This was briefly touched on above, but to refocus the thread (if I may), the key metric for the option arms is how many people are paying the minimum. It is my feeling, backed up with a little data (don’t remember the sources, but I’ve been short DSL for a year so picked it up via them) that the vast majority of option ARM borrowers only make the minimum and that after the balance goes to 115% – 120% (depends on the loan) it “resets” and you pay it off as if it were fixed (full balance, regular/high rate).

So, the real question is, looking at the chart, when were the loans made, and when will the FORCED resets occur. If you’ve been making 100% payments, you do have some past payment skin in the game, but these I believe will be the minority.