Mortgage Book Steals My Thunder
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!
Calling yield spread premium overcharging “theft” is a little harsh, but given the venom I’ve used to describe YSP in my writings, I’ll give him a pass. But let’s be clear YSP overcharging is NOT illegal, it’s not fraud, and therefore, it can’t legitimately be “theft”. The author is using hyperbole to get your attention.
What makes YSP so egregious as a rip-off is the fact it is legal!
I watched the video which looked like the intro to a 30 minute infomercial to sell the mortgage book, which outlined the rip-off YSP represents.
I don’t know the author nor am I recommending his mortgage book…I haven’t read his mortgage book. I can say this to potential mortgage consumers, real estate agents, and mortgage professionals alike:
Yield Spread Premium overcharging is real and it’s wrong.
He’s right on that account.
Where he’s wrong is making it appear that only mortgage brokers charge it!
That’s where this mortgage book runs off the rails!
Every bank on the planet has overage built into their rates too although it’s called by a different name. With Banks YSP is called Service Release Premium.
At least the Brokers have to disclose it…the banks legally hide it!
As far as taking advice from a mortgage book written by a real estate agent…maybe I’d think twice about that if I were you…ha ha!
As big a rip-off as Yield Spread Premium is it’s not the only way to get ripped off when shopping for a mortgage.
Getting the wrong loan (ie. Pick-a-Payment or Option ARMs, Interest Only Adjustables, B or bad credit mortgages…when you don’t have bad credit) can put you in foreclosure or trigger a bankruptcy…not just cost you money.
My advice, self-serving but true, is to get our free mortgage tools and learn all you can about shopping for a mortgage the right way.
Good Luck!
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Tags: Approval • Mortgage Book • Mortgage Documents • Refinancing Tips • Yield Spread Premium • YSP
My broker said that it costs one percent just to pay for all the closing costs under writers and the processing of a loan. He said that he had to charge more than one percent in order to make any money on the loan. In some of your articals you say that one percent is a fair price to ask for. Is he telling me the truth or not?
Thanks
Rob, is it true that the loan may have to be bought back in the case of a first payment default? How does that effect a broker or l.o. on the repayment? Sorry if this is a dumb question, I’m still learning.
Sounds to me like another failed realtor trying to make a buck some other way. I agree as well that some brokers definitely go a little too far with rebate at times but as you mentioned, how is it fraud if it’s 100% legal? They even implied we shouldn’t get to charge so much for origination fees - what’s wrong with charging to assume a risk? Did anyone bother to tell them that if the client fails to make one of their first few payments we most likely will have to buy the entire loan back? Realtors should stick to talking about homes and loan officers should stick to talking about loans.