For those interested, the pending ARM re-sets appear to be only the first wave of the mortgage loan fiasco.
http://seekingalpha.com/article/4664...-mortgage-bomb
This article "Negative Amortization and Interest Only: The Next Mortgage Bomb" reviews the huge percentage of loans with negative amortization and interest only payments. Let's say house prices go down (they have) and stay down, what will a huge percentage of people in the negative amortization and interest only groups do? Well, walk away from their mortgage, especially if they cannot live in the house long-term.
Last paragraph:
"Finally, in case anyone asks: “Why didn’t anyone see this coming?” The answer is pretty simple: these trends aren’t new, they’ve been developing for a couple of years now, Wall St. and the lenders saw it coming, they just chose to pretend it didn’t exist and hope that “somehow” the profits would keep rolling in. It kind of makes you wish you could rank hedge fund managers, lenders, money managers, financial executives, et al, by their propensity to wear rose colored glasses and ignore pink Elephants."