Forbes recently ranked their list of top mortgage companies of the year. Surprisingly, they’re nearly all banks. As you might know from watching my free Underground Mortgage Videos, banks are exempt from the Real Estate Settlement Procedures Act and do not always have your best interests at heart when refinancing your mortgage.
Banks routinely add Service Release Premium to their best refinance rates and are not required to disclose this markup. If you refinance your mortgage with a Bank the only ones who will know how much your mortgage interest rate has been marked up is your Bank.
Here’s the Forbes list of top five mortgage lenders in the United States.
1. Citigroup
2. Bank of America
3. Wells Fargo Bank
4. Wachovia Bank
5. Amerisave Mortgage
Take this list from Forbes with a grain of salt. The best mortgage company for you is the one that delivers your mortgage when you need it without unnecessarily marking up your mortgage interest rate and provides you with favorable terms on the loan. If you’re not already comparison shopping for lenders and brokers that agree not to charge you Yield Spread Premium on you’re mortgage rate, you’re already paying too much.
Yield Spread Premium is the markup of your mortgage interest rate by the broker or mortgage company and if you agree to pay it you will pay thousands of dollars in unnecessary finance charges.
Click for Instant Online Access
Check out my free Underground Mortgage Refinance Videos and you’ll discover how easy it is to save thousands of dollars by avoiding common mortgage mistakes.
- Free Underground Mortgage Videos
My name is Robert Regehr and I’m a personal finance blogger with a chip on my shoulder for banks and mortgage brokers that take advantage of my friends and neighbors.
Like me on Facebook
Follow me on Twitter
Sample Videos
{ 4 comments… read them below or add one }
How can I find a mortgage company that does not utilize yield spread premiums?
Hi Margaret,
The only companies that receive yield spread premiums are mortgage brokers in the wholesale business. However, every lender, be it a bank or a broker, can receive compensation based giving you a higher interest rate. With banks it is called service release premium and with brokers it is called yield spread premium.
To think that just because a broker can receive yield spread premium this somehow means that you can’t get a good deal is incorrect. I would recommend shopping various banks and brokers and not worry about how much the broker receives via yield spread premium. If you are still getting the best interest rate and closing costs, does it really matter if the broker gets a little rebate (YSP) from the wholesale lender?
The problem with Yield Spread Premium is what it does to your payment amount. If the broker gets a commission by marking up your mortgage rate which raises your payment $50 a month, you’re still out $600 a year…every year. Offer to pay a reasonable amount for loan origination of one percent, if the broker wants more there are a lot of brokers out there willing to work for that.
@Robert, I agree that there are brokers out there that are willing to work for 1% of the loan amount. However, is it better for that broker to get paid via a 1% origination fee with no YSP or no origination and 1% YSP?
I think you know that the answer to that question is that it depends on the client, their personal preference, how long they are going to stay in the home, whether they have enough equity to roll in closing costs, etc.
My point is… The original question and your response make it appear to YSP is inherently evil, when in fact it is NOT. YSP can be used to pay for the brokers commission, and also to pay for some or all of the client’s closing costs. How else does somebody get a “no cost” refinance?