Conflicts Seen with HOEPA/RESPA Proposals

There are conflicts in the way the Federal Reserve Board's Home Owners Equity Protection Act regulatory proposal and the Department of Housing and Urban Development's Real Estate Settlement and Procedure Act regulatory proposal treat yield spread premiums, an official with the Mortgage Bankers Association pointed out. Speaking at the Regional Conference of Mortgage Bankers Associations here, Ken Markison, MBA senior director and regulatory counsel, said the two parties need to get together to work out the differences. From a mortgage banker point of view, it is important in terms of their liability. The Fed proposal prohibits the payment of a YSP unless the mortgage broker has a written agreement setting forth the terms of his or her compensation. But HUD's RESPA proposal calls the YSP "the charge or credit for the interest rate chosen." It is a real conflict in terms of clarity, Mr. Markison said. If it is not resolved, it could leave lenders and mortgage brokers holding the bag in trying to explain it to consumers.