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B-166322, MAY 2, 1969

B-166322 May 02, 1969
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BLACKWELL: THIS IS IN REPLY TO YOUR LETTER OF APRIL 10. THE MATTER WAS THE SUBJECT OF OUR DECISION OF APRIL 1. WHICH IS IN THE VICINITY OF HIS NEW OFFICIAL STATION. 3 PERCENT OF THE LOAN AT THE TIME THE LOAN WAS ORIGINATED. SUMIDA WAS REIMBURSED $195 . WE STATED THAT WE WOULD NOT OBJECT TO THE REIMBURSEMENT OF A SERVICE CHARGE AT A HIGHER RATE FOR CONVENTIONAL LOANS THAN IS APPLICABLE IN THE CASE OF FHA FINANCING IF IT IS SHOWN THAT SUCH HIGHER RATE IS CUSTOMARILY CHARGED IN THE CASE OF CONVENTIONAL LOANS IN THE AREA INVOLVED. WE ALSO STATED THAT THE INFORMATION PRESENTED DID NOT SHOW A 2 PERCENT RATE FOR INITIAL SERVICE CHARGE WAS CUSTOMARILY PAID ON CONVENTIONAL LOANS IN THE COULEE DAM AREA.

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B-166322, MAY 2, 1969

TO MRS. NEDRA A. BLACKWELL:

THIS IS IN REPLY TO YOUR LETTER OF APRIL 10, 1969, REFERENCE 360, REQUESTING OUR DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER FOR $195 IN FAVOR OF MR. BEN T. SUMIDA, AN EMPLOYEE OF YOUR AGENCY, TO REIMBURSE HIM FOR AN ADDITIONAL AMOUNT HE PAID AS A LOAN SERVICE CHARGE IN CONNECTION WITH HIS PURCHASE OF A RESIDENCE AT HIS NEW OFFICIAL STATION INCIDENT TO HIS TRANSFER FROM EPHRATA, WASHINGTON, TO COULEE DAM, WASHINGTON, IN MARCH 1967. THE MATTER WAS THE SUBJECT OF OUR DECISION OF APRIL 1, 1969, B-166322.

MR. SUMIDA, WHO CONTRACTED FOR THE CONSTRUCTION OF A RESIDENCE IN ELECTRIC CITY, WASHINGTON, WHICH IS IN THE VICINITY OF HIS NEW OFFICIAL STATION, OBTAINED CONVENTIONAL FINANCING IN THE AMOUNT OF $19,500 AND PAID A SERVICE CHARGE OF $585 -- 3 PERCENT OF THE LOAN AT THE TIME THE LOAN WAS ORIGINATED. MR. SUMIDA WAS REIMBURSED $195 -- 1 PERCENT OF THE LOAN AMOUNT -- BUT CLAIMED A FURTHER AMOUNT OF $195, REPRESENTING AN ADDITIONAL 1 PERCENT OF SUCH LOAN. IN OUR DECISION OF APRIL 1, 1969, WE STATED THAT WE WOULD NOT OBJECT TO THE REIMBURSEMENT OF A SERVICE CHARGE AT A HIGHER RATE FOR CONVENTIONAL LOANS THAN IS APPLICABLE IN THE CASE OF FHA FINANCING IF IT IS SHOWN THAT SUCH HIGHER RATE IS CUSTOMARILY CHARGED IN THE CASE OF CONVENTIONAL LOANS IN THE AREA INVOLVED. WE ALSO STATED THAT THE INFORMATION PRESENTED DID NOT SHOW A 2 PERCENT RATE FOR INITIAL SERVICE CHARGE WAS CUSTOMARILY PAID ON CONVENTIONAL LOANS IN THE COULEE DAM AREA.

YOU CONTACTED THE SPOKANE, WASHINGTON FHA OFFICE REGARDING SERVICE CHARGES FOR CONVENTIONAL LOANS FOR EXISTING BUILDINGS. YOU WERE ADVISED THAT 4 MORTGAGE COMPANIES QUOTED A RATE OF 1 PERCENT AND 2 BUILDING AND LOAN ASSOCIATIONS QUOTED A RATE OF 2 PERCENT. YOU STATE IT APPEARS THAT THE "NORMAL" LOAN CHARGE IN THE SPOKANE-COULEE DAM AREA IS BASED ON THE TYPE OF LENDING INSTITUTION AND ASK WHETHER A 2 PERCENT SERVICE CHARGE MAY BE ALLOWED IN THE PRESENT CASE SINCE MR. SUMIDA OBTAINED HIS LOAN THROUGH A BUILDING AND LOAN ASSOCIATION.

WE ARE OF THE VIEW THAT THE RATE OF LOAN SERVICE CHARGE ALLOWABLE IS THE CUSTOMARY AREA RATE FOR THE TYPE OF LOAN INVOLVED WITHOUT REGARD TO THE TYPE OF THE LENDING INSTITUTION. OUR VIEW IS THAT THE INFORMATION PRESENTED FAILS TO ESTABLISH THAT THE CUSTOMARY CHARGE WAS ANY GREATER THAN 1 PERCENT. THEREFORE, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY NOT BE CERTIFIED FOR PAYMENT.

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