Why Is Loan YSP Such a Well-Kept Secret?
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.
No one in the mortgage and banking industries wants you to find out about mortgage yield spread premium because it would betray the fact they earned that money by raising your rate. Raising your rate for no other reason than to increase their income is not good for business.
In order for scams to work, the mark has to be oblivious to the deception, right?
If he discovers the truth, the jig is up! No more money…and maybe even a jail sentence.
Is that really so different from hiding mortgage yield spread from the American public?
If a loan officer gave you a choice of a loan at 6.5% rate or a loan at 6.0% rate, they know which one you would choose.
They also know they just lost most of the profit on your loan.
So they don’t give you the choice. The simply say, “Your rate Mr. Smith is 6.5%.”
Consumers need to realize when mortgage shopping they do have a choice of 6.0% instead of 6.5%. Mortgage yield spread premium is real and if you are educated on how to avoid it, you can have the 6.0% rate. You must learn to eliminate YSP on all loans you do now and in the future. We do loans every day here in Colorado without overcharging our clients using YSP.
Type the phrase “mortgage yield spread premium” into Google or any search engine. You can find anything from articles on Senate Banking testimony to lawsuits on this subject. By the way, every time a borrower has sued over mortgage yield spread premium the borrower always wins. Then the banks appeal, and secretly settle out of court. That should tell you something.
If people knew this existed, they would not stand for it and that is why it is such a secret.
Loan officers are very crafty when explaining away mortgage yield spread premium should you ask them about it. Most consumers have never heard of yield spread premium and the ones that have, don’t even know the correct details. So usually the originator never has to field any questions about it in the first place. So when they do get a question about it, they either:
1. Play dumb
2. Get angry
3. Attempt to down play or explain away
4. Are so caught off guard, they stammer, himm and haww…that’s the funny one!
Want to have some fun?
Call a mortgage company (not a bank though…they keep their employees so in the dark, they won’t know what you’re talking about.), get a loan officer on the phone, and ask them how much they typically make from Yield Spread Premium…1 point, 1.5 points, or maybe even 2 points!
Then report back in the comments below…and tell me which reaction you get!
Either way, you won’t get a good reaction. This is another reason to get our Free Tools so you’ll know who to talk with, what to say, and how to get a mortgage company to give a no YSP mortgage each and everytime you need one.
Good Luck!
Author: Rob K. Blake
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Tags: Loan Officer • Mortgage Tips • Scams • Yield Spread Premium
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We refinanced with Paramount Equity Mortgage in 2006. They NEVER revealed a YSP premium to us, in fact the loan officer even lamented, “We aren’t making any money on this deal… barely getting it done.” I am sure you’ve all heard THAT before!!
AT CLOSING, we learned they made $6880 in YSP, completely changed our loan terms and now I find out that they did MUCH more damage to us than we knew even then.
We got our PRE-disclosure docs in the mail TWO DAYS AFTER we closed, which had this information on it, of course we didn’t know it at the time. That’s right, our GFE and everything.
NOT ONLY did they take a $6880 YSP, they ALSO charged us a $3440 BROKER FEE and a $1200 “admin” fee! Our loan terms were changed and they added a prepayment penalty that was undisclosed until closing AND a balloon payment on the second mortgage that we did at the same time.
They ALSO kept the closing costs on the second mortgage that they financed back into the loan, but NEVER APPLIED back to our FIRST LOAN. I could go on and on… but I don’t have to because we FINALLY have recourse, but it hasn’t been easy.
Washington State DFI found them GUILTY of predatory and deceptive lending in 2008, and they were ordered to pay restitution. They only paid a very few borrowers because not many people knew about it. You have to file a complaint with DFI, and you can on their website: http://dfi.wa.gov If you have a loan from this company in the state of Washington, you OWE IT to yourself to check into it. It’s very SIMPLE to do.
Dishonest MORTGAGE BROKERS are responsible for a GREAT DEAL of the chaos that is happening around us, and yet, they are paying the LEAST for it. It’s time we focused on that a little more. THEY ARE NOT BEING HELD ACCOUNTABLE. NOT all brokers are dishonest, and there are some GREAT ONES. Paramount Equity Mortgage is not one of them.