Utah County Home Buyer Beware - Yield Spread Premium (YSP) - Utah County Real Estate

By
Real Estate Broker/Owner with Home Buyer Realty Utah 5705835-PB00

Utah County Home Buyer Beware - Yield Spread Premium (YSP) - Utah County Real Estate

As a Utah County Loan Officer and Utah County Realtor I have noticed an area of Home Loans and Mortgages that goes unnoticed by the consumer,  that of Yield Spread Premium.  Most Utah County borrowers believe that their Loan Officer makes his profit with the Loan Origination Fee.  But most don't understand that the Loan Officer can make up to 4 percent more, on most loans, with the Yield Spread Premium.

What is Yield Spread Premium?

Yield Spread Premium, or YSP, is the fee paid by the Lender to the broker in exchange for a higher interest rate, or an above wholesale rate.  The Utah County borrower may qualify for a certain rate, but the broker can charge this fee and give the borrower a slightly higher rate to make more commission.  YSP was originally intended as a way for the borrowers to avoid having to pay any money up front.  Today it is seen primarily as just another fee the Utah County borrower gets stuck with.  The YSP is disclosed by law on the Good Faith Estimate.  Usually the YSP is stated as between 0 and 4 percent, at the bottom in fine print.

What can Borrowers Do?

The best way to understand YSP is to discuss the topic with your Utah County Mortgage Loan Officer.  Make sure he/she explains the difference between Loan Origination and YSP, and continues to keep you informed up to and including closing. 

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Posted by

Robert A. Hulme 

Home Buyer Realty Utah, LLC
Principal Broker, Owner, Realtor, SRS, GRI, e-Pro

Utah Mobile: (801) 885-2586
Utah Real Estate Search

View Robert A Hulme's profile on LinkedIn

Comments (1)

Dan Hartman
Province Mortgage Associates - NMLS #2861 - Providence, RI

Great point, Robert,

All of our deal are disclosed with a specific amount of yield spread where applicable, so that if we're going to receive 2% in yield spread we'll show that precise amount. Disclosing a range of 0-4% sounds quite disingenuous.

Dan

Aug 24, 2009 03:43 AM