Chase Manhattan Mortgage Corporation to Acquire Advanta Corporation

A Letter to the Editor: A Big Thank You to HUDCharles W. BradleyHUD, YSP, clarifies, Mel Martinez A Letter to the Editor A Big Thank You to HUD As the president of a mortgage banking firm, I am pleased that HUD has taken a bold step toward doing the right thing for the mortgage industry and homeownership in America. HUD's Statement of Policy 2001-1 clarifies their long-standing position that the payment of yield spread premiums are not per se illegal. Mortgage professionals should be particularly pleased that HUD Secretary Mel Martinez and his staff have recognized the usefulness of YSPs as a financing tool for borrowers that lack the necessary funds to pay for settlement costs up-front. The payment of a YSP by the lender permits a borrower to finance services, such as all or a portion of a Mortgage Broker's fee, through a higher interest rate. We should further applaud HUD for clarifying its two-pronged test which determines whether lender payments to Mortgage Brokers are legal under the Real Estate Settlement Procedures Act. The exam now requires that all compensation to the Mortgage Broker, not just the YSP, must be considered on a loan-by-loan basis, and not through class action litigation. We hope this clarification will provide much needed leadership on this issue, and help stem the tide of threatened litigation that many experts predicted would greatly harm the mortgage lending industry. It is rare for any governmental agency to willingly step forward and do the right thing in the face of intense criticism, and I thank Secretary Martinez for having the guts to tackle this problem. Charles W. Bradley, Chairman, CEO EquiFirst Corporation, Charlotte, N.C.