- 12 - 15-day) optional delivery period; if the required net yield moved downward, an originator could select the lower required net yield. The purchase price and net yield to petitioner became fixed upon an originator’s selection of either the maximum required net yield, or the alternate required net yield on any day during the 60-day (or 15-day) period that an originator elected an alternate required net yield. The purchase price either would reflect a discount from par (100 percent of unpaid principal balance (UPB)) or would be at par, depending on the relationship of the rate on the mortgages (coupon rate) actually tendered by an originator to the “minimum gross yield”, which was the sum of the required net yield selected and the minimum servicing spread.11 For example, suppose an originator and petitioner entered into a prior approval purchase contract with respect to a mortgage in the maximum amount of $6 million. The originator paid the 2-percent commitment fee in the amount of $120,000. The mortgage was subject to a maximum mortgage interest rate of 12.595 percent, and the maximum required net yield to petitioner was 12.470 percent. The difference, 0.125 percent or 12.5 bps, represents the minimum spread to be retained by an originator for 11 When an originator serviced a mortgage for petitioner, it received the amount of interest on the mortgage in excess of the required net yield. The minimum servicing spread is the difference between the maximum mortgage interest rate and the maximum required net yield.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011