B-164452, JUL. 2, 1968
Highlights
THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED WERE PAID BY MR. AT THE TIME THE VOUCHER WAS SUBMITTED SETTLEMENT ON THE FULL TRANSACTION APPARENTLY HAD NOT TAKEN PLACE. A- 56 AN EMPLOYEE IS ENTITLED TO REIMBURSEMENT OF EXPENSES INCURRED IN THE PURCHASE OF A RESIDENCE PROVIDED THE DATE OF SETTLEMENT OF SUCH PURCHASE IS WITHIN 1 YEAR OF THE EFFECTIVE DATE OF THE EMPLOYEE'S CHANGE OF STATION. PAYMENT WAS AUTHORIZED ONLY AFTER THE EMPLOYEE FURNISHED EVIDENCE THAT SETTLEMENT ON THE RESIDENCE HAD BEEN COMPLETED AND THAT HE HAD MOVED IN. SANDBERG MAY HAVE PAID THE COSTS FOR WHICH HE CLAIMS REIMBURSEMENT AT SOME EARLIER DATE. THE AMOUNT OF THE VOUCHER IS COMPRISED OF TWO CATEGORIES OF EXPENSES INCURRED BY THE EMPLOYEE IN THE ACQUISITION OF A DWELLING HOUSE OR RESIDENCE AT HIS NEW OFFICIAL STATION.
B-164452, JUL. 2, 1968
TO MR. WILLIAM F. LOCKE:
YOUR LETTER OF MAY 23, 1968, REFERENCE F86 (WR/-AF, ENCLOSING A VOUCHER FOR $1,527.63 IN FAVOR OF MR. GEORGE W. SANDBERG, AN EMPLOYEE OF THE NATIONAL PARK SERVICE, ASKS OUR DECISION WHETHER THE VOUCHER COVERING CERTAIN RELOCATION EXPENSES INCURRED BY THE EMPLOYEE INCIDENT TO A TRANSFER OF STATION EFFECTIVE NOVEMBER 13, 1967, MAY BE CERTIFIED FOR PAYMENT.
THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED WERE PAID BY MR. SANDBERG IN CONNECTION WITH HIS PURCHASE OF A LOT AND CONTRACTING FOR THE CONSTRUCTION OF A RESIDENCE THEREON. AT THE TIME THE VOUCHER WAS SUBMITTED SETTLEMENT ON THE FULL TRANSACTION APPARENTLY HAD NOT TAKEN PLACE; HOWEVER, IN ORDER TO EXPEDITE HIS CLAIM MR. SANDBERG HAD, BY SPECIAL AGREEMENT, PREPAID THE EXPENSES FOR WHICH HE CLAIMS REIMBURSEMENT. UNDER SECTION 4.1 OF BUREAU OF THE BUDGET CIRCULAR NO. A- 56 AN EMPLOYEE IS ENTITLED TO REIMBURSEMENT OF EXPENSES INCURRED IN THE PURCHASE OF A RESIDENCE PROVIDED THE DATE OF SETTLEMENT OF SUCH PURCHASE IS WITHIN 1 YEAR OF THE EFFECTIVE DATE OF THE EMPLOYEE'S CHANGE OF STATION. IN THE DECISION B-164044, JUNE 7, 1968, COPY ENCLOSED, WE AUTHORIZED REIMBURSEMENT TO AN EMPLOYEE FOR CERTAIN EXPENSES INCURRED IN PURCHASING A LOT AND CONTRACTING FOR THE CONSTRUCTION OF A RESIDENCE. HOWEVER, PAYMENT WAS AUTHORIZED ONLY AFTER THE EMPLOYEE FURNISHED EVIDENCE THAT SETTLEMENT ON THE RESIDENCE HAD BEEN COMPLETED AND THAT HE HAD MOVED IN.
EVEN THOUGH MR. SANDBERG MAY HAVE PAID THE COSTS FOR WHICH HE CLAIMS REIMBURSEMENT AT SOME EARLIER DATE, REIMBURSEMENT SHOULD NOT BE AUTHORIZED UNTIL HE HAS PROVIDED EVIDENCE THAT SETTLEMENT ON THE COMPLETED RESIDENCE HAS OCCURRED WITHIN THE REQUIRED TIME LIMIT AND THAT HE HAS MOVED INTO THAT RESIDENCE.
THE AMOUNT OF THE VOUCHER IS COMPRISED OF TWO CATEGORIES OF EXPENSES INCURRED BY THE EMPLOYEE IN THE ACQUISITION OF A DWELLING HOUSE OR RESIDENCE AT HIS NEW OFFICIAL STATION. ONE CATEGORY AGGREGATING $349 COVERS VARIOUS CLOSING COSTS PAID BY THE EMPLOYEE. OF THAT TOTAL $259.50 REPRESENTS THE COST OF MORTGAGE TITLE INSURANCE. THAT AMOUNT MAY PROPERLY BE REIMBURSED IF THE PURCHASER CUSTOMARILY PAYS FOR SUCH INSURANCE IN THE AREA OF THE NEW STATION IN CONNECTION WITH TRANSACTIONS OF THE TYPE INVOLVED -- PURCHASE OF A LOT AND CONSTRUCTION OF A RESIDENCE THEREON. SUBJECT TO THE SAME CONDITION THE COST OF RECORDING FEES AND CREDIT REPORT MAY PROPERLY BE REIMBURSED. THE TITLE INSURANCE INSPECTION AND REDRAW FEES MAY BE REIMBURSED ONLY IF THOSE FEES WOULD HAVE BEEN INCURRED IN CONNECTION WITH THE ISSUANCE OF A TITLE POLICY ON A COMPLETED RESIDENCE BUT MAY NOT BE REIMBURSED IF THEY WERE INCURRED BECAUSE THE RESIDENCE WAS CONSTRUCTED AFTER THE ISSUANCE OF THE BASIC TITLE POLICY. SEE B 164044, SUPRA.
THE SECOND CATEGORY IS COMPRISED OF EXPENSES REFLECTED BY THE RECORD AS FOLLOWS:
ONE CONSTRUCTION SHORT TERM LOAN OF
$27,000 PAYABLE IN FIVE DRAWS WITH A
LOAN FEE OF 1-1/2 PERCENT $405.00
ONE 75 PERCENT 1ST TRUST LOAN OF $28,800 AT
1 PERCENT LOAN FEE 288.00
ONE 2ND TRUST LOAN OF $4,500 AT 1-1/2 PERCENT
(CORRECTLY 1-1/4 PERCENT) OF ENTIRE VALUE OF
THE PROPERTY 485.63
REIMBURSEMENT IS AUTHORIZED BY 5 U.S.C. 5724A (A) FOR COSTS INVOLVED IN THE PURCHASE OF A RESIDENCE. SINCE THE CONSTRUCTION LOAN CHARGE OF $405 WAS INCURRED BECAUSE MR. SANDBERG HAD A RESIDENCE CONSTRUCTED IT MAY NOT BE CONSIDERED AS AN ALLOWABLE EXPENSE INVOLVED IN THE PURCHASE OF A RESIDENCE. THEREFORE, REIMBURSEMENT OF THAT FEE IS NOT AUTHORIZED. DISTINGUISH OUR DECISION OF JUNE 7, 1968, B-164044, WHERE NO ADDITIONAL CONSTRUCTION LOAN ORIGINATION FEE WAS CHARGED AND THE 1 PERCENT FEE INVOLVED WAS FOR ORIGINATION OF THE MORTGAGE LOAN. COMPARE 47 COMP. GEN. 213.
THE ITEM OF EXPENSE IN THE AMOUNT OF $288 REPRESENTING THE FEE FOR THE FIRST TRUST LOAN APPEARS TO PROPERLY BE FOR REIMBURSEMENT.
REGARDING THE FEE OF $485.63 FOR THE SECOND TRUST LOAN OF $4,500 WE NOTE FROM THE RECORD THE COMMENT BY THE SONOMA MORTGAGE COMPANY AS FOLLOWS:
"PLEASE BE ADVISED THAT A 90 PERCENT LOAN IS CONSIDERED A HIGH RISK LOAN; THEREFORE, MORE COSTLY TO OBTAIN.' IN VIEW OF THAT COMMENT, THE FACT THAT THE FEE IS IN EXCESS OF 10 PERCENT OF THE AMOUNT OF THE LOAN AND IS COMPUTED UPON THE ENTIRE VALUE OF THE PROPERTY INCLUDING THE AMOUNT OF THE FIRST TRUST, WE ARE LEAD TO BELIEVE THAT THE ITEM INCLUDES ELEMENTS OF COMPENSATION TO THE MORTGAGEE FOR THE RISK ASSUMED OR THE COST OF INSURING THE MORTGAGEE AGAINST LOSS IN CASE OF FORECLOSURE. ADDITIONAL AMOUNTS PAID TO THE MORTGAGEE BECAUSE OF THE RISK INVOLVED ARE SIMILAR TO INTEREST, POINTS OR DISCOUNTS IN THAT THEY ARE PART OF THE COST OF HIRING THE MONEY. AS WE CONSTRUE THE PROVISIONS OF SECTION 4.2D OF THE CIRCULAR SUCH EXPENSES ARE NOT REIMBURSABLE. FURTHER, IN THE DECISION OF NOVEMBER 13, 1967, B 162673, COPY ENCLOSED, WE HELD THAT THE COST OF MORTGAGE GUARANTY INSURANCE IS NOT REIMBURSABLE. THEREFORE, ON THE PRESENT RECORD REIMBURSEMENT OF THAT FEE MAY NOT BE ALLOWED.
THE VOUCHER TRANSMITTED WITH YOUR LETTER IS RETURNED HEREWITH AND IF CORRECT IN OTHER RESPECTS MAY BE CERTIFIED FOR PAYMENT ONLY IN ACCORDANCE WITH THE FOREGOING.