B-168407, DEC. 22, 1969

B-168407: Dec 22, 1969

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UNDER 5 U.S.C. 5724A DATE EXPENSES ARE INCURRED IS CONTROLLING IN MOST SITUATIONS. HERE LOAN ORIGINATION FEE WAS INCURRED BY EMPLOYEE AT TIME OF SETTLEMENT JULY 3. 300 WAS MADE ON MAY 28. SUBSECTION 1 OF PARAGRAPH 3 OF THE APPLICATION FOR THE LOAN PROVIDES THAT: "A NON- REFUNDABLE FEE IN THE AMOUNT OF 1 PERCENT OF THE PRINCIPAL AMOUNT STATED ABOVE IS PAYABLE TO THE ASSOCIATION AT OR WITHIN 10 DAYS FROM THE DATE OF THIS LETTER.'. THE APPLICATION ALSO PROVIDED THAT UPON COMPLETION OF THE PROPOSED IMPROVEMENTS ON THE LAND THE ASSOCIATION WILL MAKE A LOAN IN THE AMOUNT OF $20. REPRESENTATIVE OF WESTERN FEDERAL SAVINGS AND LOAN ASSOCIATION STATED THAT THE 1 PERCENT FEE WAS NOT A LENDER'S LOAN ORIGINATION FEE AT THE TIME OF COMMITMENT BUT WAS AN AMOUNT EQUIVALENT TO SUCH FEE.

B-168407, DEC. 22, 1969

OFFICERS AND EMPLOYEES--TRANSFERS--RELOCATION EXPENSES--HOUSE PURCHASE- LOAN ORIGINATION FEE FEE PAID TO SAVINGS AND LOAN ASSOCIATION BY HOME CONSTRUCTION COMPANY MAY 27, 1969, LATER APPLIED AS LENDER'S LOAN ORIGINATION FEE IN CLOSING COSTS IN CONNECTION WITH EMPLOYEE'S PURCHASE OF HOME JULY 3, 1969 AT NEW DUTY STATION INCIDENT TO TRANSFER, MAY NOT BE REIMBURSED TO EMPLOYEE, BECAUSE BUREAU OF BUDGET CIR. NO. A-56, REVISED JUNE 26, 1969 DELETED LENDER'S LOAN ORIGINATION FEE AS REIMBURSABLE REAL ESTATE EXPENSE, AND UNDER 5 U.S.C. 5724A DATE EXPENSES ARE INCURRED IS CONTROLLING IN MOST SITUATIONS; HERE LOAN ORIGINATION FEE WAS INCURRED BY EMPLOYEE AT TIME OF SETTLEMENT JULY 3, 1969, AND REGULATION IN EFFECT AT THAT DATE NO LONGER CONTAINED PROVISION AUTHORIZING REIMBURSEMENT OF SUCH FEE. SEE 47 COMP. GEN. 582.

TO MR. PAUL J. GRAINGER:

THIS REFERS TO YOUR LETTER OF NOVEMBER 10, 1969, REFERENCE 6540, WITH ENCLOSURES, REQUESTING A DECISION FROM OUR OFFICE AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER IN FAVOR OF MR. DENNIS L. LYNCH FOR REIMBURSEMENT OF CERTAIN REAL ESTATE EXPENSES INCURRED IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT HIS NEW DUTY STATION INCIDENT TO HIS TRANSFER FROM FORT COLLINS, COLORADO, TO COLORADO SPRINGS, COLORADO.

THE INFORMATION FURNISHED SHOWS THAT APPLICATION FOR A LOAN IN THE AMOUNT OF $20,300 WAS MADE ON MAY 28, 1967, WITH THE WESTERN FEDERAL SAVINGS AND LOAN ASSOCIATION OF DENVER FOR THE CONSTRUCTION OF A RESIDENCE IN COLORADO SPRINGS TO BE BUILT BY THE VROOMAN HOMES COMPANY. SUBSECTION 1 OF PARAGRAPH 3 OF THE APPLICATION FOR THE LOAN PROVIDES THAT: "A NON- REFUNDABLE FEE IN THE AMOUNT OF 1 PERCENT OF THE PRINCIPAL AMOUNT STATED ABOVE IS PAYABLE TO THE ASSOCIATION AT OR WITHIN 10 DAYS FROM THE DATE OF THIS LETTER.' THE VROOMAN HOMES COMPANY PAID THE $203 TO THE WESTERN FEDERAL SAVINGS AND LOAN ASSOCIATION ON MAY 27, 1969. THE APPLICATION ALSO PROVIDED THAT UPON COMPLETION OF THE PROPOSED IMPROVEMENTS ON THE LAND THE ASSOCIATION WILL MAKE A LOAN IN THE AMOUNT OF $20,300. REPRESENTATIVE OF WESTERN FEDERAL SAVINGS AND LOAN ASSOCIATION STATED THAT THE 1 PERCENT FEE WAS NOT A LENDER'S LOAN ORIGINATION FEE AT THE TIME OF COMMITMENT BUT WAS AN AMOUNT EQUIVALENT TO SUCH FEE. IF MR. LYNCH HAD NOT BOUGHT THE PROPERTY IN COLORADO SPRINGS, HE WOULD HAVE FORFEITED THE $203. THE PURCHASE OF THE NEW RESIDENCE WAS CONTINGENT ON THE SALE OF HIS PROPERTY AT FORT COLLINS. THE PROPERTY IN FORT COLLINS WAS SOLD AND SETTLEMENT WAS MADE ON THE PURCHASE OF THE NEW RESIDENCE AT COLORADO SPRINGS ON JULY 3, 1969. THE INITIAL DEPOSIT OF $203 WAS APPLIED AS THE LENDER'S LOAN ORIGINATION FEE IN THE CLOSING COSTS.

YOU REQUEST INFORMATION WHETHER THE FEE PAID MAY 27, 1969, BECOMES A LENDER'S LOAN ORIGINATION FEE FOR REIMBURSEMENT PURPOSES ON MAY 27, 1969, BECAUSE BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969, DELETED THE LENDER'S LOAN ORIGINATION FEE AS A REIMBURSABLE REAL ESTATE EXPENSE. UNDER THE PROVISIONS OF PUBLIC LAW 89-516, NOW 5 U.S.C. 5724A, OUR VIEW HAS BEEN THAT THE DATE THE EXPENSES ARE INCURRED IS CONTROLLING IN MOST SITUATIONS. SEE 47 COMP. GEN. 582. HERE THE LOAN ORIGINATION FEE WAS INCURRED BY THE EMPLOYEE AT THE TIME OF SETTLEMENT JULY 3, 1969. SINCE THE REGULATION IN EFFECT AT THAT DATE NO LONGER CONTAINED ANY PROVISION AUTHORIZING REIMBURSEMENT OF A LOAN ORIGINATION FEE, THE CLAIM MAY NOT BE ALLOWED.