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Originally Posted by 4RE KLR
Yes some of them actually thought the rates would stay low for many years as the LIBOR rate had never been high and is still not high to this very day.
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Just doing a quick search on LIBOR ARMs, the first explanation I saw describes the rate as being LIBOR plus a spread.
That is quite similar to a loan based on the prime rate here. I have seen offers for Prime, Prime - 1%, Prime + 0.5%, etc.
So you are telling me that someone might have gotten an ARM for LIBOR + 15% and did not know what the spread meant and what it would do after the introductory rate ended?