Question About Mortgage Fees

[veracious]

Are yield spread premiums and service release premiums the same thing ?

One of the fees is from a banker and the other is from a broker.

Which one costs the borrower more out of pocket ?

Another question I have is;  If mortgage bankers/ lenders  intend to sell your loan on the secondary market,

does it have to be disclosed to the borrower ?

Are mortgage loans sold on the secondary market at a premium ? 

If so, is this the reason almost no one "keeps" the loans anymore ?

Why aren't consumers told about these tactics.

Could it be the reason that some brokers are willing to work extremely hard to see that you get your loan ?

Anyone know how to get lenders to disclose their complete compensation on the deal ?

Thanks for any replies

[ShanetheMortgageMan]

Yield spread premium (YSP) is only paid on brokered transactions, it's compensation paid from the creditor (wholesale lender) to the broker (mortgage broker).  Sevice release premiums (SRP) are paid to a creditor when they sell the loan to a purchaser on the secondary market (another lender, Fannie Mae, etc), which is why lenders are so concerned with making loans that are "saleable".  Some loans can have both SRP & YSP made, some loans can have one or the other, and some loans can have neither.  The total cost (interest rate, mortgage term & fees) of any could be identical to the consumer.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/respamor

At the time of loan application

When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:

• a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only) and
• a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. Depending on the type of charge and service provider selected, the difference between the estimated costs (GFE) and actual costs at settlement (HUD-1 settlement statement) may be subject to tolerance levels. If tolerance requirements are exceeded, then the borrower may be due a refund from the lender. When a loan originator permits a borrower to shop for third-party settlement services, the loan originator must provide the borrower with a written list of settlement service providers at the time of the GFE.
• a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender.

If the borrowers don't get these documents at the time of application, the lender must mail them within three business days of receiving the loan application.

Sample Mortgage Servicing Disclosure Statement: http://www.docmagic.com/media/docmagic/compliance/compliance08/lsds-msc.pdf

Creditors are not required to disclose the compensation they make on a mortgage, because the compensation can go beyond just originating the loan.  Even the creditors themselves in majority of situations do not know exactly how much total compensation will be made on a loan when the mortgage transaction closes.  Brokers on the other hand have their compensation begin & end when the mortgage transaction closes, so there is a finite amount of compensation, and because there were some egregious brokers out there all brokers are required to disclose their compensation in the consumers best interests.

[veracious]

Excellent post,  ShanetheMortgageMan.

You gave quite a lot of information. Once again you provided the aswer I was looking for and then some.

Thanks again.

P.S.   You should write a book on Mortgages since you understand the process so well and can explain it with truthful and honest

interpretations.