My opinion is that,
- Nearly every Arizona Option ARM borrower who was only making the minimum payment every month (negative amortization) has already been foreclosed on,
- Those borrowers who were generally making the interest-only payment could actually see their monthly payments go DOWN because of the crazy low interest rates we have right now, and
- Ditto for those who were paying more than the interest-only payment.
The main reasons for defaulting on an Option ARM are the same reasons for defaulting on any mortgage loan these days;
- You are way under water, and/or
- You don’t make as much money as you used to.
The Option ARM resets aren’t going to trigger a lot of additional foreclosures, in my opinion.