Abstract      The current subprime mortgage crisis can be analyzed from many different perspectives. The securitization of mortgage loans has emerged as the leading cause of the subprime mortgage crisis. The securitization of mortgage loans is a complex process that involves a number of different players(Achcraft and Scherman,2008).      This paper focuses on the impact of securitization on mortgage rates,the housing bubble and the subprime mortgage crisis.Securitization of mortgage loans has evolved from non-existent in 1970 to a major funding source with an estimated total aggregate outstanding $8.6 trillion in 2006($6.5 trillion from mortgage-backed security and $2.1 trillion for asset-backed security) in the U.S. market(Wu and Yang,2007).      The securitization of mortgage loans increases the liquidity of mortgage loans by creating secondary markets for them. The improved liquidity of mortgage loans made them a more desirable asset and the quantity demanded for the asset increased. As the quantity demanded for the asset increased,   mortgage rates declined and the prices of housing increased. The increasing housing prices may be caused by lower mortgage rates and positive feedbacks of higher housing prices reinforce the housing bubble. However, negative feedbacks began to appear as the housing bubble reverses.       The securitization of mortgage loans also led to further complications by introduction of collaterizd debt obligations(CDOs) and credit default swp(CDS). CDOs and CDSs became sources of adverse selection and moral hazard which have significantly contributed to the current subprime mortgage crisis. Our study investigates the impact of securitization on mortgage rates,the housing bubble and subprime mortgage crisis.   Selected References

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