YSP's are not finance charges and that is why they are not treated as such.  YSP's should be entered in the Premiums section of the worksheet as paid to broker (premiums are by definition treated as paid by the lender). 

In the case of an overstated APR, it is difficult to answer your question and give you a concrete answer, because whether you need to re-disclose depends on the circumstances.  Section 226.22 and Section 226.18(d)(1) of Reg. Z are the governing regulations that would help guide you in making the determination on whether or not to re-disclose.

In essence, you would first have to look to see whether APR exceeds applicable tolerances, up or down, under Section 226.22(a), and, if they do, you then would need to apply Sections 226.22(a)(4), which includes an analysis under Section 228.18(d)(1) to see if the finance charge exceeds the tolerance, and then apply Section 226.22(a)(5).  Bottom line, if the APR decreases (is overstated) beyond Reg. Z tolerances, it can be, but is not always, "exempt" from re-disclosure under Reg. Z and, therefore, MDIA.  Re-disclosure may be required if the overstated APR impacts the payment stream, loan amount, etc.

Click here for a link to Reg. Z so that you can refer to the above-referenced sections.

Excerpt from Section 226.22 states:

(4) Mortgage loans. If the annual percentage rate disclosed in a transaction secured by real property or a dwelling varies from the actual rate determined in accordance with paragraph (a)(1) of this section, in addition to the tolerances applicable under paragraphs (a)(2) and (3) of this section, the disclosed annual percentage rate shall also be considered accurate if:

(i) The rate results from the disclosed finance charge; and

(ii)(A) The disclosed finance charge would be considered accurate under §226.18(d)(1); or (B) For purposes of rescission, if the disclosed finance charge would be considered accurate under §226.23(g) or (h), whichever applies.

(5) Additional tolerance for mortgage loans. In a transaction secured by real property or a dwelling, in addition to the tolerances applicable under paragraphs (a)(2) and (3) of this section, if the disclosed finance charge is calculated incorrectly but is considered accurate under §226.18(d)(1) or §226.23(g) or (h), the disclosed annual percentage rate shall be considered accurate:

(i) If the disclosed finance charge is understated, and the disclosed annual percentage rate is also understated but it is closer to the actual annual percentage rate than the rate that would be considered accurate under paragraph (a)(4) of this section;

(ii) If the disclosed finance charge is overstated, and the disclosed annual percentage rate is also overstated but it is closer to the actual annual percentage rate than the rate that would be considered accurate under paragraph (a)(4) of this section.

Following are examples from the Official Commentary illustrating the above:

22(a)(4) Mortgage loans.

1. Example. If a creditor improperly omits a $75 fee from the finance charge on a regular transaction, the understated finance charge is considered accurate under §226.18(d)(1), and the annual percentage rate corresponding to that understated finance charge also is considered accurate even if it falls outside the tolerance of1/8of 1 percentage point provided under §226.22(a)(2). Because a $75 error was made, an annual percentage rate corresponding to a $100 understatement of the finance charge would not be considered accurate.

22(a)(5) Additional tolerance for mortgage loans.

1. Example. This paragraph contains an additional tolerance for a disclosed annual percentage rate that is incorrect but is closer to the actual annual percentage rate than the rate that would be considered accurate under the tolerance in §226.22(a)(4). To illustrate: in an irregular transaction subject to a1/4of 1 percentage point tolerance, if the actual annual percentage rate is 9.00 percent and a $75 omission from the finance charge corresponds to a rate of 8.50 percent that is considered accurate under §226.22(a)(4), a disclosed APR of 8.65 percent is within the tolerance in §226.22(a)(5). In this example of an understated finance charge, a disclosed annual percentage rate below 8.50 or above 9.25 percent will not be considered accurate.

The conservative approach would be to simply re-disclose.  Keep in mind that even if there is no obligation to disclose under the above provisions in the case of an overstated APR, there are some investors who mandate re-disclosure even if the APR has decreased.  So, you should check on the policy of each one of your investors.

We've also written an article here regarding the MDIA requirements and the implementation of the APR Threshold Variance Audit.