The yield spread premium (YSP) is the payment a lender makes to a broker for selling mortgages above-par.

When a loan that originates from a lender has zero points, it is a par loan.

When the interest of these loans go below par, the lender has to charge points in the settlement costs so as not to make a loss from the get-go.

However, if a broker has exceptional salesmanship and sells a loan with interest rates above par, negative points in the form of rebates will be credited to the mortgage broker.

These rebates are called the yield spread premium.

It is mostly similar to what is called a service release premium (SRP).

The difference between the two is that YSP results in the bank paying the broker. And SRP results in investors in the secondary market paying the bank.

Otherwise, their functions are essentially the same.