B-164906, AUG. 12, 1968

B-164906: Aug 12, 1968

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THE FEE WAS ASSESSED BY THE SAVINGS AND LOAN ASSOCIATION WHICH FINANCED THE PURCHASE OF THE DWELLING BY THE EMPLOYEE AND APPEARS TO BE 1 PERCENT OF THE BALANCE DUE ON THE LOAN. PLEASE BE ADVISED THAT THERE WERE NO PLACEMENT FEE-. "OUR FEES IN CONNECTION WITH YOUR ASSUMPTION OF THIS LOAN WERE COMPLETELY WITHIN THE FEDERAL HOUSING ADMINISTRATION REGULATION.'. LENDERS' LOAN ORIGINATION AND SIMILAR FEES AND CHARGES WHICH GENERALLY ARE UNDERSTOOD TO BE IN THE NATURE OF REIMBURSEMENT TO THE LENDER FOR ADMINISTRATIVE COSTS INCURRED AS DISTINGUISHED FROM "POINTS" OR INTEREST SUPPLEMENTS. WHILE THE LENDER'S LETTER IS NOT DEFINITIVE AS TO THE PURPOSE AND NATURE OF AN "ASSUMPTION" FEE. OUR UNDERSTANDING IS THAT IT IS A SIMILAR FEE TO LOAN APPLICATION OR LOAN ORIGINATION FEES IN THAT IT IS IN THE NATURE OF AN ADMINISTRATIVE COST.

B-164906, AUG. 12, 1968

TO MR. J. E. FOWLER, JR.:

YOUR LETTER OF JULY 22, 1967 (1968) (SIC), WITH ENCLOSED RECLAIM VOUCHER FOR $203.66 IN FAVOR OF MR. JERRY W. RAMSEY, AN EMPLOYEE OF THE BUREAU OF MINES, REPRESENTING THE EXPENSE OF AN ,ASSUMPTION FEE" INCURRED BY MR. RAMSEY IN THE PURCHASE OF A RESIDENCE IN ARLINGTON, VIRGINIA, INCIDENT TO THE TRANSFER OF HIS OFFICIAL STATION TO WASHINGTON, D.C., REQUESTS OUR DECISION WHETHER THE VOUCHER MAY BE CERTIFIED FOR PAYMENT.

THE FEE WAS ASSESSED BY THE SAVINGS AND LOAN ASSOCIATION WHICH FINANCED THE PURCHASE OF THE DWELLING BY THE EMPLOYEE AND APPEARS TO BE 1 PERCENT OF THE BALANCE DUE ON THE LOAN. IN ITS LETTER TO MR. RAMSEY THE SAVINGS AND LOAN ASSOCIATION STATES AS FOLLOWS: "CONCERNING YOUR QUESTION WITH RESPECT TO THE FEES CHARGED BY THIS ASSOCIATION FOR THE ASSUMPTION OF THE LOAN ON THE ABOVE CAPTIONED PROPERTY FROM BERNARD L. BOLT, ET UX, PLEASE BE ADVISED THAT THERE WERE NO PLACEMENT FEE-, -COMMISSION FEE- OR - ORIGIINATION (ORIGINATION) (SIC) FEE-. "OUR FEES IN CONNECTION WITH YOUR ASSUMPTION OF THIS LOAN WERE COMPLETELY WITHIN THE FEDERAL HOUSING ADMINISTRATION REGULATION.'

SECTION 4.2 OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 AUTHORIZES REIMBURSEMENT OF FEES FOR LOAN APPLICATIONS, LENDERS' LOAN ORIGINATION AND SIMILAR FEES AND CHARGES WHICH GENERALLY ARE UNDERSTOOD TO BE IN THE NATURE OF REIMBURSEMENT TO THE LENDER FOR ADMINISTRATIVE COSTS INCURRED AS DISTINGUISHED FROM "POINTS" OR INTEREST SUPPLEMENTS.

WHILE THE LENDER'S LETTER IS NOT DEFINITIVE AS TO THE PURPOSE AND NATURE OF AN "ASSUMPTION" FEE, OUR UNDERSTANDING IS THAT IT IS A SIMILAR FEE TO LOAN APPLICATION OR LOAN ORIGINATION FEES IN THAT IT IS IN THE NATURE OF AN ADMINISTRATIVE COST.

THEREFORE, ON THAT BASIS, THE VOUCHER WHICH IS RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE PROPER.