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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 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 ...
Brokers defend these incentives, known as yield spread premiums, as worthwhile for borrowers who want to finance certain expenses to hold down closing costs. But the higher rates cost them much ...
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YSP may refer to: . Yemeni Socialist Party; Party of the Greens and the Left Future (YSP), a Turkish political party; Yield spread premium, a cash rebate paid by a lender to a mortgage broker if the broker sells a mortgage at an above-Par interest rate to a borrower
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.)
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.
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]