Answers - YSP

Here is the question:
Ken asks,
“Does YSP apply to government mortgages as well creating higher than necessary FHA and VA mortgage rates?”
“I have a friend who swears that FHA rates are FHA rates because of the assistance aspect- no more, no less. I am fairly confident that it does not matter and those government mortgage programs [...]

Here is the question…and it is a good one!
“My mortgage broker had locked me in at 6.43% with a .25 point buy down at a cost of $875.00. Her yield spread was .98%.
Then a week later the market fluctuated and she was able to lock me in at 6% with no buy down and her [...]

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. [...]

Not disclosing yield spread premium is a violation of the Real Estate Settlement and Procedures Act, so it’s a crime for sure. If the crime is considered “fraud” per se, I am not sure.
However, it is unlikely the Good Faith Estimate (GFE) and/or the HUD1 Closing Statement won’t disclose YSP if it’s being paid. Mortgage [...]