I agree it's difficult, but there are those with a legit use of an ARM. Having been in construction for 20 years, the last three homes I built for myself were with a 5/1 ARM because I had sweat equity in the house. They always appraised for well more than I built them for and we never lived in them more than three years. I sold my last house after I got RIF'd two years ago and made 100k.
Of course, that's all come to an end, as NOBODY seems to be able to get a construction loan these days. It's all cash or a large percentage of your money and you own the lot. The pendulum has swung too far the other way, after all the douchbag flippers, wannabe builders, banks and the Gov screwed it up.
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....The problem with this is it's SO murky and case-by-case as to who bought speculatively and who bought honestly - expecting to live there for a while. It's a difficult if not impossible thing to determine. If ANYONE gets aid, it should only be those who bought in good faith, not looking to do a "quick flip", but how do you determine that? I'd say you could probably exclude all the ARM loans (these were taken typically by speculators hoping to dump the property before the reset) but it's possible that some bought "in good faith" looking to live in the place with an ARM hoping to refi, which now they can't do because the banks won't lend. It would unfairly penalize them I suppose, but maybe it's still better than doing nothing if this segment of the economy really is "too big to fail".
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