Last week's Federal Reserve Board decision to publish proposed Truth in Lending regulations included a major reversal to their prior policy on Yield Spread Premiums.
While in 2008 the Federal Reserve choose NOT to ban Yield Spread Premiums, in 2009 they have reversed that position and they are now proposing to ban those payments NOT only for brokers but ALL loan originators.
The Federal Reserve has not yet formally published the proposed regulation in the Federal Register, but should be doing so shortly.
I have extracted from the 674 page Federal Reserve draft (HERE) the relevant YSP pages and formatted them in MS Word so as to make it easier to copy and paste relevant sections in your communications with others. In this excerpt the Federal Reserve also seeks comments on whether they should ban loan steering.
While formatting of my excerpt will not exactly match the final FR publication, the content should be identical. My 12 pg MS Word excerpt of these YSP and anti-steering provisions is HERE.
I expect that the proposed ban on YSP's will be extremely controversial and strongly opposed by lenders and brokers. It will likely be next year before any final regulation is in place, and even longer before that regulation becomes effective.
Once the actual regulation has been posted for comment, I will do an additional post with a more in depth analysis of the specifics of the YSP proposal.
Originally created and posted on the Oregon Housing Blog.
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