B-165840, FEB. 13, 1969

B-165840: Feb 13, 1969

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THE ATTORNEY FOR THE SAVINGS AND LOAN ASSOCIATION DESCRIBED THE SERVICE CHARGE AS FOLLOWS: "THE SERVICE CHARGE BY FIRST FEDERAL OF $512.50 IS A CHARGE MADE INCIDENTAL TO ALL LOANS AND PURPORTS TO COVER BOOKKEEPING. PROVIDES FOR REIMBURSEMENT OF A LENDER'S LOAN ORIGINATION FEE WHICH IS A CHARGE MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN ORIGINATING AND CLOSING A LOAN. ASKED THE FOLLOWING QUESTION REGARDING THE SERVICE CHARGE: "IS THIS CHARGE MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN ORIGINATING AND CLOSING A LOAN? WHICH IS RETURNED HEREWITH.

B-165840, FEB. 13, 1969

TO MR. JAMES D. LANE:

WE REFER TO YOUR LETTER OF DECEMBER 10, 1968, REFERENCE AD-RFM-2, TRANSMITTED HERE ON DECEMBER 19, 1968, BY THE DIRECTOR OF FINANCIAL MANAGEMENT, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, WHEREIN YOU REQUEST OUR DECISION WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER FOR $205 IN FAVOR OF MR. HOWARD E. GARDNER, AN EMPLOYEE OF THE JOHN F. KENNEDY SPACE CENTER, FLORIDA.

THE AMOUNT CLAIMED REPRESENTS PART OF A SERVICE FEE CHARGED BY THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF SEMINOLE COUNTY IN CONNECTION WITH MR. GARDNER'S PURCHASE OF A RESIDENCE AT HIS NEW OFFICIAL STATION. THE FULL AMOUNT OF THE SERVICE CHARGE ($512.50) REPRESENTS 2-1/2 PERCENT OF THE MORTGAGE LOAN OF $20,500 OBTAINED BY MR. GARDNER. IN LETTER DATED JUNE 25, 1968, THE ATTORNEY FOR THE SAVINGS AND LOAN ASSOCIATION DESCRIBED THE SERVICE CHARGE AS FOLLOWS:

"THE SERVICE CHARGE BY FIRST FEDERAL OF $512.50 IS A CHARGE MADE INCIDENTAL TO ALL LOANS AND PURPORTS TO COVER BOOKKEEPING, INSURANCE AND TAX SERVICES DURING THE TERM OF THE LOAN SO THAT THE STATED RATE OF AND TAX SERVICES DURING THE TERM OF THE LOAN SO THAT THE STATED RATE OF INTEREST (7 PERCENT) MAY BE REALIZED AS A NET FIGURE.'

SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, PROVIDES FOR REIMBURSEMENT OF A LENDER'S LOAN ORIGINATION FEE WHICH IS A CHARGE MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN ORIGINATING AND CLOSING A LOAN. SEE 47 COMP. GEN. 213 AND B- 162494, OCTOBER 26, 1967, COPY HEREWITH.

IN A LETTER DATED JULY 19, 1968, ADDRESSED TO THE MORTGAGEE'S ATTORNEY, THE CHIEF OF THE TRAVEL UNIT, KENNEDY SPACE CENTER, ASKED THE FOLLOWING QUESTION REGARDING THE SERVICE CHARGE:

"IS THIS CHARGE MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN ORIGINATING AND CLOSING A LOAN?

THE ATTORNEY ANSWERED "NO" TO THE ABOVE QUESTION.

IN VIEW THEREOF IT DOES NOT APPEAR FROM THE EVIDENCE PRESENTED THAT ANY PART OF THE SERVICE CHARGE OF $512.50 REPRESENTS A REIMBURSABLE EXPENSE UNDER SECTION 4.2D OF CIRCULAR NO. A-56. THEREFORE, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY NOT BE CERTIFIED FOR PAYMENT.