B-162571, OCTOBER 23, 1967, 47 COMP. GEN. 213

B-162571: Oct 23, 1967

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" OR "ORIGINATION FEE" ARE INTERCHANGEABLE TERMS FOR THE EXPENSE OF ORIGINATING AND CLOSING A LOAN AS DISTINGUISHED FROM "POINTS". THE FEES ARE REIMBURSABLE UNDER SECTION 4.2D OF THE BUREAU OF THE BUDGET CIRCULAR NO. 1967: REFERENCE IS MADE TO THE REQUEST OF SEPTEMBER 18. INCLUDED AMONG THE REIMBURSABLE EXPENSES ARE THE FEE FOR LOAN APPLICATION AND THE FEE FOR THE LENDER'S LOAN ORIGINATION. THERE ARE CERTAIN EXPENSES WHICH ARE EXCLUDED FROM REIMBURSEMENT SUCH AS MORTGAGE DISCOUNTS ("POINTS"). IT IS STATED THAT IN CONNECTION WITH THE SALE OF A RESIDENCE THE COST OF A PERCENTAGE LOAN PLACEMENT FEE IS CUSTOMARILY PAID BY THE PURCHASER AND THAT THIS FEE IS SOMETIMES REFERRED TO AS A "COMMISSION LOAN.'.

B-162571, OCTOBER 23, 1967, 47 COMP. GEN. 213

OFFICERS AND EMPLOYEES - TRANSFERS - RELOCATION EXPENSES - HOUSE PURCHASE - CLOSING CHARGES IF THE VARIOUS FINANCING COSTS INCURRED BY CIVILIAN EMPLOYEES INCIDENT TO A PERMANENT CHANGE OF STATION IN CONNECTION WITH THE PURCHASE OF A SWELLING AND REFERRED TO AS "PLACEMENT FEE," ,COMMISSION LOAN FEE," OR "ORIGINATION FEE" ARE INTERCHANGEABLE TERMS FOR THE EXPENSE OF ORIGINATING AND CLOSING A LOAN AS DISTINGUISHED FROM "POINTS"--- MORTGAGE DISCOUNTS--- PART OF THE PRICE FOR THE HIRE OF MONEY, THE FEES ARE REIMBURSABLE UNDER SECTION 4.2D OF THE BUREAU OF THE BUDGET CIRCULAR NO. A-56, WHICH PROVIDES FOR THE REIMBURSEMENT OF FEES FOR LOAN APPLICATIONS AND LENDER'S LOAN ORIGINATION, BUT NOT FOR THE REIMBURSEMENT OF MORTGAGE DISCOUNTS OR "POINTS.'

TO THE SECRETARY OF THE ARMY, OCTOBER 23, 1967:

REFERENCE IS MADE TO THE REQUEST OF SEPTEMBER 18, 1967, FROM YOUR UNDER SECRETARY, THE HONORABLE DAVID E. MCGIFFERT, FORWARDED HERE BY THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE ON SEPTEMBER 22, 1967, PDTATAC 67-32, FOR AN ADVANCE DECISION CONCERNING THE PROPRIETY OF REIMBURSING AN EMPLOYEE FOR CERTAIN COSTS INCIDENT TO A PERMANENT CHANGE OF STATION AND IN CONNECTION WITH THE PURCHASE OF A DWELLING.

THE UNDER SECRETARY SAYS THAT SECTION 4.2D OF THE BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, PROVIDES FOR REIMBURSEMENT UNDER CERTAIN CONDITIONS FOR VARIOUS FINANCING COSTS REQUIRED TO BE PAID INCIDENT TO THE SALE OR PURCHASE OF A RESIDENCE. INCLUDED AMONG THE REIMBURSABLE EXPENSES ARE THE FEE FOR LOAN APPLICATION AND THE FEE FOR THE LENDER'S LOAN ORIGINATION. ON THE OTHER HAND, THERE ARE CERTAIN EXPENSES WHICH ARE EXCLUDED FROM REIMBURSEMENT SUCH AS MORTGAGE DISCOUNTS ("POINTS").

IT IS STATED THAT IN CONNECTION WITH THE SALE OF A RESIDENCE THE COST OF A PERCENTAGE LOAN PLACEMENT FEE IS CUSTOMARILY PAID BY THE PURCHASER AND THAT THIS FEE IS SOMETIMES REFERRED TO AS A "COMMISSION LOAN.' A DECISION IS REQUESTED AS TO WHETHER THE FEES VARIOUSLY REFERRED TO AS A ,PLACEMENT FEE," "COMMISSION LOAN FEE" OR "ORIGINATION FEE," ASSOCIATED WITH THE PLACEMENT OF A LOAN AND NORMALLY PAID BY THE PURCHASER, IS PROPERLY REIMBURSABLE TO OTHERWISE ELIGIBLE CIVILIAN EMPLOYEES UNDER THE PROVISIONS OF THE BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966.

SECTION 4.2D OF THE BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, PROVIDES THAT FEES FOR LOAN APPLICATIONS AND LENDER'S LOAN ORIGINATION ARE REIMBURSABLE. MORTGAGE DISCOUNTS ("POINTS") ARE NOT REIMBURSABLE.

THE UNDER SECRETARY REFERS TO A FEDERAL HOUSING ADMINISTRATION REGULATION WHICH PERMITS A ,PLACEMENT FEE" NOT TO EXCEED 1 PERCENT OF THE LOAN TO BE CHARGED TO THE PURCHASER. FEDERAL HOUSING ADMINISTRATION REGULATION CONTAINED IN 24 CFR 203.27 PROVIDES THAT THE MORTGAGEE MAY COLLECT FROM THE MORTGAGOR CERTAIN FEES AMONG WHICH IS A CHARGE TO COMPENSATE THE MORTGAGEE FOR EXPENSES INCURRED IN ORIGINATING AND CLOSING THE LOAN, THE CHARGE NOT TO EXCEED $20 OR 1 PERCENT OF THE ORIGINAL PRINCIPAL AMOUNT OF THE MORTGAGE, WHICHEVER IS GREATER.

IF THE VARIOUS FEES REFERRED TO AS "PLACEMENT FEE," "COMMISSION LOAN FEE," OR "ORIGINATION E," ARE INTERCHANGEABLE TERMS AS INDICATED AND ARE CHARGES MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN ORIGINATING AND CLOSING A LOAN, AS DISTINGUISHED FROM "POINTS" WHICH IS A PART OF THE PRICE FOR THE HIRE OF THE MONEY, THEY MAY BE REIMBURSED TO ELIGIBLE CIVILIAN EMPLOYEES INCIDENT TO A PERMANENT CHANGE OF STATION AND IN CONNECTION WITH THE PURCHASE OF A HOUSE.

A COPY OF THIS DECISION IS BEING FURNISHED TO THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE.