american housing, page-8

It's hard to pick the likely outcome from this data.
Translating to Aussie speak:
Sub-prime loans - no Aussie equivalent - very hard to get significant finance here with a seriously impaired credit record. Politicians in US responsible for these.
Alt-A - same as our low-doc loans (also known as liar-loans in the US) - these are a mixed bag.
Option ARM's - teaser rates for 2-3 years, adjusting to higher rates on expiration of teaser term. Credit quality typically good.

Big unknown is the effect of non-recourse finance on these ARM's - where negative equity exists, will owners walk away and erase their mortgage debt? It was a no-brainer for the sub-primers and possibly some of the Alt-A's - but for the ARM's, welching on some housing finance not such a smart idea as will destroy the mortgagee's credit record. That's bad news for them and better option would be to tough out the period of negative equity. Much easier to re-finance housing loans in the US - and with rates low, some of these ARM's could get themselves of the hook this way - so long as the yield on 10yr treasuries remain at present levels.
BUT - if unemployment continues to rise - different story, could get nasty.