RE ELIZABETH Warren's Oct. 2 op-ed "Mortgage brokers' sleight of hand," the description of the "yield spread premium" as a "bribe" and "kickback" is inflammatory.
The yield spread premium is the vehicle used to compensate mortgage brokers for the professional service they provide to homebuyers. This fee is expressed in terms of points, or percentage of the loan principal, that the lender pays to the mortgage broker. It is not a secret bribe or kickback, but rather a figure that is disclosed to borrowers on several of the upfront preliminary disclosures they sign and then again on the final settlement statement.
Warren is quick to blame mortgage brokers for the fact that many borrowers have found themselves in programs they can't afford. But don't borrowers have a responsibility to ask questions and understand the details of the program they're buying?
In every industry there are unethical people who take advantage, cut corners, and cheat. But many mortgage brokers are looking to make a living by dispensing valuable advice to help borrowers navigate the complicated, confusing mortgage maze, and they deserve to be compensated for their expertise.