Definition: Extra money paid by a mortgage lender to a mortgage broker as a bonus often represented as a percentage of the original loan balance. Typically, if a lender is paying the broker a premium bonus, it's because the broker left "money on the table" in the deal. This money the lender is paying the broker, well, it could have gone to the borrower in the form of an interest rate reduction or fee reduction or both. Instead, it goes into the mortgage broker's pocket!
Examples:
Mortgage lenders often pay up to 2% as a yield spread premium to mortgage brokers, so borrowers should ask about the YSP way before closing in order to renegotiate.
