B-168475, JAN. 16, 1970

B-168475: Jan 16, 1970

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WHEN LOAN ORIGINATION FEES WERE NO LONGER REIMBURSABLE MAY BE PAID EXPENSES OF LOAN ORIGINATION FEE EVEN THOUGH ATTORNEY WHO PAID FEE ORIGINALLY WAS NOT REIMBURSED BY BANK UNTIL AFTER JULY 1. REQUESTS OUR DECISION WHETHER THE ENCLOSED VOUCHER IN THE AMOUNT OF $195 REPRESENTING AN "INITIAL LOAN SERVICE CHARGE" WHICH IS IN THE NATURE OF A LOAN ORIGINATION FEE MAY BE CERTIFIED FOR PAYMENT TO MR. YOU ASK WHETHER REIMBURSEMENT OF THE $195 IS TO BE BASED UPON EITHER THE DATE OF THE LENDER'S APPROVAL OF THE LOAN. OR THE DATE ON WHICH THE DEED TRANSFERRING THE PROPERTY IS RECORDED. OR WHETHER SOME OTHER POINT IN TIME IS FOR CONSIDERATION. A-56 WERE EFFECTIVE JUNE 26. WE HAVE HELD THAT THE DELETION OF THE LOAN ORIGINATION FEE FROM SUCH CIRCULAR WAS NOT EFFECTIVE UNTIL JULY 1.

B-168475, JAN. 16, 1970

CIVIL PAY--TRANSFERS--LOAN ORIGINATION FEE--EFFECTIVE DATE DECISION TO CERTIFYING OFFICER OF FOREST SERVICE, DEPARTMENT OF AGRICULTURE, CONCERNING PAYMENT OF LOAN ORIGINATION FEE INCIDENT TO PURCHASE OF RESIDENCE AT NEW STATION BY EMPLOYEE BASED ON DATE OF LENDER'S APPROVAL OF LOAN, DATE OF FINAL CLOSING, OR SOME OTHER TIME. A TRANSFERRED EMPLOYEE WHO OBTAINED A LOAN FOR PURCHASE OF HOME AT NEW STATION AND RECEIVED THE DEED PRIOR TO JULY 1, 1969, WHEN LOAN ORIGINATION FEES WERE NO LONGER REIMBURSABLE MAY BE PAID EXPENSES OF LOAN ORIGINATION FEE EVEN THOUGH ATTORNEY WHO PAID FEE ORIGINALLY WAS NOT REIMBURSED BY BANK UNTIL AFTER JULY 1, 1969.

TO MR. PAUL J. GRAINGER:

YOUR LETTER OF NOVEMBER 10, 1969, REFERENCE 6540, REQUESTS OUR DECISION WHETHER THE ENCLOSED VOUCHER IN THE AMOUNT OF $195 REPRESENTING AN "INITIAL LOAN SERVICE CHARGE" WHICH IS IN THE NATURE OF A LOAN ORIGINATION FEE MAY BE CERTIFIED FOR PAYMENT TO MR. JAMES P. PFAU INCIDENT TO HIS PURCHASE OF A RESIDENCE AT HIS NEW OFFICIAL STATION, STEAMBOAT SPRINGS, COLORADO, UPON TRANSFER FROM FORT COLLINS, COLORADO, UNDER TRAVEL ORDER NO. R2-304 DATED JUNE 5, 1969.

IN VIEW OF THE REVISION OF SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED (TRANSMITTAL MEMORANDUM NO. 5), DATED JUNE 26, 1969, WHICH DELETED LOAN ORIGINATION FEES FROM THOSE OTHERWISE REIMBURSABLE, YOU ASK WHETHER REIMBURSEMENT OF THE $195 IS TO BE BASED UPON EITHER THE DATE OF THE LENDER'S APPROVAL OF THE LOAN, THE DATE OF FINAL CLOSING OF THE PURCHASE, OR THE DATE ON WHICH THE DEED TRANSFERRING THE PROPERTY IS RECORDED, OR WHETHER SOME OTHER POINT IN TIME IS FOR CONSIDERATION. WHILE TRANSMITTAL MEMORANDUM NO. 5 INDICATES THAT THE REVISIONS TO CIRCULAR NO. A-56 WERE EFFECTIVE JUNE 26, 1969, WE HAVE HELD THAT THE DELETION OF THE LOAN ORIGINATION FEE FROM SUCH CIRCULAR WAS NOT EFFECTIVE UNTIL JULY 1, 1969. SEE B 168065, NOVEMBER 19, 1969, COPY HEREWITH.

THE PAPERS ACCOMPANYING THE VOUCHER SHOW THAT INCIDENT TO MR. PFAU'S HOUSE HUNTING TRIP ON JUNE 12, 1969, HIS OFFER OF $15,200 TO PURCHASE A HOME WAS ACCEPTED BY THE SELLER ON JUNE 15, 1969. THE ACCEPTED OFFER WAS CONTINGENT UPON THE PURCHASER'S OBTAINING A 15-YEAR LOAN OF $11,000 AT NO MORE THAN 8 PERCENT INTEREST FROM THE ROUTT COUNTY FEDERAL SAVINGS AND LOAN ASSOCIATION. THE OFFER ALSO WAS CONTINGENT UPON DISBURSEMENT OF THE LOAN PROCEEDS "WITHIN 3 WEEKS FROM THE DATE HEREOF."

THE RECORD SHOWS THAT THE LOAN WAS MADE ON JUNE 25, 1969, AND THE DEED IS DATED JUNE 25, WAS ACKNOWLEDGED BEFORE A NOTARY PUBLIC ON JUNE 27 AND RECORDED IN THE LAND RECORDS ON JUNE 30, 1969. THE BORROWER'S COPY OF LOAN SETTLEMENT STATEMENT FURNISHED BY THE LENDER ON SEPTEMBER 15, 1969, SHOWS DISBURSEMENT OF THE LOAN MONEY ON JUNE 25, 1969. THE LENDING BANK INDICATES AT THAT TIME SUFFICIENT MONEYS WERE WITHHELD TO PAY THE ATTORNEY FEES AND OTHER EXPENSES.

WE CONSISTENTLY HAVE HELD THAT THE DATE OF "SETTLEMENT" FOR THE SALE OR PURCHASE OF A RESIDENCE REFERS TO THE DATE OF THE CLOSING TRANSACTION WHICH USUALLY INCLUDES THE SIMULTANEOUS OR CONCURRENT PAYMENT OF THE CONTRACT CONSIDERATION, THE EXECUTION OF THE TRANSFER DEED OR CONVEYANCE OF TITLE, AND THE EXECUTION OF SUCH DOCUMENTS AS CREATE OR EVIDENCE THE LIENS, IF ANY, SECURED BY THE REAL ESTATE CONVEYED. THE PROVISIONS IN SECTION 4 OF CIRCULAR NO. A-56 CONTEMPLATE REIMBURSEMENT OF THE COSTS OF THE CUSTOMARY SETTLEMENT TRANSACTION BY WHICH TITLE TO A RESIDENCE IS EXCHANGED. COMPARE OUR DECISION AT 46 COMP. GEN. 677 (B-160799, DATED FEBRUARY 28, 1967), CONCERNING EQUITABLE TITLE AND POSSESSION CONTINGENT UPON PAYMENT OF THE CONSIDERATION UNDER A CONTRACT FOR DEED; ALSO SEE 47 ID. 582 (B 163827, DATED APRIL 23, 1968).

IN THIS CASE BOTH THE SETTLEMENT OF THE LOAN AND THE CONVEYANCE BY DEED WERE EFFECTED ON JUNE 25, 1969. THE LOAN ORIGINATION FEE AND OTHER EXPENSES CONNECTED WITH THE PURCHASE OF THE RESIDENCE WERE WITHHELD FROM THE FACE AMOUNT OF THE LOAN. REGARDLESS OF THE FACT THAT OTHER CLOSING EXPENSES INITIALLY WERE PAID BY AN ATTORNEY IN JULY AND WERE NOT REIMBURSED TO SUCH ATTORNEY BY THE BANK UNTIL SEPTEMBER 1969, WE BELIEVE THAT SINCE THE LOAN WAS MADE AND THE DEED EXECUTED TO MR. PFAU BEFORE JULY 1, 1969, THE $195 FEE IS ALLOWABLE UNDER THE PROVISIONS OF SECTION 4.2D OF CIRCULAR NO. A-56, REVISED (OCTOBER 12, 1966), WHICH PRIOR TO JULY 1, 1969, AS PREVIOUSLY INDICATED AUTHORIZED REIMBURSEMENT OF THE EXPENSES OF A LOAN ORIGINATION FEE.

THE VOUCHER AND RELATED PAPERS ARE RETURNED HEREWITH AND MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.