Safeguards Sought On Yield Spread Premiums
January 9, 2002
Mortgage Bankers Association States Its Case To Senate Banking Committee
Inman News Features
The Mortgage Bankers Association of America reiterated its support for the U.S. Department of Housing and Urban Development?s recent clarifications of the legality of yield spread premiums under the Real Estate Settlement Procedures Act. That support was given in testimony presented to the U.S. Senate Banking Committee.
The bankers? group said the industry would continue to work with HUD and Congress to assist in developing effective borrower disclosures and protection measures.
"Up-front costs have long been recognized as the major barrier to homeownership and the yield spread premium mechanism has emerged as the most effective tool for removing this barrier," said MBA Chairman-Elect John Courson.
Yield spread premiums allow borrowers to reduce up-front loan fees by instead paying a higher interest rate. However, these premiums at times have been used to defraud borrowers.
Courson said MBA wants clear regulations, a maximum level of protection for borrowers and less confusion for lenders about what practices are legal.
Copyright: Inman News Service