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servicing the mortgage, or $7,500/year. If an originator
contemplated selling the subject mortgage to another buyer in
lieu of petitioner, it would have to consider the effect of
forfeiting the otherwise refundable portion of the commitment
fee, or $90,000, in comparison to the spread it could obtain with
another purchaser.
In the event that petitioner’s required net yield on any day
during the 60-day (or 15-day) period exceeded the “maximum
required net yield”, petitioner could be required on that day to
contract to purchase conforming mortgages at the maximum required
net yield stated on the Form 6, instead of at its current day
required net yield. This arrangement effectively ensured that an
originator could make a mortgage loan to a borrower at a
particular rate, and would be protected against having to sell it
to petitioner at a discount from par, or at an additional
discount as a result of an increase in petitioner’s required net
yield during the 60-day (or 15-day) period. Because it could
select the maximum required net yield if market rates increased,
an originator was assured of dealing at a rate that was no higher
than was specified in the prior approval purchase contract.
Thus, an upward movement in interest rates normally would not
prevent an originator from delivering a mortgage under the prior
approval program. Alternatively, if interest rates went down, an
originator would have the benefit (whether in the form of a
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