RESPA Changes - Does the YSP Affect the APR?

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Question:

YSP was not considered APR impacting prior to RESPA Reform (built into the rate). With the change on the GFE to reflect YSP as a credit to the borrower, is this now APR impacting? We think is should be treated the same way it was prior to RESPA reform, but are concerned RESPAs change may have an unintended impact on Regulation Z.

Answer:

RESPA cannot affect Regulation Z. RESPA and TILA function independently of each other. This has always been the case even though the old form GFE and HUD-1 were often used to identify and pick up charges for TILA calculations. TILA has not changed yet, and what was a finance charge before HUD changed the GFE remains a finance charge, regardless of what clever place HUD has thought up to hide it.

First published on BankersOnline.com 7/12/10