I did a simple study of option ARMs for my blog a week ago. Main findings were, 1) option ARMs appear to be the cause of 25% to 30% of all foreclosures that occurred the last 6 months, 2) they are overrepresented in the South Bay. In 91914 (the upscale corner of Eastlake), the percentage of option ARM induced foreclosures is close to 50%. (That explains how we came to have a pocket of million-dollar houses in the area so far away from any high-tech employment.)
Numbers seem to suggest that option ARM holders are defaulting en masse long before the final reset.
Of course, that only tells us about ARMs that already went delinquent. There could be a big chunk of sleeper option ARMs in Carmel Valley. But those must be still paying. In all of 92130, I only see 9 trustee sales since July that have negative-amortization characteristics.
