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A yield spread premium (YSP) is the money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower up front costs, generally paid in origination fees, broker fees or discount points.
The Federal Reserve has banned mortgage fees you probably weren't even aware of, but that were inflating your home-loan interest rate. On Monday, the Fed announced it was banning yield spread ...
The Fed spelled out its goals yesterday: "Prohibit lenders from paying mortgage brokers "yield spread premiums" that exceed the amount the consumer Abuses the Fed hopes to correct with the new ...
In attempt to put on a more consumer-friendly face, the Federal Reserve proposes a ban on side payments to mortgage brokers that encourage them to steer customers to higher-cost mortgage loans.
Not disclosing Yield spread premium or other hidden fees BEFORE the settlement/closing. Failing to provide all RESPA documentation, i.e. Good Faith Estimate, Special Information Booklet, Truth in Lending, etc. so the borrower may clearly understand the mortgage terms and lender policies.
Mortgage brokers, on the other hand, earning the same yield spread premium, disclose the additional fee to the consumer because the yield spread premium becomes an additional fee earned and therefore disclosable under federal and state law. [1]
Annual percentage yield. Called the APY, this is the total amount of interest you'll earn on your deposit over one year, including compound interest , expressed as a percentage. Member FDIC.
Often the loan originator can increase the margin when structuring the product for the borrower. An increase to the margin will also increase the borrower's interest rate, but will improve the yield spread premium which the loan originator may receive as compensation from the lender. Fully indexed rate (F.I.R.)