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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.
On Monday, the Fed announced it was banning yield spread premiums, or YSPs. YSPs are essentially bonuses. ... For premium support please call: 800-290-4726 more ways to reach us. Mail. Sign in.
In finance, the yield spread or credit spread is the difference between the quoted rates of return on two different investments, usually of different credit qualities but similar maturities. It is often an indication of the risk premium for one investment product over another.
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.)
For example, New York State regulations require a non servicing "banker" to disclose the exact percentage of loans actually funded and serviced as opposed to sold/brokered. Brokers must also disclose Yield spread premium while Bankers do not. This has created an ambiguous and difficult identification of the true cost to obtain a mortgage.
Normally, to compensate the bondholder for the time value of money, the price of a zero-coupon bond will always be less than its face value on any date of purchase before the maturity date. [8] During the European sovereign-debt crisis , some zero-coupon sovereign bonds traded above their face value as investors were willing to pay a premium ...
For an MBS, the word "option" in option-adjusted spread relates primarily to the right of property owners, whose mortgages back the security, to prepay the mortgage amount. Since mortgage borrowers will tend to exercise this right when it is favourable for them and unfavourable for the bond-holder, buying an MBS implicitly involves selling an ...
In finance, mortgage yield is a measure of the yield of mortgage-backed bonds.It is also known as cash flow yield. The mortgage yield, or cash flow yield, of a mortgage-backed bond is the monthly compounded discount rate at which the net present value of all future cash flows from the bond will be equal to the present price of the bond.