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07/12/2007 FAQ #8: Could you run a numerical example on how a defaulting ARM borrower whose rate has been reset higher in either the subprime, Alt A or prime sectors could be rescued from being foreclosed?
Maybe the best way is to follow through the examples on the presentation slides #2, #5 and #7. So let’s say a lending bank has a defaulting ARM borrower. If the bank offers him a 5-year SwapR…