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B-168384, JAN. 6, 1970

B-168384 Jan 06, 1970
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A-56 PROHIBITS REIMBURSEMENT FOR FINANCE CHARGES UNDER TRUTH IN LENDING ACT AND SINCE SETTLEMENT WAS NOT EFFECTED UNTIL SEPTEMBER 10. OWNER'S CERTIFICATE OF TITLE $ 25.00 TOTAL $442.00" THE ABOVE ITEMS HAVE BEEN DISALLOWED BASED ON SETTLEMENT EXPENSE DATA FURNISHED BY THE FEDERAL HOUSING ADMINISTRATION (FHA). THE USUAL FEES FOR ITEMS 1 AND 3 ABOVE ARE $242 AND $20. THAT DATA IS APPARENTLY CONSISTENT WITH ESTIMATES OF CLOSING COSTS FOR THE WASHINGTON AREA SUPPLIED TO YOU EARLIER BY FHA. FHA QUALIFIES ITS DATA AS BEING ONLY ESTIMATES WHICH ARE SUBJECT TO CHANGE WHEN BASIC COSTS CHANGE. DUFFY HAVE ADVISED HIM THAT THE CUSTOMARY FEE FOR TITLE EXAMINATION AND PRELIMINARY CERTIFICATION SINCE JUNE 1969 IS 1 PERCENT OF THE SALES PRICE WHICH HAS THE APPROVAL OF THE BAR ASSOCIATION OF THE NORTHERN VIRGINIA AREA.

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B-168384, JAN. 6, 1970

CIVIL PAY--TRANSFERRED EMPLOYEES--RELOCATION EXPENSES DECISION TO CERTIFYING OFFICER OF FOREST SERVICE, DEPARTMENT OF AGRICULTURE, AUTHORIZING CERTIFICATION OF VOUCHER FOR REAL ESTATE EXPENSES INCURRED BY EMPLOYEE FOR PURCHASE OF HOME IN FAIRFAX COUNTY, VIRGINIA INCIDENT TO PERMANENT CHANGE OF STATION. A TRANSFERRED EMPLOYEE WHO CLAIMS $117 FOR TITLE EXAMINATION AND CERTIFICATE IN AMOUNT OF $359.00 AND $25.00 INCIDENT TO PURCHASE OF HOME, WHEN FHA COST OF SETTLEMENT DATA SCHEDULE SETS USUAL FEES AS $242 AND $20.00, RESPECTIVELY, MAY BE REIMBURSED FOR SUCH AMOUNTS ON THE BASIS THAT THEY DO NOT EXCEED THE AMOUNTS CUSTOMAIRLY CHARGED. THE EMPLOYEE CLAIMING THAT THE FHA FEE SCHEDULE SHOULD BE USED AS GUIDELINE RATHER THAN AS RIGID LIMITATION. HOWEVER, WITH RESPECT TO CLAIM OF $300 FOR LOAN APPLICATION FEE SINCE JUNE 26, 1969, REVISION OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 PROHIBITS REIMBURSEMENT FOR FINANCE CHARGES UNDER TRUTH IN LENDING ACT AND SINCE SETTLEMENT WAS NOT EFFECTED UNTIL SEPTEMBER 10, 1969, EMPLOYEE MAY NOT BE REIMBURSED FOR SUCH CHARGE.

TO MR. LOUIS B. ANDERSON:

YOUR LETTER OF NOVEMBER 14, 1969, REFERENCE 6540, REQUESTS A DECISION ON WHETHER AN ENCLOSED RECLAIM VOUCHER IN THE AMOUNT OF $442 MAY BE CERTIFIED FOR PAYMENT TO MICHAEL D. DUFFY FOR REAL ESTATE EXPENSES INCURRED ON THE PURCHASE OF A RESIDENCE IN FAIRFAX COUNTY, VIRGINIA, INCIDENT TO A PERMANENT CHANGE OF STATION AS AN EMPLOYEE OF THE FOREST SERVICE.

YOU STATE THAT $442 CONSISTS OF:

"1. TITLE EXAMINATION AND PRELIMINARY CERTIFICATION $359.00

LESS AMOUNT PREVIOUSLY PAID 242.00

$117.00

2. FHA LOAN APPLICATION FEE $300.00

3. OWNER'S CERTIFICATE OF TITLE $ 25.00

TOTAL $442.00"

THE ABOVE ITEMS HAVE BEEN DISALLOWED BASED ON SETTLEMENT EXPENSE DATA FURNISHED BY THE FEDERAL HOUSING ADMINISTRATION (FHA). ACCORDING TO A "COST OF SETTLEMENT" SCHEDULE SENT TO YOU BY FHA ON OCTOBER 24, 1969, THE USUAL FEES FOR ITEMS 1 AND 3 ABOVE ARE $242 AND $20, RESPECTIVELY, WITH $242 APPARENTLY DERIVED ON THE BASIS OF 3/4 OF 1 PERCENT FOR THE FIRST $20,000 OF PURCHASE PRICE PLUS $5 PER THOUSAND THEREAFTER. THAT DATA IS APPARENTLY CONSISTENT WITH ESTIMATES OF CLOSING COSTS FOR THE WASHINGTON AREA SUPPLIED TO YOU EARLIER BY FHA. AS YOU NOTE, HOWEVER, FHA QUALIFIES ITS DATA AS BEING ONLY ESTIMATES WHICH ARE SUBJECT TO CHANGE WHEN BASIC COSTS CHANGE.

THE ATTORNEYS FOR MR. DUFFY HAVE ADVISED HIM THAT THE CUSTOMARY FEE FOR TITLE EXAMINATION AND PRELIMINARY CERTIFICATION SINCE JUNE 1969 IS 1 PERCENT OF THE SALES PRICE WHICH HAS THE APPROVAL OF THE BAR ASSOCIATION OF THE NORTHERN VIRGINIA AREA. ACCORDING TO MR. DUFFY'S ATTORNEYS THE $25 FOR CERTIFICATE OF TITLE IS INCLUDED IN THE 1 PERCENT FEE ($359 $25 $384 OR 1 PERCENT OF SALE PRICE OF $38,400).

YOU POINT OUT THAT BUREAU OF THE BUDGET CIRCULAR NO. A-56 AT SECTION 4.3C APPEARS TO GIVE ADMINISTRATIVE OFFICES SOME LEEWAY IN DETERMINING WHETHER EXPENSES ARE REASONABLE IN THAT CLOSING COST DATA FURNISHED BY FHA SHOULD BE USED AS GUIDELINES AND NOT AS RIGID LIMITATIONS. YOU FEEL THAT, IN THE ABSENCE OF MORE AUTHORITATIVE DATA FROM FHA, THE FEE FOR ITEMS 1 AND 3 SHOULD BE REIMBURSED IN FULL.

WE WOULD NOT OBJECT TO THE REIMBURSEMENT OF THE ADDITIONAL AMOUNTS (ITEMS 1 AND 3) ON THE BASIS THAT THEY DO NOT EXCEED THE AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE. SEE B-166322, APRIL 1, 1969; B- 166698, MAY 27, 1969; B-167605, AUGUST 21, 1969; B 167950, OCTOBER 1, 1969, COPIES ENCLOSED.

WITH RESPECT TO ITEM 2, AS YOU NOTE, THE JUNE 26, 1969, REVISION OF SECTION 4 OF CIRCULAR NO. A-56 PROHIBITS REIMBURSEMENT FOR EXPENSES WHICH ARE DETERMINED TO BE PART OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT, PUBLIC LAW 90-321, WHICH IS EFFECTIVE JULY 1, 1969. THE SETTLEMENT SUBMITTED SHOWS MR. DUFFY'S SETTLEMENT DATE TO BE SEPTEMBER 10, 1969. THE "TRUTH IN LENDING STATEMENT" SHOWS THE ORIGINATION FEE OF $300 TO BE A PREPAID FINANCE CHARGE.

WE HAVE HELD THAT THE DATE EXPENSES ARE INCURRED IS CONTROLLING IN MOST INSTANCES IN FIXING THE RIGHTS OF EMPLOYEES TO BENEFITS PROVIDED BY 5 U.S.C. 5724A. SEE B-168011, OCTOBER 24, 1969, COPY ENCLOSED, AND 47 COMP. GEN. 582 (1968). ACCORDINGLY, NO PART OF THE $300 IN ITEM 2 MAY BE ALLOWED.

WITH REFERENCE TO THE FHA AND VA FEES FOR LOAN APPLICATION LISTED AS ALLOWABLE EXPENSE ITEMS IN SECTION 4.2D OF CIRCULAR NO. A-56, IT IS OUR UNDERSTANDING THAT THESE ARE FEES CHARGED BY THOSE AGENCIES FOR THEIR SERVICES. SEE 24 CFR 200.144, 26 F.R. 7390, AUGUST 12, 1961.

THE VOUCHER IS RETURNED FOR PROCESSING, IF OTHERWISE PROPER, IN ACCORDANCE WITH THIS DECISION.

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