Mortgage Rate Calculations To Determine Yield Spread Premium
I’ve compiled a few resources on average mortgage rate data and yield spread premium starting with Congressional testimony from experts and ending with average mortgage rate resources online.
Be sure to read the Harvard Professor Jackson’s testimony if nothing else….
Harvard Professor’s Conclusions on YSP
Here’s the average mortage rate data provided by HSH.com. They survey more than 4,000 retail home mortgage providers and they get the rates people are closing with…not the rate in the lobby! These rates are more accurate since they gather them daily, not weekly and they survey a much greater number (4000 vs Freddie Mac’s 125) of mortgage providers. So these average mortgage rates represent the retail rates people are closing with…not what they were promised at application.
The rates above are for Fannie Mae/ Freddie Mac loans $417,000 or less. A good way to get today’s true average mortgage rate just subtract .375% from the rates shown. To get the true jumbo average mortgage rate subtract .25% from the rates shown.
This little short cut is the only way I’ve found in eleven years, to get you the true, real, No YSP, par rate without actually publishing wholesale mortgage lender rate sheets…which I am contractually barred from doing.
More Average Mortgage Rate Survey Links
Fannie Mae Weekly Yield Data - This the Wholesale Market Rate. Too bad they only publish a weekly average mortgage rate survey instead a daily.
Freddie Mac Primary Market Survey This is a survey of over 125 banks, brokers and mortgage companies who provide the rate and points data for that days locked commitments. In other words, it is the retail rate in the market that day as an average mortgage rate!
I’d stick with HSH.com since the Fannie Mae and Freddie Mac average mortgage rate data is less fresh.
Yield Spread Premium Government, Legislative, and Law Firm Links
Senate Banking Committee Press Release
Culpepper v. Inland Mortgage Corp. (6/22/1998, No. 97-6109)
Prepared Statement of Ms. Susan M. Johnson A Private Citizen from Minnesota
Opening Statement - Chairman Sarbannes-Senate Banking Committee
Good Luck!
Author: Rob K. Blake
Published January 5, 2008
Modified February 26, 2008
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Settlement Statement - The Only Way To Locate Yield Spread Premium
Micky,
Thanks for stopping by and leaving a comment.
I’m not sure if in your rather lengthy comment you fully appreciate or understand the position of this author and website publisher..so let me be clear…
We believe no originator/company should profit from either a disclosed or undisclosed rate increase over par…no bank, no broker….period. Therefore, profiting (earning income unattainable any other way) from hidden or disclosed SRP and yield spread premium should be banned…either by law or via a self-imposed code of conduct.
We’ve done it ourselves for years. Customers love the transparency and honesty becoming customers for life. In the end, it really is the best long-term business model for our industry.
I’ve heard all the “arguments” from those who disagree…but in the end it’s not an “ethical” practice to lie to make money…and when a bank loan officer or mortgage broker says, “That’s the best rate we can do”…it’s a lie…you know it and I know it!
It really is that simple:
Do you want mortgage folks lying to everyone about something as important as the financing for the single largest investment a person is ever going to make?
You mentioned real estate agents…and as many beefs as I have with their profession..the way they charge and disclose their fee…of X% …nothing hidden…no lies…it is ethical, straight-forward, and honorable.
We could and should learn something from them instead of justifying the unjustifiable ad nauseum.
Rob K. Blake
November 8th, 2007 at 10:19 pmThe Mortgage Insider
When you have government politicians comment on the mortgage business that they do not understand it is over whelming.
Yield Spread has to be used by the broker as additional profit inorder to say in business. The YPS is disclosed on the HUD-1. Banks or lenders do not have to disclose. Why do you think Mortgage Brokers do most of the business. It is because they offer the best rates and programs the customer may qualify for. In an open maket place people do not go where they do not get the best deal or service. I have been in the mortgage business for over 10 years, and have beat banks on rates and mortgage services. Further, mortgage rates is one of the most competative products in the county.
And when I hear pretatory lending I think of all the customers I have met that have been covered up in credit card debt at 15% to 24%. But that’s ok because its banks. When I hear pretatory lending, I think of customers buying a truck at $700 to $800 per month and cannot pay the same amount on a mortgage. Brokers are licensed, bonded, insured, regulated by states and federal law they are required to buy back loans that go bad or where not done properly. It is not about YPS it is about the APR and interest rate. If the banks rate is 6.5% 30 year fixed (no YPS disclosed) and a broker rate
is 6.5% 30 year fixed and 2% YPS disclosed, what difference does it make to the customer. NONE.
Also, state law and/or lenders have already limited what brokers can make to 5% of the loan amount. Realtors make 6% of the purchase price.
Next lets eliminate the “back end load” that securities brokers make, lets eliminate what the realtor can make, lets elimnate the commission that the title company makes on the title policy, lets not let the third party companies make any money. Medical costs are pretty high, lets tell the doctors what they can make, Oil companies make money lets tell them what to charge. We no longer need congress or senators we need them to be trustees for all of us, they get any money we make all 300 million people, they tell us how to spend it and what we shoud do, what house to buy, car, food, vacation, and before we make any decision we check with them first. As the comedian Ron White said “you can’t fix stupid”
November 8th, 2007 at 9:32 pmLeave a Comment