Yield Spread Premium, or YSP, is the cash rebate paid to a mortgage broker based on selling an interest rate above the wholesale Par rate that the borrower qualifies for.

For example, If a mortgage broker offers a borrower a loan of $100,000 at an interest rate of 6.25%, and the Par rate is 6%, the broker may earn a Yield Spread Premium (YSP) equal to 1.0% of the loan amount. This $1,000.00 fee is paid by the lender directly to the broker as a "rebate." The mortgage broker earns "one point" directly from the lender "POC" (Paid outside Closing). Although the borrower is not charged the fee directly, the borrower does pay the fee indirectly by accepting a higher interest rate in exchange for lower fees.

In the U.S., mortgage brokers are required to disclose YSP as a fee "POC" (Paid Outside Closing) on page 2 of the HUD1 Settlement statement, inside the margin, away from the column marked "Paid from Borrower's funds at Settlement."

YSPs as a financial instrument are not controversial. What is controversial is how they are applied, and how and when brokers and lenders have to disclose their existence and their amount to the borrower.

Consumer groups such as the Center for Responsible Lending contend that disclosing the YSP to borrowers informs borrowers that the broker might be charging them a higher interest rate than they might otherwise qualify for. They point out that the YSP amount to a fee paid to the broker, and therefore its exact amount should be made known when the borrower commits to a broker ("locks in the rate"), rather than later in the loan process.

Conventional mortgage brokers (those who are not Upfront Mortgage Brokers) contend that this disclosure requirement puts them at a disadvantage when compared to Institutional ("Retail") Lenders, who do not have to disclose their YSP. In addition, they point out that there are truely legitimate reasons for a YSP, such as help in offseting closing costs for borrowers who are short of cash. For those borrowers, brokers use the YSP to help pay closing costs, as outlined below. Conventional mortgage brokers also point out that if only they were required to disclose their YSP, borrowers might not save money, but simply steered to retail lenders who would charge the same amount for a loan, but would appear better at first glance because they did not have to list those fees explicitly.