B-163796, APR. 11, 1968

B-163796: Apr 11, 1968

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

SCHLUMPF: REFERENCE IS MADE TO YOUR LETTER OF MARCH 5. YOUR CLAIM WAS DISALLOWED ON THE GROUND THAT SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. PROVIDES THAT MORTGAGE DISCOUNTS ("POINTS") ARE NOT REIMBURSABLE. A-56 CONTAINS INFORMATION THAT THE COST OF THE OWNER'S TITLE POLICY IS NOT REIMBURSABLE TO THE EMPLOYEE. A RECLAIM FOR SUCH REIMBURSEMENT WAS ALLOWED IN OUR DECISION OF JUNE 27. YOU FEEL THAT YOUR SITUATION IS IDENTICAL TO THAT OF THE CLAIMANT IN THE CITED CASE IN THAT YOU COULD NOT AVOID THE $320 "POINTS" COST BECAUSE THE BUYER CHOSE TO FINANCE THE BUYING OF THE HOME THROUGH FHA INSTEAD OF PAYING CASH OR FINANCING THE TRANSACTION BY OTHER MEANS. THAT THE REGULATION CONTEMPLATES REIMBURSEMENT OF COSTS INVOLVED IN PROVING THAT TITLE TO PROPERTY IS MARKETABLE.

B-163796, APR. 11, 1968

TO MR. WALTER E. SCHLUMPF:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 5, 1968, REQUESTING REVIEW OF THE DISALLOWANCE OF YOUR CLAIM FOR REIMBURSEMENT OF $320 FOR "LOAN POINTS TO BANK," PAID IN CONNECTION WITH THE SALE OF YOUR RESIDENCE AT YOUR OLD STATION, INCIDENT TO YOUR TRANSFER FROM WEAVERVILLE, CALIFORNIA, TO SAN FRANCISCO, CALIFORNIA, EFFECTIVE MARCH 12, 1967. YOUR CLAIM WAS DISALLOWED ON THE GROUND THAT SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, PROVIDES THAT MORTGAGE DISCOUNTS ("POINTS") ARE NOT REIMBURSABLE. YOU STATE THAT, WHILE CIRCULAR NO. A-56 CONTAINS INFORMATION THAT THE COST OF THE OWNER'S TITLE POLICY IS NOT REIMBURSABLE TO THE EMPLOYEE, A RECLAIM FOR SUCH REIMBURSEMENT WAS ALLOWED IN OUR DECISION OF JUNE 27, 1967, B-161459 (46 COMP. GEN. 884), ON THE BASIS THAT THE EMPLOYEE COULD NOT AVOID SUCH COSTS. YOU FEEL THAT YOUR SITUATION IS IDENTICAL TO THAT OF THE CLAIMANT IN THE CITED CASE IN THAT YOU COULD NOT AVOID THE $320 "POINTS" COST BECAUSE THE BUYER CHOSE TO FINANCE THE BUYING OF THE HOME THROUGH FHA INSTEAD OF PAYING CASH OR FINANCING THE TRANSACTION BY OTHER MEANS.

IN OUR DECISION B-161459 WE DETERMINED THAT SECTION 4.2 OF CIRCULAR NO. A -56 PROHIBITED REIMBURSEMENT OF THE COST OF INSURANCE PURCHASED BY AN EMPLOYEE FOR HIS PROTECTION, AS DISTINGUISHED FROM THAT PURCHASED FOR THE PROTECTION OF THE LENDER, AND THAT THE REGULATION CONTEMPLATES REIMBURSEMENT OF COSTS INVOLVED IN PROVING THAT TITLE TO PROPERTY IS MARKETABLE. IT WAS FOR THESE REASONS, NOT BECAUSE THE EMPLOYEE COULD NOT AVOID SUCH COST, WE HELD THAT, IF THE CUSTOM OF AN AREA IS THAT THE SELLER PURCHASE A TITLE INSURANCE POLICY FOR THE BUYER IN LIEU OF SHOWING MARKETABLE TITLE BY A TITLE SEARCH, AN ABSTRACT OF TITLE OR A LEGAL OPINION, THE COST OF SUCH INSURANCE WAS REIMBURSABLE.

IN VIEW OF THE ABOVE AND SINCE CIRCULAR NO. A-56 EXPRESSLY STATES MORTGAGE DISCOUNTS ("POINTS") ARE NOT REIMBURSABLE THE DISALLOWANCE OF YOUR CLAIM MUST BE SUSTAINED.