B-173222, AUG 10, 1971

B-173222: Aug 10, 1971

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MONROE MAY RECOVER $100 WHICH WAS PRIMARILY RELATED TO THE CLOSING AND TO THE PREPARATION OF DOCUMENTS AS AUTHORIZED UNDER SECTION 4.2C. BY WHICH YOU HAVE FORWARDED THE RECLAIM VOUCHERS OF MRS. MONROE AND HAVE REQUESTED OUR ADVANCE DECISION AS TO WHETHER THE VOUCHERS MAY PROPERLY BE CERTIFIED FOR PAYMENT. WOLF'S CLAIM IS FOR REIMBURSEMENT OF $266.40 PAID BY HER AS A LEGAL FEE IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT HER NEW DUTY STATION IN ATLANTA. THIS ITEM WAS SUSPENDED FROM THE ORIGINAL VOUCHER FOR THE REASON THAT IT WAS NOT SUPPORTED BY A STATEMENT ITEMIZING THE CHARGES. TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES.

B-173222, AUG 10, 1971

CIVILIAN EMPLOYEES - PURCHASE OF RESIDENCE DECISION CONCERNING RECLAIM VOUCHERS SUBMITTED BY EILEEN D. WOLF AND RAYMOND E. MONROE FOR REIMBURSEMENT OF EXPENSES IN CONNECTION WITH THE PURCHASE OF THEIR RESPECTIVE RESIDENCES. MRS. WOLF MAY BE REIMBURSED $150 TITLE EXAMINATION COST UNDER OMB CIR. NO. A-56, SECTION 4.2C AND $41.40 MORTGAGE TITLE INSURANCE PREMIUM UNDER SECTION 4.2D. NO REIMBURSEMENT MAY BE MADE OF THE BALANCE DESCRIBED GENERALLY AS REPRESENTATION AND CLOSING COSTS. MR. MONROE MAY RECOVER $100 WHICH WAS PRIMARILY RELATED TO THE CLOSING AND TO THE PREPARATION OF DOCUMENTS AS AUTHORIZED UNDER SECTION 4.2C. HOWEVER, THE $75 TRANSFER FEE MAY NOT BE REIMBURSED.

TO MRS. OPAL A. SHELTON:

THIS REFERS TO YOUR LETTER OF JUNE 2, 1971, BY WHICH YOU HAVE FORWARDED THE RECLAIM VOUCHERS OF MRS. EILEEN D. WOLF AND MR. RAYMOND E. MONROE AND HAVE REQUESTED OUR ADVANCE DECISION AS TO WHETHER THE VOUCHERS MAY PROPERLY BE CERTIFIED FOR PAYMENT.

MRS. WOLF'S CLAIM IS FOR REIMBURSEMENT OF $266.40 PAID BY HER AS A LEGAL FEE IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT HER NEW DUTY STATION IN ATLANTA, GEORGIA. THIS ITEM WAS SUSPENDED FROM THE ORIGINAL VOUCHER FOR THE REASON THAT IT WAS NOT SUPPORTED BY A STATEMENT ITEMIZING THE CHARGES. OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969, SECTION 4.2C, PROVIDES AS TO REIMBURSEMENT OF LEGAL EXPENSES:

"C. LEGAL AND RELATED COSTS. TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES, THE FOLLOWING EXPENSES ARE REIMBURSABLE WITH RESPECT TO THE SALE AND PURCHASE OF RESIDENCES IF THEY ARE CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION OR IF CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE; COSTS OF (1) SEARCHING TITLE, PREPARING ABSTRACT, AND LEGAL FEES FOR A TITLE OPINION, OR (2) WHERE CUSTOMARILY FURNISHED BY THE SELLER, THE COST OF A TITLE INSURANCE POLICY; COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS, AND CONTRACTS; RELATED NOTARY FEES AND RECORDING FEES; COSTS OF MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES; AND SIMILAR EXPENSES. COSTS OF LITIGATION ARE NOT REIMBURSABLE."

THE LAW FIRM TO WHICH THE $266.40 FEE WAS PAID HAS NOW EXPLAINED THAT THE FEE INCLUDES A $41.40 MORTGAGE TITLE INSURANCE PREMIUM AND, OF THE REMAINDER, IT HAS APPORTIONED $150 TO TITLE EXAMINATION AND CERTIFICATION, AND $75 TO REPRESENTATION AND CONDUCTING OF THE CLOSING. THE INFORMATION NOW FURNISHED WARRANTS THE CONCLUSION THAT $150 REPRESENTS CHARGES OF THE TYPE PROPERLY REIMBURSABLE UNDER SUBSECTION 4.2C OF CIRCULAR NO. A-56. ALSO, THE $41.40 MORTGAGE TITLE INSURANCE PREMIUM MAY BE REIMBURSED UNDER SUBSECTION 4.2D. THERE IS NO BASIS FOR REIMBURSEMENT OF THE BALANCE DESCRIBED GENERALLY AS REPRESENTATION AND CLOSING COSTS.

IN REGARD TO MR. MONROE'S RECLAIM, THE RECORD INDICATES THAT THE $175 AMOUNT IS COMPOSED OF $75 CHARACTERIZED BY THE EMPLOYEE'S ATTORNEY AS LOAN TRANSFER FEES, AND $100 DESCRIBED AS A "CLOSING ONLY" CHARGE IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT HIS NEW DUTY STATION.

A LOAN ASSUMPTION FEE, A LOAN ORIGINATION FEE, AND A LOAN TRANSFER FEE ARE REGARDED AS FINANCE CHARGES WITHIN THE MEANING OF THE TRUTH IN LENDING ACT, TITLE I, PUBLIC LAW 90-321. SEE B-170787, NOVEMBER 17, 1970, AND DECISION CITED THEREIN. WITH REGARD TO SUCH CHARGES SECTION 4.2D OF CIRCULAR NO. A-56, REVISED JUNE 26, 1969, PROVIDES IN PART AS FOLLOWS:

" *** 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. *** "

IN VIEW OF THE ABOVE, THE $75 AMOUNT PAID BY MR. MONROE AS A TRANSFER FEE MAY NOT BE REIMBURSED.

THE $100 "CLOSING ONLY" CHARGE PAID BY MR. MONROE IS STATED BY HIS ATTORNEY TO BE FOR THE FOLLOWING SERVICES:

"BRIEF INITIAL CONFERENCE; FURNISHING OF REALTY SALES AGREEMENT; PRELIMINARY COORDINATION WITH LENDERS HOLDING SECURITY INTEREST TO BE ASSUMED BY PURCHASER; DRAFTING OF CLOSING INSTRUMENTS (INCLUSIVE OF WARRANTY DEED WITH ASSUMPTION AGREEMENT, SETTLEMENT STATEMENT, AFFIDAVIT OF SELLER, ONE LENDER'S LOAN ASSUMPTION DOCUMENTS, LETTER NOTIFYING OTHER LENDER OF LOAN ASSUMPTION); ATTENDANCE UPON CLOSING TRANSACTION; POST- CLOSING RECORDING AND PROCESSING OF DOCUMENTS AND PAYMENT OF WITHHELD ITEMS, AND LETTER AND TELEPHONE CALLS TO EFFECT FURTHER LIAISON BETWEEN PURCHASER AND LENDERS."

THE FEDERAL HOUSING ADMINISTRATION HAS ADVISED YOUR OFFICE THAT THE FEE IS REASONABLE AND CUSTOMARY. LEGAL AND RELATED COSTS ARE ALLOWABLE ONLY IF THEY RELATE TO THE TYPE DESCRIBED IN SECTION 4.2C OF CIRCULAR NO. A-56, QUOTED ABOVE. IT IS APPARENT THAT THE FEE OF $100 WAS PRIMARILY RELATED TO THE CLOSING AND TO THE PREPARATION OF DOCUMENTS AS AUTHORIZED UNDER SECTION 4.2C. UNDER THE CIRCUMSTANCES AND SINCE THE FEE HAS BEEN DETERMINED AS REASONABLE AND CUSTOMARY IT MAY BE ALLOWED.

THE RECLAIM VOUCHERS OF MRS. WOLF AND MR. MONROE ARE RETURNED, TOGETHER WITH THE FILE, FOR HANDLING IN ACCORDANCE WITH THE ABOVE.