My opinion is that,

  1. Nearly every Arizona Option ARM borrower who was only making the minimum payment every month (negative amortization) has already been foreclosed on,
  2. 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
  3. 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;

  1. You are way under water, and/or
  2. 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.

Video Explanation