Powayseller once said, with characteristic confidence, that “50% of the ARMs originated in 2005/2006 are going to default.” Not just subprime ARMs, or Alt-A ARMs… but ALL ARMs. I offered to take the other side of such a wager – that in fact, less than 50% would default – but she was uninterested… I don’t think it would surprise anyone here to find that 25% of the “non-conforming” 2/28s & 3/27s originated between 2004 and 2005 ultimately default. But recall that a large percentage of mortgages that default are ultimately brought current. In summary, it’s gonna get very ugly, but Powayseller’s predictions regarding defaults remain, shall we say, “aggressive.”
