Don't assume this is all bad news, Joe. Keep in mind that these resets can have advantageous results for homeowners if Bernanke keeps interest rates low since surely a lot of these loans were written at higher rates and will reset down, not up, affording the borrowers some relief in the form of lower monthly payments.
In addition, this graph lumps Option ARMs together with Alt-A loans, while the risks inherent in each are very different. Many self-employed people use Alt-A loans as do buyers of property for investment. Being Alt-A does not strictly mean not being qualified for the same loan with full docs, just that some (not all, these are not called 'liar loans' for no reason!) people's finances are so complicated or perhaps they have 'mattress money' which cannot be verified in the normal loan process so it is easier to go Alt-A. While Alt-A default risk is higher than for prime loans, it is lower than the risk on subprime, and within the Alt-A category, investment property loans are higher-risk than those on owner-occupied properties.
There are a lot of variables to consider here, so don't conclude these data represent total 'likely' defaults -- IMO, they do not, they simply represent the total number of potentially riskier loans out there, and as we all know, foreclosure has now moved into the prime loan category as people lose their jobs, so I'm not sure what conclusion, if any, is appropriate from viewing those data.
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