The company has taken that position, effectively deleting the fixed-to-floating provision. Whether this is legal or not is debatable, unless or until someone litigates the issue, and I am unaware of anyone initiating legal action.

In my view there are three issues that disturb me.

1) PMT's reading of the fixed to floating provision is debatable. To me, the clause states that if LIBOR rates are not quoted by Reuters, then the issuer is obliged to create its own base rate by obtaining three bank to bank quotes for 90 days / $1mm.

2) Regardless of ultimate determination, a victory by PMT is not as important as managements breach of trust in taking advantage of a technicality rather than fulfilling the intent and promise intended by both parties.

3) Can we reasonably believe that if rates had moved in different direction, lower, so that the floating rate would be lower than nominal final fixed rate, that the company would have continued to pay the higher rate. I think not.