You are right about the hurdles to refinancing out of an option ARM. There are many. And these conditions are likely to persist limiting them from doing so.
The one scenario for people with ARMs that works in their favor is if rates are the same or lower when the re-set happens. This is only for those who have traditional ARMS or those with option ARMS who have made principal payments. The neg-am option ARM people are screwed either way (That is … unless they put 50% down and have low debt ratios or are making big bucks off their other investments. Which is likely to be an insignificant fraction of the option ARM folks).
