B-169790, JUL. 2, 1970

B-169790: Jul 2, 1970

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EMPLOYEE WHO INCIDENT TO PURCHASE OF A NEW HOME AT NEW STATION PAID AN FHA LOAN APPLICATION FEE MAY HAVE SUCH FEE CONSIDERED IN THE CATEGORY OF AN "APPRAISAL FEE" RATHER THAN FINANCE CHARGE AND THEREFORE BE REIMBURSED FOR SUCH FEE. WHICH REQUESTS A DECISION ON WHETHER A FEDERAL HOUSING ADMINISTRATION (FHA) LOAN APPLICATION FEE IS REIMBURSABLE TO MR. WAS TRANSFERRED FROM OKLAHOMA CITY. AMONG THE ITEMS OF REAL ESTATE EXPENSES INCURRED WAS $45 FOR AN FHA LOAN APPLICATION FEE. THE FOLLOWING EXPENSES ARE REIMBURSABLE *** IF THEY ARE CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION. CHARGE OR EXPENSE IS REIMBURSABLE WHICH IS DETERMINED TO BE A PART OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT.

B-169790, JUL. 2, 1970

CIVIL PAY -- REAL ESTATE -- FHA APPLICATION FEE DECISION TO CERTIFYING OFFICER OF DEPT. OF TRANSPORTATION VERIFYING THAT AN FHA LOAN APPLICATION FEE MAY BE CONSIDERED A REIMBURSABLE ITEM TO AN EMPLOYEE WHO PURCHASED A HOUSE INCIDENT TO PERMANENT CHANGE OF STATION FROM OKLAHOMA CITY TO HOUSTON. EMPLOYEE WHO INCIDENT TO PURCHASE OF A NEW HOME AT NEW STATION PAID AN FHA LOAN APPLICATION FEE MAY HAVE SUCH FEE CONSIDERED IN THE CATEGORY OF AN "APPRAISAL FEE" RATHER THAN FINANCE CHARGE AND THEREFORE BE REIMBURSED FOR SUCH FEE.

TO MR. R. J. SCHULLERY:

WE REFER FURTHER TO YOUR LETTER OF MAY 11, 1970, WHICH REQUESTS A DECISION ON WHETHER A FEDERAL HOUSING ADMINISTRATION (FHA) LOAN APPLICATION FEE IS REIMBURSABLE TO MR. HERBERT O. ELLISON INCIDENT TO A PERMANENT CHANGE OF STATION DURING 1969.

YOU STATE THAT MR. ELLISON, AS AN EMPLOYEE OF THE FEDERAL AVIATION ADMINISTRATION, WAS TRANSFERRED FROM OKLAHOMA CITY, OKLAHOMA, TO HOUSTON, TEXAS, EFFECTIVE DECEMBER 1, 1969. FURTHER, HE PURCHASED A NEW RESIDENCE IN HOUSTON INCIDENT TO THE TRANSFER. AMONG THE ITEMS OF REAL ESTATE EXPENSES INCURRED WAS $45 FOR AN FHA LOAN APPLICATION FEE.

YOU POINT OUT THAT SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 (JUNE 26, 1969) PROVIDES:

"D. THE FOLLOWING EXPENSES ARE REIMBURSABLE *** IF THEY ARE CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY PAID IN THE LOCALITY OF THE RESIDENCE: FHA OR VA FEE FOR LOAN APPLICATION; *** NOTWITHSTANDING THE ABOVE, NO FEE, COST, CHARGE OR EXPENSE IS REIMBURSABLE WHICH IS DETERMINED TO BE A PART OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT, TITLE I, PUBLIC LAW 90-321, AND REGULATION Z ISSUED PURSUANT THERETO BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. *** "

YOU HAVE DOUBT WHETHER THE FHA LOAN APPLICATION FEE IS REIMBURSABLE IN THE LIGHT OF THE DEFINITION OF FINANCE CHARGE AS SET FORTH IN SECTION 226.4 OF REGULATION Z AND OUR DECISION B-168674, FEBRUARY 10, 1970.

SECTION 203.12(A) OF THE FHA REGULATIONS REQUIRES THAT MORTGAGEES PAY THE FHA FEE TO COVER THE COST OF PROCESSING AN APPLICATION. PROPERTY APPRAISALS BY FHA PERSONNEL ARE A PART OF THE PROCESSING PROCEDURE. THE FEE FOR AN APPLICATION INVOLVING EXISTING CONSTRUCTION IS $35 AND FOR PROPOSED CONSTRUCTION IT IS $45 AS MORE THAN ONE APPRAISAL OCCURS. THE FEDERAL RESERVE BOARD ADVISES THAT IT HAS DETERMINED THE FHA APPLICATION FEE FALLS WITHIN THE CATEGORY OF AN "APPRAISAL FEE" UNDER SECTION 226.4(E)(5) OF REGULATION Z AND, THEREFORE, WOULD NOT BE A FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT. WE CONCUR IN THAT FINDING.

ACCORDINGLY, THE VOUCHER WHICH IS RETURNED HEREWITH MAY, IF OTHERWISE CORRECT, BE CERTIFIED FOR PAYMENT.