Finance
What is a 'yield spread premium' (YSP) in mortgage lending?
AThe lender's profit margin on government loans
BCompensation paid to a mortgage broker by a lender for delivering a loan at an interest rate above the par rate; restricted under RESPA and Dodd-Frank✓ Correct
CThe difference between ARM and fixed rates
DA premium paid for jumbo loans
Explanation
A YSP was compensation paid by lenders to mortgage brokers for originating loans at above-market interest rates. RESPA reforms and Dodd-Frank restrictions have significantly limited and changed how mortgage broker compensation is structured.
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