They don’t refi because they can’t. Many of the exotics and i-onlys are already at or near 100% on loan to value. Other lenders look at the situation and see bad risk.
Keep in mind that in 2005, teaser ARMs and exotics accounted for 2/3rds of the new mortgages. Those people don’t have 15-20% equity and are severely exposed.
Contrast that with the national average of about 25% and you can see why the SoCal market is going to act differently than the national market on the downside, just like it did on the upside.
