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Great question!

What the average consumer doesn’t know is just how wide-spread of an activity and how profitable the practice of rate bumping to insure YSP or SRP income really is.

If Joe Sixpack actually knew these things one might have a shot at pressuring State legislatures or even Congress to pass laws making it illegal.

But sadly that’s not the case. The reality is, once again, the powerful banking interests get laws passed favoring more income for them on the backs of those they supposedly serve…their customers.

Those interests will powerful lobbyists are the same folks who get laws passed…and that is not you or me.

Charging Yield Spread Premium or getting income from “mortgage rate bumping” is not now nor has it been illegal…and it won’t be anytime soon.

The most recent changes proposed in new legislation has stopped just short of outlawing it.

I’m afraid the mortgage broker lobbyists as well are just too powerful to let it go.

Legislators have a “fairness” issue to deal with if they outlaw Yield Spread Premium for mortgage brokers, but continue to allow Service Release Premiums mortgage banks and direct lenders. Since banks are not about to give up service release income, YSP will remain legal by proxy.

I think both are here to stay.

Thanks for the question!

Author: The Mortgage Insider

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