A yield spread premium 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. This "may [be used to] wipe out or offset other loan costs, like Loan Level Pricing Adjustments."

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. The yield spread premium must be disclosed on the HUD-1 Form when the loan is closed.

Mortgage brokers are compensated directly by borrowers when the borrower pays an origination fee, when the lender pays the broker a yield spread premium or a combination of these. If there is no origination fee, the borrower is most likely agreeing to pay an interest rate above the market rate. There is no such thing as a no-cost mortgage for the borrower.

www.nber.org [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

link.springer.com [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

heinonline.org [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

www.sciencedirect.com [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

www.sciencedirect.com [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

academic.oup.com [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

onlinelibrary.wiley.com [PDF]

… Since then, various authors have investigated a variety of alternative interest rates and spreads.1 … yields according to the expectations hypothesis. Both of these interpretations of the yield spread's usefulness for forecasting real output …

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This affects consumers because they end up paying more money than what they should be paying if they were not using brokers to obtain loans.

Yield spread premium 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. The yield spread premium must be disclosed on the HUD-1 Form when the loan is closed.

Yes, there is some risk involved with this type of transaction.

Yield spread premium 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.

The lender pays the broker an origination fee, discount points, or other fees to offset the cost of the higher interest rate.

The borrower pays for this type of compensation.

Yes, lenders can also pay brokers directly through yield spread premiums or by combining both origination fees and yield spread premiums. If there are no origination fees, it means that borrowers are paying higher interest rates than market rates.

You may end up paying more than necessary in closing costs and fees.

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