B-163461, MAR. 19, 1968

B-163461: Mar 19, 1968

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AN EMPLOYEE WHO IS RECLAIMING THAT AMOUNT UNDER THE PROVISIONS OF PUBLIC LAW 89-516. THE EMPLOYEE MAY BE REIMBURSED THE $480 OR IN LIEU THEREOF IS ELIGIBLE TO BE PAID $220 (THE 1 PERCENT OF THE CONVENTIONAL LOAN ($22. INSPECTION FEE" AND THAT THE PURCHASER'S SETTLEMENT SHEET INDICATED THAT THE LOAN FEE WAS $480. THE LATTER TWO ITEMS YOU ADVISE WERE ADMINISTRATIVELY ALLOWED. THE $480 WAS DISALLOWED BECAUSE IT WAS ADMINISTRATIVELY UNDERSTOOD FROM THE LAW FIRM THAT HANDLED THE SETTLEMENT THAT THE FEE WAS NOT THE TOTAL CHARGE BY THE LENDING INSTITUTION BUT ONLY A PART OF THE TOTAL "LOAN COMMISSION" (THE LOAN ASSOCIATION DESIGNATION) WHICH WAS SPLIT BETWEEN THE PURCHASER AND SELLER. ATTESTING THAT THE AMOUNT IS A "LOAN PLACEMENT FEE" .

B-163461, MAR. 19, 1968

TO MR. ARTHUR J. GILMORE:

YOUR LETTER OF JANUARY 30, 1968, REFERENCE F5023-ABFA, SUBMITS A VOUCHER FOR $480 IN FAVOR OF MR. MANUAL MORRIS, AN EMPLOYEE WHO IS RECLAIMING THAT AMOUNT UNDER THE PROVISIONS OF PUBLIC LAW 89-516, APPROVED JULY 21, 1966, 80 STAT. 323, 5 U.S.C. 5724A AND BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966. YOU ASK WHETHER, UNDER THE FACTS AND CIRCUMSTANCES SET OUT BELOW, THE EMPLOYEE MAY BE REIMBURSED THE $480 OR IN LIEU THEREOF IS ELIGIBLE TO BE PAID $220 (THE 1 PERCENT OF THE CONVENTIONAL LOAN ($22,000) ( REFLECTED IN THE SALES CONTRACT?

YOU POINT OUT THAT MR. MORRIS, UPON PERMANENT CHANGE OF STATION, SAN FRANCISCO, CALIFORNIA, TO WASHINGTON, D.C., PURCHASED A NEW HOME IN MARYLAND ON AUGUST 27, 1967. FURTHER YOU POINT OUT THAT ON HIS VOUCHER HE CLAIMED, AMONG OTHER ITEMS, $500 REIMBURSEMENT FOR "LOAN APPLICATION FEE: LOAN FEE, CREDIT REPORT, AND INSPECTION FEE" AND THAT THE PURCHASER'S SETTLEMENT SHEET INDICATED THAT THE LOAN FEE WAS $480, THE CREDIT REPORT $10 AND THE INSPECTION FEE $10. THE LATTER TWO ITEMS YOU ADVISE WERE ADMINISTRATIVELY ALLOWED. THE $480 WAS DISALLOWED BECAUSE IT WAS ADMINISTRATIVELY UNDERSTOOD FROM THE LAW FIRM THAT HANDLED THE SETTLEMENT THAT THE FEE WAS NOT THE TOTAL CHARGE BY THE LENDING INSTITUTION BUT ONLY A PART OF THE TOTAL "LOAN COMMISSION" (THE LOAN ASSOCIATION DESIGNATION) WHICH WAS SPLIT BETWEEN THE PURCHASER AND SELLER.

MR. MORRIS HAS MADE RECLAIM FOR THAT AMOUNT SUPPORTING IT WITH A LETTER FROM THE LENDING INSTITUTION, WHICH YOU ENCLOSE, ATTESTING THAT THE AMOUNT IS A "LOAN PLACEMENT FEE" , WITHOUT FURTHER EXPLANATION OF THAT TERM. YOU ALSO ATTACHED A COPY OF THE SALES CONTRACT AND YOU POINT OUT THAT SUCH CONTRACT CONTAINS THE STATEMENT "PURCHASER AGREES TO PAY 1 PERCENT OF LOAN AMOUNT FOR OBTAINING LOAN".

WE NOTE FROM THE COPY OF THE SETTLEMENT AND OTHER PAPERS FURNISHED WITH YOUR ADDITIONAL LETTER OF MARCH 7, 1968, THAT THE LOAN IN THIS CASE ACTUALLY WAS $24,000. IF THE $480 ITEM REFERRED TO ON THE SETTLEMENT AS A LOAN FEE IS THE SAME KIND OF FEE COVERED BY THE SALES CONTRACT THEN WE FAIL TO UNDERSTAND WHY MR. MORRIS WAS CHARGED $480 RATHER THAN $240 (1 PERCENT OF $24,000).

SECTION 4.2D OF THE CIRCULAR CITED ABOVE, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"* * * FEES FOR LOAN APPLICATIONS, LENDER'S LOAN ORIGINATION * * * AND SIMILAR FEES AND CHARGES, ARE REIMBURSABLE TO THE EXTENT SUCH COSTS ARE CUSTOMARILY PAID BY THE * * * PURCHASER AT THE LOCATION OF THE NEW OFFICIAL STATION * * *. MORTGAGE DISCOUNTS (-POINTS-) * * * ARE NOT REIMBURSABLE.'

IN OUR DECISION B-162571, OCTOBER 23, 1967 (47 COMP. GEN.--- ( WE POINTED OUT AS FOLLOWS:

"IF THE VARIOUS FEES REFERRED TO AS -PLACEMENT FEE-, -COMMISSION LOAN FEE -, OR -ORIGINATION FEE-, 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 SE.'

IN VIEW OF THE CONFLICT IN THE INFORMATION SET FORTH HEREIN WE ARE UNABLE TO DETERMINE WHETHER THE $480 OR ANY PART THEREOF IS AN EXPENSE ASSOCIATED WITH THE ORIGINATION AND CLOSING OF THE LOAN OR WHETHER IT SHOULD BE REGARDED AS PART OF THE PRICE FOR THE HIRE OF THE MONEY INVOLVED IN THE LOAN. ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD THE VOUCHER WHICH IS RETURNED HEREWITH MAY NOT BE CERTIFIED FOR PAYMENT.