Florida Mortgage : Learning Center

There has been much discussion regarding the mortgage broker’s yield spread premium  and why that should be considered a disadvantage for consumers.  Many feel that since a bank doesn’t earn a yield spread premium, on paper anyways, everyone should run to their local bank for their Florida mortgage needs.

A yield spread premium is money that a wholesale lender will pay a mortgage lender or broker for providing them with a serviceable, paying, homeowner.  An example could be a current 30 year fixed rate of 6.375% might pay the mortgage company about 1.25% in yield spread premiums. On a loan amount of $150,000, that would be $1,875 in income for the mortgage business. 

Here’s the real problem with the whole yield spread issue.  A Florida mortgage company can provide a fixed rate (as shown above) with no discount points and no origination fees; and earn an income.  This income is disclosed upfront, verbally, and in print and on the HUD-1 at closing.  If that is such a big problem, then why aren’t the local bank rates any lower than what we are providing? 

The truth is; banks earn similar SRP’s, service release premiums, to pay their employees and do not have to disclose that earned income.  Get your mortgage from a mortgage Florida correspondent lender or mortgage broker business and they will disclose their earnings upfront and stick to it.  Transparency and integrity.

If banks offered lower fixed rates than what we can deliver, then I wouldn’t be so bothered.  But I guess as long as they aren’t as regulated as Florida mortgage professionals then they will keep providing our already low Florida rates.

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