Yield Spread Premium Law and Legal Definition

A yield spread premium (YSP) is a payment made by a lender to a mortgage broker in exchange for that broker's delivering a mortgage ready for closing that is at an interest rate above the par value of the loan being offered by the lender. YSP is the difference between the par rate and the actual rate of the loan; this difference is paid to the broker as a form of bonus. YSP is typically a certain percentage of the loan amount; therefore, the higher the loan is above par value, the higher the YSP paid the mortgage broker. [Bassett v. Ruggles, 2010 U.S. Dist. LEXIS 37666, 20-21 (E.D. Cal. Apr. 15, 2010)].