I see you point, but once you are in an ARM you don’t “requalify” every time the rate adjusts. You simply get a letter stating that your payment has increased/decreased to X, based on this interest rate.
That’s a good point, but I would think (and maybe I’m wrong about this) that a homeowner has tremendous leverage these days in negotiating ARM rates (or converting an ARM to a fixed-rate loan) with banks. The implied threat of a homeowner abandoning a home and turning the keys over to the bank is more real than it has been in years.