LeBow's Dr. Joseph Mason on the Implications of Subprime Mortgages

As the downturn in the mortgage industry has a major impact on the stock market, journalists from around the nation and the worlds are turning to LeBow College of Business Associate Professor of Finance Joseph Mason to gain perspective on the effects that the rise of foreclosures and property seizures will have on the economy overall.

Earlier this year, Mason and his colleague, Joshua Rosner, manager director, Graham Fisher & Co., presented a paper entitled “How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?” at the Hudson Institute last month. Among the conclusions Mason and Rosner have drawn is that in 2005 and 2006, there were “massive deteriorations in subprime mortgage performance, particularly in ‘non-traditional’ hybrid, interest-only, and negative amortization loans.” Furthermore, they found that by 2006, foreclosures and seizures of properties obtained through subprime loans increased by 10 percent, “the worst levels in nearly a decade.”

Mason and Rosner warned that the great concern in this trend is the “reputational risk posed to the U.S. capital markets- markets that have been viewed as among the most transparent, efficient and well regulated in the world.”

In the last few weeks, Mason has been quoted in dozens of publications including The New York Times, The Economist, Financial Times, The Washington Times, as well as on CNBC and CNN.

Most recently, Mason was the subject of an interview on WBBM in Chicago and explained how the mortgage crisis affects other segments of the economy.