What does YSP mean in mortgage?
yield spread premium
A yield spread premium (YSP) is a form of compensation that a mortgage broker, acting as the intermediary, receives from the originating lender for selling an interest rate to a borrower that is above the lender’s par rate for which the borrower qualifies.
Is YSP legal?
YSPs have been a legal form of compensation, but they are essentially kickbacks brokers and lenders receive for steering borrowers into loans that are unnecessarily expensive—and often with higher risk of foreclosure.
Who pays the yield spread premium?
mortgage lender
The “yield spread premium,” or YSP as it’s known in the industry, is the fee (commission) paid by the mortgage lender to the broker in exchange for a higher interest rate, or an above market mortgage rate.
What was the primary consideration for prohibiting loan originators from earning YSP as compensation?
What was the primary consideration for prohibiting loan originators from earning YSP as compensation? Fiduciary responsibility deems the mortgage professional responsible for looking out for the customer’s best interests.
What is a Trid loan?
Summary. TRID is a series of guidelines that dictate what information mortgage lenders need to provide to borrowers and when they must provide it. TRID rules also regulate what fees lenders can charge and how these fees can change as the mortgage matures.
How does yield spread work?
A yield spread is the difference between yields on differing debt instruments of varying maturities, credit ratings, issuer, or risk level, calculated by deducting the yield of one instrument from the other. This difference is most often expressed in basis points (bps) or percentage points.
What is the 3 7 3 Rule mortgage?
The 3/7/3 Rule requires a seven business day waiting period once the initial disclosure is provided before closing a home loan (business days are everyday except Sundays and Holidays). Lenders are forbidden from collecting money for appraisals, loan applications, etc.
Can a loan originator pay for an appraisal?
Only the lender or a third party specifically authorized by the lender (including but not limited to, appraisal companies, AMCs, and correspondent lenders) may directly pay an appraiser for appraisal services. Lenders may charge the broker or the borrower for the appraisal fee.
What does a YSP mean on a mortgage?
Yield Spread Premium. Reviewed by Will Kenton. Updated Sep 27, 2019. A yield spread premium also called a “YSP” is a form of compensation that a mortgage broker, acting as the intermediary, receives from the original lender for selling an interest rate to a borrower that is above the lender’s par rate for which the borrower qualifies.
When to use yield spread premium ( YSP )?
The YSP can sometimes be applied to cover costs associated with the loan, so the borrower isn’t on the hook for additional fees. As a result of legislation that was passed in 1999, the yield spread premium must now be reasonably related to the actual services the mortgage broker performs for the home buyer.
Where do I find the YSP on my HUD form?
Any YSP will be listed on the HUD-1 form presented at closing. The yield spread premium is one of many fees associated with purchasing a piece of property or home.