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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.
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.
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]
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.
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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 ...
A high-yield savings account is essentially the same as a standard savings account, but it pays a much higher yield on your money. The national average yield on savings accounts is 0.57 percent APY.
option-adjusted spread, or the extra yield demanded by the security holder to compensate for the mortgage repayment option; current-coupon spread; volatilities; convexity; cost of carry; While all these factors can be important in accounting for changes in MBS returns, in practice a particular user may only select a subset.