It’s just a guess, but anyone who refinanced using an ARM probably withdrew much or maybe all their disposable equity when they did it; why else would someone use an ARM in a refi?

There could be a host of reasons. I have two personal examples, since I refinanced to ARMs twice in my life. In neither case did I tap additional equity.

In one case it was to get a much lower rate on a house I planned to sell within 2-3 years (personal residence sold in ’05). In this case no additional equity was taken out and the loan was about 65% LTV and for the 2 years I remained, I saved about about $400 per month. In the other case, it was a rental property, where I wanted to improve cash flow, so I lowered my payments and took a 5-year AR at about 50% LTV

Maybe I’m the exception, but at times there are lots of reasons to consider ARMs rather than equity extraction. However, in the current market the spread between 30-year fixed and 3, 5, 7 and 10 year ARMS is so small that it makes sense for a lot fewer people these days.