Walk into a home-loan office and ask if "overages" are charged, and veteran officers will immediately begin coughing or winding their watches. Younger representatives would have to be told that an overage is a creative manipulation of a loan's yield-spread premium, or YSP. Some lenders deliberately take advantage and charge significantly more for a loan than is necessary. The practice was commonly known in the industry as an "overage," yet that was only one of its definitions.To managers, an overage had become a synonym for funds left over when the loan was sold for less to the secondary market than was charged the borrower. It was all about timing -- selling the loan when the time was right. Now, help is on the way. On Aug. 16, the Federal Reserve announced fi...
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