Federal Home Loan Mortgage Corporation - Page 12

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          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.                                                 





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Last modified: May 25, 2011