Loan 1: Contains a $1,440 Yield Spread Premium on a $120,000 property.
Loan 2: Contains a $4,799 Yield Spread Premium on a $150,000 property.
(a) The following documentation is not an example of a loan initiated by Scott Veerkamp. I am merely providing this example to show the financial impact of YSP on the homeowner.
(b) On average, mortgage brokers receive 1% of the loan amount each time they raise the interest rate .25%. In other words, the lender pays the broker a "kickback" for increasing the interest rate on the loan.
(c) What is the difference in cost between a 6% rate and a 6.5% rate on a $200,000 loan over 30 years? Here is the answer according to bankrate mortgage calculator: -($23,414.40)
(d) On the mortgage above, the broker would receive a $4,000 kickback or (2% of the loan amount) for increasing the interest rate .5%. Therefore, a family would pay an extra -($23,414.40) over 30 years because they did not receive the interest rate they qualified for.
(e) I believe most families would prefer to invest the $23,414.40 in EDUCATION. Clearly, this makes more sense than "wasting it" with a predatory loan.
(f) Therefore, I am asking Scott Veerkamp to answer the following questions: 1. How does Predatory Lending "protect and promote the interest of the client"? 2. How does Yield Spread Premium "keep the interest of the client above all else"?
*You can find YSP on the settlement in your mortgage documents. It will be listed as POC or "paid outside of closing".
