Finance
What is 'yield spread premium' (YSP) in mortgage lending?
AAdditional compensation a lender pays a broker for delivering a loan at a higher-than-market interest rate✓ Correct
BThe difference between the index rate and the fully indexed rate on an ARM
CA premium added to the APR for high-risk borrowers
DThe profit a lender makes from selling a loan on the secondary market
Explanation
A yield spread premium was compensation paid by a lender to a mortgage broker for delivering a loan at an interest rate above the par rate. TRID (2015) regulations have reduced/eliminated traditional YSPs through the Loan Estimate disclosure requirements.
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