Was the person breeding for chocolate or red? Sometimes a condition known as Alopecia or Blue Born can affect yorkies. It's caused by having two receive genes where two dominant genes should be, one recessive gene isn't bad, and will result in red or chocolate, but two can cause something know as the blue born. They tend to lose body hair, and get very leathery skin that is like an elephant hide, and can cause extreme pain. That's why many people don't believe the red and chocolates should be bred, even though some think it's pretty, because this condition can result. I'm not sure that's what you are describing though, or perhaps your baby has a mild case. Here's a link with more information:
Top Yorkie Genetics Chocolate Yorkies Chocolate Yorkie Red Golden Blue Born Yorkshire Terrier