B-167538, SEP. 4, 1969

B-167538: Sep 4, 1969

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THE PAYMENT OF $254 INCLUDED IN A LOAN FEE OF $608 IS A PART OF THE CHARGE MADE FOR THE USE OF MONEY LOANED TO AN EMPLOYEE INCIDENT TO THE PURCHASE OF A HOME AND THEREFORE UNDER SECTION 4.2D OF THE BUREAU OF THE BUDGET CIRCULAR NO. SUCH A MORTGAGE DISCOUNT OR POINTS IS NOT REIMBURSABLE. GREEN: REFERENCE IS MADE TO YOUR LETTER OF JULY 17. IS REIMBURSABLE TO THE EMPLOYEE UNDER THE APPLICABLE PROVISIONS OF BUREAU OF THE BUDGET CIRCULAR A-56 WHICH WERE IN EFFECT AT THE TIME OF SETTLEMENT . FOR A RESIDENCE PURCHASED BY THE EMPLOYEE WHICH WAS LOCATED AT 1125 LARCH AVENUE. THE RECORD BEFORE OUR OFFICE SHOWS THAT THE EMPLOYEE WAS REIMBURSED FOR HIS REAL ESTATE TRANSACTION COSTS AND OTHER EXPENSES INCIDENT TO HIS PERMANENT CHANGE OF STATION FROM PENNSYLVANIA TO BERKELEY.

B-167538, SEP. 4, 1969

CIVIL PAY - TRANSFERS - HOME LOAN FEES DECISION TO CERTIFYING OFFICER OF ATOMIC ENERGY COMMISSION CONCERNING LOAN FEE INCIDENT TO EMPLOYEE'S PURCHASE OF RESIDENCE AT MORAGA, CALIFORNIA, UPON TRANSFER FROM PENNSYLVANIA TO CALIFORNIA. THE PAYMENT OF $254 INCLUDED IN A LOAN FEE OF $608 IS A PART OF THE CHARGE MADE FOR THE USE OF MONEY LOANED TO AN EMPLOYEE INCIDENT TO THE PURCHASE OF A HOME AND THEREFORE UNDER SECTION 4.2D OF THE BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, SUCH A MORTGAGE DISCOUNT OR POINTS IS NOT REIMBURSABLE. RECOVERY SHOULD BE MADE. SEE B- 162494, OCTOBER 26, 1967.

TO MR. M. H. GREEN:

REFERENCE IS MADE TO YOUR LETTER OF JULY 17, 1969, IN WHICH YOU REQUEST AN ADVANCE DECISION FROM OUR OFFICE AS TO WHETHER OR NOT A LOAN FEE OF $608 CHARGED BY THE FIDELITY SAVINGS AND LOAN ASSOCIATION, OAKLAND, CALIFORNIA, TO MARTIN A. DAUGHERTY, AN EMPLOYEE OF THE ATOMIC ENERGY COMMISSION, IS REIMBURSABLE TO THE EMPLOYEE UNDER THE APPLICABLE PROVISIONS OF BUREAU OF THE BUDGET CIRCULAR A-56 WHICH WERE IN EFFECT AT THE TIME OF SETTLEMENT -- JUNE 6, 1968 -- FOR A RESIDENCE PURCHASED BY THE EMPLOYEE WHICH WAS LOCATED AT 1125 LARCH AVENUE, MORAGA, CALIFORNIA.

THE RECORD BEFORE OUR OFFICE SHOWS THAT THE EMPLOYEE WAS REIMBURSED FOR HIS REAL ESTATE TRANSACTION COSTS AND OTHER EXPENSES INCIDENT TO HIS PERMANENT CHANGE OF STATION FROM PENNSYLVANIA TO BERKELEY, CALIFORNIA, IN THE AMOUNT OF $4,358.45. THIS AMOUNT INCLUDED THE LOAN FEE OF $608. AFTER AN AUDIT REVIEW OF THE ACCOUNT, IT WAS DISCOVERED THAT A PORTION OF THE LOAN FEE MIGHT NOT BE REIMBURSABLE AND AN INQUIRY WAS MADE WITH THE FIDELITY SAVINGS AND LOAN ASSOCIATION OF OAKLAND, CALIFORNIA, AS TO THE NATURE OF THE LOAN FEE. IN A LETTER DATED MAY 14, 1969, THE ASSOCIATION INFORMED THE DIRECTOR OF THE FINANCE DIVISION OF THE UNITED STATES ATOMIC ENERGY COMMISSION, BERKELEY, CALIFORNIA, AS FOLLOWS:

"LOAN FEE $608.00

"FEE TAKEN INTO CURRENT

INCOME: $354.00

"THE BALANCE OF THE FEE, $254.00, WILL BE TAKEN INTO DEFERRED INCOME AT THE RATE OF 1/14TH OF THE FEE EVERY SIX MONTHS, SPREAD OVER A SEVEN YEAR PERIOD, OF WHICH 1/14TH WAS TAKEN IN JUNE OF 1968 * * *.'

BASED ON OUR DECISION, B-162494, OCTOBER 26, 1967, A REQUEST WAS MADE TO THE EMPLOYEE FOR REFUND OF THAT PORTION OF THE FEE WHICH WILL BE TAKEN INTO DEFERRED INCOME, NAMELY $254, BUT THE EMPLOYEE CONTESTED THE REQUEST ON THE GROUND THAT THE $608 FEE DID NOT EXCEED "THAT CUSTOMARILY CHARGED IN THE LOCATION OF THE RESIDENCE.'

YOU INQUIRE WHETHER OR NOT OUR SUBSEQUENT DECISIONS, B-166322, APRIL 1, 1969, AND MAY 2, 1969, AND B-166614, APRIL 25, 1969, MODIFY IN ANY WAY OUR DECISION OF OCTOBER 26, 1967, B-162494.

IT SHOULD BE NOTED THAT IN BOTH B-166322 AND B-166614 WE DID NOT OBJECT TO THE REIMBURSEMENT OF A SERVICE CHARGE AT A HIGHER RATE FOR CONVENTIONAL LOANS SO LONG AS SUCH CHARGE IS "IN LINE WITH LOCAL PRACTICE AND REASONABLE IN AMOUNT.' THIS SERVICE CHARGE REFERRED, HOWEVER, TO THE FEE CUSTOMARILY CHARGED FOR THE SERVICE OF ORIGINATING AND CLOSING A LOAN BY A FINANCIAL INSTITUTION AND NOT TO A CHARGE MADE BY A LENDING INSTITUTION FOR THE USE OF THE MONEY LOANED.

IN THE INSTANT CASE, THE AMOUNT IN DISPUTE, THE $254, WHILE INCLUDED IN THE $608 LOAN FEE WAS, IN FACT, A PART OF THE CHARGE MADE FOR THE USE OF THE MONEY LOANED TO THE EMPLOYEE, BEING IN THE NATURE OF A MORTGAGE DISCOUNT OR "POINTS". SUCH CHARGE WAS TREATED AS DEFERRED INCOME BY THE LENDER.

SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, PROVIDES AMONG OTHER THINGS THAT: "* * * MORTGAGE DISCOUNTS (- POINTS-) * * * ARE NOT REIMBURSABLE.' THUS, THE MATTER IS GOVERNED BY THE EXPRESS REGULATORY PROVISION QUOTED ABOVE AND THE PRINCIPLE ENUNCIATED IN B-162494, CITED IN YOUR LETTER. SEE ALSO 47 COMP. GEN. 213.

ACCORDINGLY, APPROPRIATE ACTION SHOULD BE TAKEN TO RECOVER FROM THE EMPLOYEE THAT PORTION ($254) OF THE LOAN FEE WHICH IS NOT REGARDED AS REIMBURSABLE UNDER THE PROVISIONS OF BUREAU OF THE BUDGET CIRCULAR NO. A- 56.