A service release premium (SRP) must be?

A service release premium (SRP) is a fee that is generally paid to lenders when a loan is sold to investors after it has been closed. The concept of the SRP is that it reflects the value of servicing rights that a lender or mortgage broker can receive when they transfer the servicing of a loan.

The correct understanding is that an SRP is typically relevant only after the loan is closed, which is why the assertion that it is "only paid on a closed loan" holds true. Once a loan is originated and subsequently sold, the originating lender can realize a service release premium based on the servicing rights. This means that SRPs are tied to the loan's status post-closure, confirming the validity of the answer.

In contrast, aspects such as whether it must be disclosed to the borrower, who it is paid to, or its influence on the interest rate charged to the borrower are not inherent characteristics of what an SRP fundamentally entails in this context. These alternatives suggest misunderstandings about the nature of loan servicing and premiums associated with servicing transfers, hence not aligning with the core principle of SRPs.