From my limited knowledge of loans, ARMs adjust when the teaser rate expires, or when the mortgage balance exceeds a certain amount, i.e. your unpaid interest is high enough to trigger a new amortization schedule. Is it possible that ARMs can reset if the market value of your home drops below the mortgage amount? Even if it is, I doubt any lender would force significant amounts of their loans to go into a delinquent state. That doesn’t help them at all.