B-168659, MAR. 3, 1970

B-168659: Mar 3, 1970

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IS DISALLOWED SINCE REGULATIONS IN EFFECT AT TIME OF SETTLEMENT. ARE FOR APPLICATION IN DETERMINING REIMBURSABLE EXPENSES AND VA FUNDING FEE HAS BEEN HELD TO BE FINANCE CHARGE UNDER SUBSEC. 4.2D AND TRUTH IN LENDING ACT. THE AMOUNT REPRESENTS THE VETERANS ADMINISTRATION (VA) FUNDING FEE THAT WAS DISALLOWED ADMINISTRATIVELY ON HIS PRIOR VOUCHER WHEREIN CLAIM WAS MADE FOR THE REAL ESTATE EXPENSES INCURRED IN PURCHASING A RESIDENCE INCIDENT TO CHANGE OF HIS PERMANENT STATION FROM PHILADELPHIA. REIMBURSEMENT OF BOTH THE LENDER'S LOAN ORIGINATION FEE ($246) AND THE VA FUNDING FEE ($123) ON THE PRIOR VOUCHER WERE DENIED SINCE THESE ITEMS WERE DETERMINED BY YOUR OFFICE TO BE FINANCE CHARGES WHICH CANNOT BE REIMBURSED UNDER THE PROVISIONS OF THE REVISED SUBSECTION 4.2D.

B-168659, MAR. 3, 1970

OFFICERS AND EMPLOYEES--TRANSFERS--RELOCATION EXPENSES--HOUSE PURCHASE VETERANS ADMINISTRATION FUNDING FEE REIMBURSEMENT TO EMPLOYEE OF $123 VETERANS ADMINISTRATION (VA) FUNDING FEE UNDER PROVISIONS OF REVISED SUBSEC. 4.2D, BUR. OF BUDGET CIR. NO. A- 56, REVISED, JUNE 26, 1969, REAL ESTATE EXPENSE BEING INCURRED BY PURCHASE OF RESIDENCE UPON TRANSFER OF PERMANENT DUTY STATION FROM PHILADELPHIA, PA; TO ALEXANDRIA, VA; IS DISALLOWED SINCE REGULATIONS IN EFFECT AT TIME OF SETTLEMENT, SEPT. 25, 1969, ARE FOR APPLICATION IN DETERMINING REIMBURSABLE EXPENSES AND VA FUNDING FEE HAS BEEN HELD TO BE FINANCE CHARGE UNDER SUBSEC. 4.2D AND TRUTH IN LENDING ACT, 15 U.S.C. 1605 (A)(5), AND SEC. 226.4 (A)(7) OF REGULATION Z, 12 CFR, PART 226. SEE COMP. GEN. DECS. CITED.

TO MAJOR P. BOZEMAN:

YOUR LETTER OF NOVEMBER 4, 1969, REFERENCE DSASC-MF, FORWARDED TO US UNDER PDTATAC CONTROL NO. 69-50, REQUESTS AN ADVANCE DECISION WHETHER YOU MAY PROPERLY PAY THE AMOUNT OF $123 CLAIMED ON THE SUBMITTED TRAVEL VOUCHER OF MR. HARRY R. MURPHY. THE AMOUNT REPRESENTS THE VETERANS ADMINISTRATION (VA) FUNDING FEE THAT WAS DISALLOWED ADMINISTRATIVELY ON HIS PRIOR VOUCHER WHEREIN CLAIM WAS MADE FOR THE REAL ESTATE EXPENSES INCURRED IN PURCHASING A RESIDENCE INCIDENT TO CHANGE OF HIS PERMANENT STATION FROM PHILADELPHIA, PENNSYLVANIA, TO ALEXANDRIA, VIRGINIA, AS AUTHORIZED BY TRAVEL ORDER NO. 4570-69 DATED MAY 7, 1969.

THE SETTLEMENT ON THE PURCHASE OF THE RESIDENCE OCCURRED ON SEPTEMBER 25, 1969. THEREFORE, REIMBURSEMENT OF BOTH THE LENDER'S LOAN ORIGINATION FEE ($246) AND THE VA FUNDING FEE ($123) ON THE PRIOR VOUCHER WERE DENIED SINCE THESE ITEMS WERE DETERMINED BY YOUR OFFICE TO BE FINANCE CHARGES WHICH CANNOT BE REIMBURSED UNDER THE PROVISIONS OF THE REVISED SUBSECTION 4.2D, BUREAU OF THE BUDGET CIRCULAR NO. A 56, REVISED, JUNE 26, 1969 (TRANSMITTAL MEMORANDUM NO. 5).

YOU SAY MR. MURPHY CONTENDS THAT HE SHOULD BE REIMBURSED FOR THE VA FUNDING FEE BECAUSE THE REVISION OF CIRCULAR NO. A-56 WAS PUBLISHED AFTER THE ISSUANCE OF HIS TRAVEL ORDER AND AFTER THE DATE OF HIS CONTRACT TO PURCHASE THE RESIDENCE. IN ADDITION YOU INDICATE THERE IS DOUBT AS TO WHETHER THE VA FUNDING FEE IS ACTUALLY A "FINANCE CHARGE" WITHIN THE PROHIBITION CONTAINED IN THE REVISED SUBSECTION 4.2D, SET OUT BELOW.

WE HAVE HELD THAT THE REGULATIONS IN EFFECT AT THE TIME OF SETTLEMENT OF A REAL ESTATE TRANSACTION ARE FOR APPLICATION IN DETERMINING WHAT EXPENSES ARE FOR REIMBURSEMENT THEREUNDER. SEE THE ENCLOSED COPIES OF OUR DECISIONS B-168011 DATED OCTOBER 24, 1969, B 168065 DATED NOVEMBER 19, 1969, AND B-168239 DATED DECEMBER 15, 1969. HERE THE SETTLEMENT OCCURRED ON SEPTEMBER 25, 1969. HENCE, THE REGULATIONS AS CHANGED BY THE REVISION OF CIRCULAR NO. A-56 ON JUNE 26, 1969, ARE CONTROLLING.

AS TO THE VA FUNDING FEE, WE RECENTLY HAVE HELD THAT SUCH FUNDING FEE IS A FINANCE CHARGE WITHIN THE MEANING OF SECTION 106 (A)(5) OF THE TRUTH IN LENDING ACT, 15 U.S.C. 1605 (A)(5), AND SECTION 226.4 (A)(7) OF REGULATION Z, 12 CFR PART 226. SEE THE ENCLOSED COPIES OF OUR DECISIONS B-168674 DATED FEBRUARY 10, 1970, AND B-168675 DATED FEBRUARY 17, 1970.

IN VIEW OF THE FOREGOING, THE SUBMITTED VOUCHER MAY NOT BE PAID AND IS RETAINED IN OUR FILE IN ACCORDANCE WITH ESTABLISHED PROCEDURE.