Loan Origination Fee Claim

A Federal employee appealed a Claims Division settlement which disallowed his claim for reimbursement of a loan origination fee which he incurred in connection with the purchase of a residence following a transfer of duty station. He purchased the residence using Veterans Administration (VA) financing. His agency suspended payment of his claim for the loan origination fee on the grounds that it was a finance charge. The Claims Division, on appeal, likewise found the loan origination fee to be a finance charge. The employee submitted two letters, one from a private mortgage company and one from VA, which stated that the loan origination fee was not a finance charge, but a closing cost. Reimbursement of a Federal employee in connection with the purchase of a residence incident to a permanent change of duty station is determined by Federal regulations which expressly categorize loan fees as finance charges, and which are not reimbursable. Where it is claimed that the loan origination fee is levied to reimburse the lender for costs or services that are expressly excluded from the governing regulation, GAO requires an itemization of the alleged reimbursable items. Since there was no itemization of the charges in the loan origination fee paid by the employee, he may not be reimbursed for any part of the fee.