In the beginning of July, New Hampshire passed HB610, a bill banning yield spread premiums (YSPs) and including more restrictions about cross-selling. The bill goes into effect tomorrow, and, as it does, Generation Mortgage announced to its brokers that it is pulling out of the state. The bill was passed to help ensure that brokers are not compensated extra for selling borrowers higher interst loans (which is an even larger concern on the forward mortgage side).
However, lenders trying to avoid HB610 and similar legislation may be out of luck– the Federal Reserve is trying to push the mortgage industry to pay originators in the form of a flat fee, though some experts believe that compensation based on interest rate would still be allowed. If the federal legislation goes through, lenders will be hard-pressed to find states that allow YSPs. Even if the legislation does not pass, the debate and abuse on the forward mortgage side makes similar state legislation more likely.