Basis Rate Swap

A mortgage company issues variable rate mortgages tied to the LIBOR rate (London Interbank Offer), but when they borrow money it's based on the Treasury Bill rate (which is based on an alternate money market). The spread (or difference) between the lending and borrowing rates results in interest rate risk, so they undertake a basis rate swap, exchanging the LIBOR and Treasury Bill rates, thereby eliminating the risk.

In other words, variable interest rates based on alternate money markets were switched out to lessen the inherent risk the mortgage company would face from using different borrowing and lending rates.