New to this ...YSP disclosure question

[jennmac]

Hi everyone! Great forum...been reading for a couple of months before registering. I am in PA so no free loan doc review available yet for me, they say hopefully in a week or two. I refinanced Apr 26, 2007 and I pulled out my paperwork to find that I was charged a yield spread premium of $5600, in addition to the 1pt I paid the broker. The loan amount was $320,000. YSp was listed in section 900 on the hud sheet, and I believe it is supposed to be in section 800. I wonder if they tried to hide it there because they failed to disclose any YSP on the GFE. It isn't listed anywhere on the GFE, not even in a range of %. I am past 1 year, do you think I may have any avenues to pursue?

Also, don't know if this matters or not, but they completely misrepresented the estimated monthly payment on the GFE. They have it as $1833.33 P&I, where it should be $2102.17 P&I (same int rate and terms on GFE and TILA but totally different payment).

TIA for any guidance...
JM

[JoJoJodyJo]

Hi Jennmac - Let me see if I can shed some light on this for you. The YSP is not a fee you were charged. The YSP is a premium paid to your broker by the lender for giving you a rate that was higher than par. If your loan amount was $320,000, then the broker received a 1.75% YSP on top of the 1 point he charged you. The YSP is not listed in the same section as your other fees because you're not paying it.

The difference between the $1833.33 and $2102.17 payments seem to me to be impounds for taxes and insurance. Probably the $1833.33 is the P&I (principal, interest) and the $2102.17 is the PITI (principal, interest, taxes, and insurance).

Hope that helps.

[LHarveyMadman]

That YSP is on the high side. I was told by a loan officer friend that an ethical loan officer shoots for about a 1% YSP. For very small loans, the YSP might be higher (LO needs to make money somehow, whether we like it or not), and for large loans it might be lower - mine was about 0.9%.

In your case, you have a middlin' loan amount, so a YSP of 1.75% seems excessive to me. Don't take my word for it, though, my feeling is based on what I was told, and it was just one person's opinion that I solicited. Regardless of where the truth is, the bottom line is that your loan officer sold you a loan at a higher interest rate than you could have actually received.

The point you paid and the YSP that the lender paid to your LO work against each other. The point buys down the interest rate, and the YSP brings your interest rate up. It's a reward to the LO from the lender for getting you to agree to a higher interest rate.

My opinion is that you are likely a victim of predatory lending practices, and you should investigate this furhter.

[jennmac]

Thanks for your replies. JoJoJodyJo, the $1833 estimated payment was shown as P&I. The $2102 I actually pay is also just P&I. When I pull up a mortgage calculator online and calculate $320,000 for 360 months @ 6.875, I get $2102. $1833 is more of a 5.5-5.6% interest rate, which I DEFINITELY didn't get. It does make me very upset to think that there is a possibility that I could have gotten it...I just don't know why that number ended up there on the GFE...it's almost $300 shy of my actual P&I payment.

LHarvey, it seems excessive to me too. He made $3200 on the point, $5600 on the YSP, plus some miscellaneous underwriting and processing fees I paid. Over $9k total!

[LHarveyMadman]

Yeah, your situation really seems off. I'll see if I can contact my LO friend to see what he thinks about the YSP+point thing, but he's really busy and hard to reach. Maybe you could have NACA take a look at your loan papers and render their opinion.

When I closed on my loan a few years ago, there were all sorts of little fees here and there that bumped up the closing costs. So irritating. I found out later that a lot of those fees are negotiable, but I bought back when the housing market was still relatively hot and haggling over those fees probably would have impeded my closing and quashed the sale. $100 notary fee? The local UPS station does it for $10.