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Fed Finalizes Rules Aimed at Mortgage Overcharges (Yield Spread Premiums)

Tuesday, August 17, 2010

"For years, consumer advocates have been deeply troubled by 'yield-spread premiums (YSPs),' the routine payments to brokers and lenders that essentially function as kickbacks for overcharging on home loans. The Federal Reserve's final rules on YSPs, issued yesterday, mark a welcome milestone that will finally end this practice—saving money for home buyers and making it easier to shop for the best loan.

The Dodd/Frank financial reform bill passed last month contains similar protections on yield-spread premiums that go slightly further than the Fed's final rules. As the reform bill is implemented, the new Consumer Financial Protection Bureau will write more detailed rules, and these rules will be critical to ensure a fair and competitive mortgage market and the stability of the economy as a whole."

For more information: Kathleen Day at (202) 349-1871 or; Ginna Green at (510) 379-5513 or; or Charlene Crowell at (919) 313-8523 or