to its legal reserves.

Clearing the air on BofA’s foreclosure problems is emerging as the first major test for CEO Brian Moynihan, who has enjoyed a bit of a honeymoon period but will face antsy investors on an earnings conference call Tuesday morning.

If he fails to ease fears about ballooning legal exposures, BofA shares could fall even further, Guggenheim Partners analyst Marty Mosby writes in a note to clients Friday.

“Stock performance next week will more likely be driven by their discussion related to the mortgage foreclosure and repurchase issues,” Mosby writes of BofA and Wells Fargo.