Consumers Demand Yield Spread Premium Disclosure
America's Watchdog and its National Mortgage Complaint Center are demanding immediate federal reforms related to what it calls a "mortgage kick back" known as a "yield spread premium" in order to protect all homeowners. America's Watchdog indicates that if U.S. homeowners finally understand how much they were overcharged by a bank or a mortgage banker, there would be a national homeowners revolt. America's Watchdog has called the current proposed Congressional mortgage reform a "pathetic joke," inspired by campaign contributions from banks, mortgage bankers & homebuilders, that will continue to hide the most outrageous mortgage fee for nearly all US homeowners. A "yield spread premium" is a kick back mortgage lenders get for inflating a consumers interest rate. Mortgage brokers are required to disclose this kick back. Banks and mortgage bankers do not have to disclose this fee, even though they get this kick back too. yield spread premiums have a whole lot to do with the current US real estate disaster. Had US consumers actually been able to see what their bank, or mortgage banker was making off their mortgage transaction, or how much it increased their monthly mortgage payment, most consumers never would have agreed to do the mortgage in the first place.
America's Watchdog and its National Mortgage Complaint Center are consumer advocates focused on mortgage lending in the United States. For the last four years, America's Watchdog has been vocal about what they call "ridiculous double standards" that exist in the U.S. mortgage industry. Because of these double standards, America's Watchdog estimates that 9 out of 10 current US homeowners pay a higher monthly mortgage payment than what they could have, or should have received when they financed or refinanced their home. America's Watchdog and its National Mortgage Complaint Center have described the "yield spread premium", as a the most ridiculous mortgage double standard and, as the worst kick back scheme in US history. Critics charge that the "yield spread premium" is a kick back banks or mortgage lenders receive for inflating a consumer's interest rate on a home loan.
According to Americas Watchdog, "mortgage brokers have to disclose this kickback to consumers, but banks and mortgage bankers are exempt from this disclosure requirement". Also known as a rebate; according to Americas Watchdog, "yield spread premiums have a whole lot to do with the current US real estate disaster. Had U.S. consumers actually been able to see what their bank, or mortgage banker was making off their mortgage transaction, or how much it increased their monthly mortgage payment, most consumers never would have agreed to do the mortgage in the first place."
According to America's Watchdog and its National Mortgage Complaint Center, "the U.S . Congress and consecutive White House Administrations have failed to require banks, mortgage bankers and home builders to disclose the yield spread premium kick back, because these business groups are some of the largest campaign donors to members of Congress, the US Senate, and consecutive White House Administrations".
America's Watchdog added, "if most citizens want to know why we have an epic real estate disaster in the US, one needs look no further than Washington DC and an army of paid lobbyists to see how it happened". Americas Watchdog went on to say, "Wall Street is also complicit in the US mortgage disaster because most of the biggest investment bankers, and financial advisers sold US pension funds garbage mortgage loan portfolios, that now could literally bankrupt many of our nation's pension funds."
So how bad is the mortgage yield spread premium kick back issue? According to the National Mortgage Complaint Center, "it's so bad that only 1 out of 100 consumers even knows what it is. Even worse, on mortgage broker transactions, where the broker is required to disclose the yield spread premium kick back, only 2% of all consumers even know what it was, or how it affected their monthly mortgage payment." On mortgage loans or refinances from a bank or mortgage banker there is no requirement to even disclose the kickback, even though like mortgage brokers, they get these kick backs too. America's Watchdog's President estimates "the average US homeowner pays about $125 more per month, because a bank, mortgage banker or home builder failed to mention that they received thousands of dollars for inflating an unsuspecting consumers interest rate over the best interest rates available. In the end an unsuspecting consumer simply ends up with a much higher monthly mortgage payment".
So what immediate federal reforms are needed with respect to US mortgages/home loans?
- Mortgage Brokers, Banks, Mortgage Bankers and Home Builders acting as mortgage lenders, should all be required to disclose to the consumer the yield spread premium kick back they are getting for inflating the borrowers interest rate, & what difference this will make in the borrowers monthly mortgage payment.
- Banks, Mortgage Bankers and Home Builders acting as mortgage lenders should be required to disclose the "service release premium" (SRP) they get for selling a consumers mortgage to a loan servicer. A SRP is typically $1500 to $3000, and the home loan borrower should see this fee up front, in order to fully understand what the lender is actually making on the mortgage transaction.
- It should be illegal for banks, mortgage bankers or home builders to be set up phony title insurance companies, and then resell the title insurance policy to a title insurance company for penny's on the dollar. The National Mortgage Complaint Center has proof national home builders are deeply involved in this scheme.
Because in 2008, the US economy is on the verge of the largest real estate disaster in US history, the National Mortgage Complaint Center intends to take out full page ads in national publications before the November election, so voters can see what bank, mortgage lender, or home builder paid what member of Congress, or the Senate for the mortgage/real estate disaster that now faces the United States. According to the group, "it's an election year and voters need to see how their Congress person or US Senator participated in this disaster. A bribe from special interest group is still a bribe, and millions of US homeowners have been cheated, gouged and many may now lose their home.
If a homeowner or home buyer intends to finance or refinance a home loan in 2008, the National Mortgage Complaint Center is encouraging all consumers to call its national toll free number for the name of a honest mortgage lender that can help them with a conventional, FHA or VA mortgage. Their toll free number is 866-714-6466. Consumers wishing to learn more about the mortgage process are encouraged to visit America's Watchdog's Homeowners Consumer Center and inspect their free 20-page mortgage guide. The free mortgage guide is located on the Homeowners Consumers Center Resource Page.