Please review these two statements from the Center for Responsible Lending regarding YSP and prepayment penalties...
Yield Spread Premium: 1. "Many lenders pay this premium---essentially a kickback to brokers---only when the loan has a prepayment penalty that helps trap the borrower in the higher-cost loan long enough for the lender to recoup the cost of the payment to the broker."
2. "Because YSP's encourage prepayment penalties, these kickbacks not only make loans more expensive from the beginning, they also effectively penalize borrowers for developing good credit over time."
Obviously, this information makes it difficult for NAR to say Yield Spread Premium "protects and promotes the interest of the client."
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