Just to add to this, I asked someone who knows about this sort of stuff to take a look at your post, and here's his reply:

Quote:
Actually, the IRS would consider the payment to him income and taxable. It doesn't matter how you or your partner characterize it. Moreover, there may be closing costs (title insurance, settlement and recording fees and taxes) each time a mortgage is made. If it's an "all-in" mortgage (one where settlement costs are paid by the lender), there's usually some time limit--like one year or more--before the loan can be paid in full. Moreover, this would probably be considered a fraud on the mortgage broker's (that's the recipient of the YSP) part against his loan purchasers. If caught this poster could well be implicated.