Can these people really pretend that a 1% rate was a reality?  Or even 5.9%?  They were counting on cheap money as far as the eye can see and closed their eyes to the risk.  It's a sin that brokers preyed on their hopes but they are partially culpable for not having the sense to understand variable means variable.  Not variable only if it moves in my direction and someone will show up to bail me out in a year or so.  Just what did the notice that the max could be 12.4% mean to them?  

Their real problem is the house probably isn't worth $344k.  Time to call the bank and work out a better deal or hand them the keys and face reality.  They've lost their down payment but probably gotten cheap rent as their interest payments were tax deductible.