Those jitters add an X factor to today's real estate slump. They have sped up the downturn and could deepen it. Worst of all, they have created widespread uncertainty because, unlike the old days when bad mortgages festered in bank portfolios, the risks are now spread among investment firms, insurance companies, and others. No one knows how broad or deep the losses are.
"What it comes down to is, we have an information problem in the markets right now," says Joseph Mason, a finance expert at Drexel University in Philadelphia. "We don't know where all the exposures lie."