Mortgage yield spread premium is responsible for up to two thirds of the revenue earned on every mortgage. Yet most Americans have no knowledge of mortgage yield spread premium or how to avoid it.

Locating the yield spread premium rip-off is virtually impossible except at closing on the settlement statement known as the HUD1 Settlement Statement. Of course, by then it’s too late!

Other non settlement statement mortgage disclosures specifically the Good Faith Estimate (the mortgage application disclosure) are useless for discovering yield spread premium overcharging since most brokers either never disclose or obfuscate the disclosure as you’ll see below.

A Good Faith Estimate is a legally required mortgage document showing costs, rate, and payment. Believing the Good Faith Estimate reflects truthful, accurate, and guaranteed figures is folly.

Nothing could be further from the truth.

The Good Faith Estimate is manipulated by the loan officer low balling the costs and rate morphing it from a mortgage disclosure into a selling tool. It does not reflect real mortgage rates or actual closing costs.

What is APR?, is commonly asked question and a confusing concept for the average consumer since most erroneously believe they can use APR to compare mortgage offers.

The confusion is compounded when it is widely reported the government passed The Truth In Lending Act in 1974 which mandated a disclosure of APR on all financing for the express purpose of making financing offers comparable.

What documents should you sign to execute a mortgage rate lock? Always get a rate lock agreement from your broker or banker at the time of lock. Of course, like anything in the real estate or mortgage world, if it’s not in writing it doesn’t exist.

There is a new FTC study being quoted by bloggers all over the web and reported in major newspapers like the LA Times and Washington Post by real estate columnist Kenneth R. Harney who I must say when it comes to mortgage issues is more often wrong than right.

The study (if true) makes some amazingly ominous claims:

I found a Real Estate agent turned mortgage book author who wrote a book titled, “Theft By Mortgage”. Boy was I shocked to learn his mortgage book warns about yield spread premium!