B-164416, JUN. 28, 1968

B-164416: Jun 28, 1968

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ADAM FRUZYNSKI: THIS IS IN REPLY TO YOUR MEMORANDUM OF MAY 2. IN CONNECTION WITH YOUR PURCHASE OF A RESIDENCE AN ITEM OF $98.50 WAS LISTED ON CLOSING AS . ANOTHER ITEM WAS "TITLE INSURANCE" LISTED AS COSTING $41.75. UPON EXAMINATION BY OUR OFFICE THE ITEM OF $41.75 FOR MORTGAGE POLICY TITLE INSURANCE WAS ALLOWED LESS $8.35 WITHHOLDING TAX. THE NET FIGURE OF $33.40 WAS APPLIED TO PARTIALLY LIQUIDATE THE OVERPAYMENT OF $98.50. SUCH INSURANCE IS APPARENTLY REQUIRED ON ALL CONVENTIONAL LOANS IN THE AREA OF YOUR PURCHASE WHEN THE FIRST MORTGAGE EXCEEDS 80 PERCENT OF THE COST OF THE HOUSE. YOU URGE THAT SINCE THE COST IN QUESTION IS NOT DEPENDENT ON THE WILL OF THE MORTGAGOR. IS NOT FOR HIS BENEFIT AND IS NOT AVOIDABLE ON HIS PART THAT IT SHOULD BE REIMBURSABLE.

B-164416, JUN. 28, 1968

TO DR. ADAM FRUZYNSKI:

THIS IS IN REPLY TO YOUR MEMORANDUM OF MAY 2, 1968, APPEALING FROM OUR OFFICE SETTLEMENT OF APRIL 1, 1968, WHICH INDICATED AN OUTSTANDING INDEBTEDNESS OF $65.10, REPRESENTING OVERPAYMENT OF A CLAIM FOR MORTGAGE GUARANTY INSURANCE IN THE AMOUNT OF $98.50, LESS OTHER ADJUSTMENTS, IN CONNECTION WITH YOUR CHANGE OF STATION IN JULY 1967 FROM PAXINOS, PENNSYLVANIA, TO HARBESON, DELAWARE, AS AN EMPLOYEE OF THE DEPARTMENT OF AGRICULTURE.

IN CONNECTION WITH YOUR PURCHASE OF A RESIDENCE AN ITEM OF $98.50 WAS LISTED ON CLOSING AS ,MORTGAGE TITLE POLICY AT FMI.' ANOTHER ITEM WAS "TITLE INSURANCE" LISTED AS COSTING $41.75. UPON EXAMINATION BY OUR OFFICE THE ITEM OF $41.75 FOR MORTGAGE POLICY TITLE INSURANCE WAS ALLOWED LESS $8.35 WITHHOLDING TAX. THE NET FIGURE OF $33.40 WAS APPLIED TO PARTIALLY LIQUIDATE THE OVERPAYMENT OF $98.50, RESULTING IN THE CONTESTED INDEBTEDNESS OF $65.10.

THE RECORD INDICATES THAT THE ITEM OF $98.50 REPRESENTS INSURANCE COSTS OF PROTECTING THE MORTGAGE LOAN COMPANY AGAINST DEFAULT IN LOAN PAYMENTS ON THE PART OF THE BUYER MORTGAGOR. SUCH INSURANCE IS APPARENTLY REQUIRED ON ALL CONVENTIONAL LOANS IN THE AREA OF YOUR PURCHASE WHEN THE FIRST MORTGAGE EXCEEDS 80 PERCENT OF THE COST OF THE HOUSE.

YOU URGE THAT SINCE THE COST IN QUESTION IS NOT DEPENDENT ON THE WILL OF THE MORTGAGOR, IS NOT FOR HIS BENEFIT AND IS NOT AVOIDABLE ON HIS PART THAT IT SHOULD BE REIMBURSABLE.

IN OUR DECISION B-163419, FEBRUARY 26, 1968 (COPY ENCLOSED) WE POINTED OUT THAT SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 EXPRESSLY PROVIDES THAT COSTS OF MORTGAGE INSURANCE IS NOT REIMBURSABLE. ACCORDINGLY, THERE IS NO BASIS FOR MODIFYING OUR PRIOR OFFICE SETTLEMENT.

THE BUREAU OF THE BUDGET UNDER THE APPLICABLE STATUTE IS RESPONSIBLE FOR ISSUING THE ABOVE REGULATIONS. ANY RECOMMENDATION FOR A CHANGE OR AMENDMENT TO THE REGULATIONS TO INCLUDE REIMBURSEMENT FOR THE TYPE OF INSURANCE HERE INVOLVED SHOULD BE ADDRESSED TO THAT AGENCY. HOWEVER, IT IS DOUBTFUL THAT ANY SUCH AMENDMENT COULD BE MADE RETROACTIVE SO AS TO COVER YOUR CASE.