Yield Spread Premium

In short, yield spread premium is the rebate that the lender pays to the mortgage broker. The amount of that rebate depends on the interest rate that the borrower agrees to. For example, a loan officer might offer a borrower an interest rate at 6% and the lender (e.g Countrywide) would pay the mortgage broker a 1% ysp (e.g. on a loan amount of $100,000, the ysp would be $1,000) At an interest rate of 5.75% the ysp might only be .5%, or $500 on a 100k loan. In the past it hasn't been required that the loan officer disclose the ysp to the borrower and it was kind of a secret. But that is changing and it is now required that the loan officer disclose the ysp on the good faith estimate (usually around line 814). This is great news for borrowers so that they can see if they are really getting a good deal on the interest rate. Word to the wise...anything above 1% ysp and you could probably find a better deal elsewhere.