Premium pricing refers to situations when a borrower selects a higher interest rate on a mortgage loan in exchange for a lender credit. The lender credit cannot be used to fund any portion of the borrower’s down payment, and should not exceed the amount needed to offset the borrower’s closing costs.
Any excess lender credit required to be returned to the borrower in accordance with applicable regulatory requirements is considered an overpayment of fees and charges, and may be applied as a principal curtailment or returned in cash to the borrower.
See the following sections for additional details on lender credits derived from premium pricing:
- B3-4.1-01, Minimum Reserve Requirements
- B3-4.1-02, Interested Party Contributions (IPCs)
- B3-4.3-06, Donations From Entities
- B5-5.1-02, Community Seconds Loan Eligibility
For additional information, see B2-1.5-02, Loan Eligibility.