The problem is that you assume that all ARMS were put in place in the same category: 100% LTV, buyer stretched to 40% of their income for PITI, etc. This is simply not the case, and probably what drives some of us batty.
Though there are many loans in these high-risk categories, the 25% of loan resets next year and the xx billion dollars at stake also includes some people who put 20% or more down for loans with PITI at less than 20% of their incomes.
I pointed to a specific above. Others have pointed to specific examples of FBs who are in the category you assume. No way a majority of ALL ARMs resetting in 2007 go into default.
By the way, I won’t take any side bets on this one. I placed my bet in 2002 and will stick with it.
