[Request for Decision Concerning Loan Origination Fee Claim]

The Internal Revenue Service (IRS) requested a decision concerning an employee's claim for a 3-percent loan origination fee he incurred when he purchased a residence at his new duty station. IRS limited reimbursement to 1 percent, based on advice from the Department of Housing and Urban Development. GAO found that the 1-percent fee was limited to loans insured by the Federal Housing Administration and did not apply to the employee's conventional mortgage. GAO held that the employee was entitled to reimbursement for a 3-percent loan origination fee because he demonstrated through a Federal Home Loan Bank survey that the 3-percent fee was customary in his new locality for conventional financing. Accordingly, the employee may be reimbursed for the full 3-percent loan origination fee.