B-164117, MAY 16, 1968

B-164117: May 16, 1968

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WERE INCURRED BY THE EMPLOYEE IN CONNECTION WITH THE PURCHASE BY HIM OF A DWELLING AT HIS NEW OFFICIAL STATION. ARE AS FOLLOWS: "1. APPRAISAL FEE OF $35.00 INCURRED ON THE PURCHASE OF THE NEW RESIDENCE WAS WITHHELD BECAUSE SECTION 4. RECORDING FEES OF $15.05 ON THE PURCHASE OF THE NEW RESIDENCE WERE WITHHELD BECAUSE SECTION 4.2C. A SERVICE CHARGE OF $499.50 ON A LOAN OBTAINED IN CONNECTION WITH THE PURCHASE OF A NEW RESIDENCE WAS WITHHELD PENDING ITS ITEMIZATION. A $42.50 PAYMENT FOR A MORTGAGE POLICY ON THE NEW RESIDENCE WAS WITHHELD BECAUSE BOB CIRCULAR A-56 DOES NOT APPEAR TO SPECIFICALLY ALLOW OR DISALLOW THIS ITEM. CLAIMANT STATED THAT MORTGAGEPOLICY WAS REQUIRED IN ORDER TO OBTAIN THE LOAN DESCRIBED IN 3 ABOVE.'.

B-164117, MAY 16, 1968

TO MR. HARRISON:

YOUR LETTER OF APRIL 23, 1968, WITH ENCLOSURES, ASKS OUR DECISION CONCERNING THE LEGALITY OF ALLOWING REIMBURSEMENT OF CERTAIN RELOCATION EXPENSES INCURRED BY AN EMPLOYEE OF THE GOVERNMENT PRINTING OFFICE INCIDENT TO THE TRANSFER OF HIS OFFICIAL STATION TO ST. LOUIS, MISSOURI.

THE QUESTIONED ITEMS OF EXPENSE AGGREGATING $592.05, WERE INCURRED BY THE EMPLOYEE IN CONNECTION WITH THE PURCHASE BY HIM OF A DWELLING AT HIS NEW OFFICIAL STATION. AS DESCRIBED IN YOUR LETTER, THE ITEMS AND THE REASONS FOR THE DOUBT AS TO THEIR ALLOWABILITY, ARE AS FOLLOWS:

"1. APPRAISAL FEE OF $35.00 INCURRED ON THE PURCHASE OF THE NEW RESIDENCE WAS WITHHELD BECAUSE SECTION 4, BOB CIRCULAR A-56, DOES NOT APPEAR TO PERMIT THIS TYPE OF EXPENSE AT BOTH LOCATIONS.

"2. RECORDING FEES OF $15.05 ON THE PURCHASE OF THE NEW RESIDENCE WERE WITHHELD BECAUSE SECTION 4.2C, BOB CIRCULAR A-56, DOES NOT PERMIT THIS TYPE OF EXPENSE AT BOTH LOCATIONS.

"3. A SERVICE CHARGE OF $499.50 ON A LOAN OBTAINED IN CONNECTION WITH THE PURCHASE OF A NEW RESIDENCE WAS WITHHELD PENDING ITS ITEMIZATION. ACCORDING TO CLAIMANT, $166.50 REPRESENTS THE NORMAL CHARGE FOR ORIGINATING THE LOAN; $166.50 REPRESENTS AN ADDITIONAL CHARGE FOR PROCESSING A 90 PERCENT LOAN; AND $166.50 REPRESENTS PAYMENT TO THE REAL ESTATE AGENT ACTING AS BROKER.

"4. A $42.50 PAYMENT FOR A MORTGAGE POLICY ON THE NEW RESIDENCE WAS WITHHELD BECAUSE BOB CIRCULAR A-56 DOES NOT APPEAR TO SPECIFICALLY ALLOW OR DISALLOW THIS ITEM. HOWEVER, CLAIMANT STATED THAT MORTGAGEPOLICY WAS REQUIRED IN ORDER TO OBTAIN THE LOAN DESCRIBED IN 3 ABOVE.'

CONCERNING ITEM NO. 1, THE EXPENSE FOR AN APPRAISAL INCURRED AT THE NEW OFFICIAL STATION, THE EMPLOYEE WAS ALLOWED $45 FOR AN APPRAISAL IN CONNECTION WITH THE SALE OF HIS RESIDENCE AT HIS OLD OFFICIAL STATION. THAT EXPENSE WAS PAID UNDER SECTION 4.2B OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 REVISED, WHICH SECTION RELATES TO SELLING EXPENSES. AN APPRAISAL FEE INCURRED ON THE PURCHASE OF A NEW RESIDENCE, IF AN ALLOWABLE ITEM, WOULD BE FOR PAYMENT UNDER SECTION 4.2C OF THE CIRCULAR, AND THE PROHIBITION IN THAT SECTION AGAINST THE ALLOWANCE OF THE SAME TYPE OF EXPENSE AT BOTH THE OLD AND NEW OFFICIAL STATIONS WOULD APPLY. THEREFORE, THE ITEM OF $35 MAY NOT BE PAID.

ITEM NO. 2, RECORDING FEE, PROPERLY IS FOR DISALLOWANCE FOR THE REASONS APPLICABLE TO ITEM NO. 1.

THE SERVICE CHARGE OF $499.50, ITEM NO. 3, IS SAID TO BE COMPRISED OF THREE AMOUNTS EACH OF $166.50 EQUAL TO 1 PERCENT OF THE LOAN OF $16,650. ONE AMOUNT IS IDENTIFIED AS A LENDER'S LOAN OR ORIGINATION FEE UNDER SECTION 4.2D OF THE CIRCULAR AND SUCH ITEM IS REIMBURSABLE.

THE SECOND AMOUNT IS DESCRIBED AS AN ADDITIONAL CHARGE FOR PROCESSING A 90 PERCENT LOAN. WHILE IT CANNOT BE CLEARLY IDENTIFIED, THIS ITEM MAY BE EQUIVALENT TO "POINTS," I.E., AS PART OF THE COST OF THE HIRE OF MONEY BORROWED AND THUS IS NOT REIMBURSABLE UNDER THE CIRCULAR. ON THE OTHER HAND, IT MAY BE AN INSURANCE COST PAID BY THE LOAN COMPANY, AND FOR WHICH THE PURCHASER REIMBURSED IT, FOR THE PROTECTION OF THE MORTGAGEE. SUCH COST IS NOT ALLOWABLE. SEE OUR DECISIONS OF OCTOBER 23, 1967, B-162571 (47 COMP. GEN. 213); B-162673, NOVEMBER 13, 1967; B-163461, MARCH 19, 1968. COPIES OF THE CITED DECISIONS ARE ENCLOSED. THEREFORE, ON THE PRESENT RECORD, THIS AMOUNT IS FOR DISALLOWANCE.

CONCERNING THE THIRD AMOUNT OF $166.50, WE FIND NO CLEAR AUTHORITY IN THE CIRCULAR FOR REIMBURSEMENT OF EXPENSES INCURRED BY AN EMPLOYEE AS A CONSEQUENCE OF CHARGES MADE BY THE REAL ESTATE BROKER IN THE PURCHASE TRANSACTION FOR SERVICE RENDERED BY HIM IN THE PROCUREMENT OF A LOAN. MOREOVER, THERE IS NO SHOWING THAT SUCH A COST IS ONE CUSTOMARILY PAID BY A PURCHASER AT THE LOCATION OF THE NEW OFFICIAL STATION. ON THE PRESENT RECORD THE PERCENTAGE COST OF $166.50 CHARGED BY THE REAL ESTATE AGENT AS A MORTGAGE BROKER MAY NOT BE REIMBURSED.

REGARDING ITEM NO. 4, WE ARE UNABLE TO SPECIFICALLY IDENTIFY THE NATURE OF THE INSURANCE INVOLVED. FROM THE EMPLOYEE'S EXPLANATION THE POLICY WAS REQUIRED TO OBTAIN THE LOAN. THUS, IT WOULD APPEAR THAT THE LENDER OR MORTGAGEE IS THE INSURED PARTY AND THAT THE INSURANCE MAY BE THAT AFFORDED BY A "MORTGAGE TITLE" POLICY, THE COST OF WHICH IS REIMBURSABLE TO THE PURCHASER UNDER SECTION 4.2D OF CIRCULAR NO. A-56, AS DISTINGUISHED FROM THE COSTS OF "RECORD TITLE" OR "MORTGAGE GUARANTY" POLICIES. AS TO THE LATTER, SEE 47 COMP. GEN. 213, SUPRA. IF THE EMPLOYEE CAN ESTABLISH THAT THE EXPENSE IN QUESTION WAS FOR "MORTGAGE TITLE" INSURANCE HE MAY BE REIMBURSED.

OTHERWISE, ON THE RECORD NOW BEFORE US WE CONCLUDE THAT THE EMPLOYEE MAY BE ALLOWED ONLY $166.50 OF ITEM NO. 3 REPRESENTING THE LOAN ORIGINATION FEE.

THE ENCLOSURES TRANSMITTED WITH YOUR LETTER ARE RETURNED HEREWITH AS REQUESTED.