Interesting piece in the WSJ about stats from First American CoreLogic, which tracks mortgages and exotic loans. It turns out that those who used the option-ARM, which allows borrowers to pick their monthly payment (usually no interest, interest-only or full amortized payment — guess which one most people chose?) may be more toxic than “subprime loans.” No surprise here, but read on:

Nationwide, delinquencies on subprime loans — at about 28% as of February, according to First American CoreLogic– remain much higher than for option ARMs. But recent reports from mortgage securitizations suggest that subprime delinquencies have started going bad at a lower rate while delinquencies on option ARMs are speeding up.

Unlike subprime loans, which went to people with weak credit, option ARMs were generally given to borrowers considered to be lower-risk. But lending standards weakened in recent years and many borrowers now have little or no equity. Many lenders reduced the teaser rates on these loans as home prices climbed, making them appealing to borrowers looking to make the lowest monthly payment possible.

As you can see, California has probably the biggest chunk of these loans, many from Countrywide, Washington Mutual and Wachovia, according to the article.