I think that lowering interest rates will probably be the extent of it. The rest will be up to the lending institutions and debtors themselves. Assuming that the collapse will be initiated largely by ARM resets, lower LIBOR = smaller increases in payments after resets. This would probably reduce the the size of the collapse. Lenders, of course, can attempt to save themselves and individual property owners from the inmpending foreclosure/distress sale process by simply re-negotiating ARM terms prior to or at the time of reset, but I wouldn’t hold my breath.
