The reality is that many of the home owner's facing foreclosure don't have only an ARM mortgage. With so many buying incentives such as "No Money Down," finance your closing cost etc. Many homes were finances with 100+% financing and once one bank loans 80% another bank comes in for the rest. Yes, the fist loan is an ARM at a great rate but the second mortgage is at a rate in the double digits. The notes have fine prints that state missing one payment increases in significantly and that in 3 or 5 years it becomes a balloon payment. Why did so many agree to 100+% financing:
1. Many thought this was the time to jump into home buyer, not understanding "Supply and Demand" or "Buyers Market vs. Seller's Market"
2. It was believed the prices would continue rising, Remember "What goes up must come down"
3. Lenders eager to make loans advised buyers, that they can always refinance in a few years and get out this loan, but they have to get in this loan now. Not warning of possible price drop or credit rating drop from hardship of current loan.

Another option is refinancing to a fixed-rate loan while rates are at historic lows. Ms. Francis(NOT ME) says this is especially popular with borrowers who have ARMs adjusted according to other indexes or have terms that allow for sharper interest rate spikes. But the cost of refinancing may be steep, especially in New York, where borrowers must pay a mortgage recording tax.
http://www.nytimes.com/2010/08/29/realestate/29mort.html?ref=business