Regulators may have a lot to look at now that the refi boom may be going bust. Mortgage bankers are developing a crop of new products based on the London Interbank Offered Rate they believe will bolster the business when refis dry up.
One of the options that some lenders are testing is the use of Liborbased B- and C-level adjustable rate mortgages. Libor is the interest rate banks charge each other for short-term Eurodollar loans ranging from overnight to five years in maturity. Many originators prefer dealing in the Libor market because many of their liabilities are based in that market and they want the match.