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End Predatory Pricing on Home Loans (Yield-Spread Premiums)

December 7, 2009
Mortgage Lending

Did you know that 6 out of 10 people who received subprime loans during the height of the lending boom could have qualified for a lower-cost mortgage--and it was completely legal? The vast majority of subprime loans made by mortgage brokers or loan officers came with a "yield-spread premium" – a kickback that brokers received from lenders in exchange for hiking the interest rates on loans or steering borrowers into more expensive, riskier loan products.

The Federal Reserve Board is now deciding whether to fix the problem of price gouging on mortgages. They have heard from many mortgage brokers, now they need to hear from concerned consumers.