B-174106, OCT 21, 1971

B-174106, OCT 21, 1971

CIVILIAN EMPLOYEE - PURCHASE OF RESIDENCE INCIDENT TO CHANGE OF STATIONS - "VA LOAN APPLICATION FEE" DECISION ALLOWING CLAIM OF MR. JERRY P. TOWNSEND, EMPLOYEE OF THE DEPARTMENT OF THE INTERIOR, TO $175 REPRESENTING VA APPLICATION FEE PAID BY CLAIMANT IN CONNECTION WITH PURCHASE OF A RESIDENCE INCIDENT TO TRANSFER OF OFFICIAL STATIONS. UNDER SECTION 4.2 OF BUREAU OF MANAGEMENT & BUDGET CIRCULAR NO. A-56, VA FEE FOR LOAN APPLICATION, WHICH IS PAID IN LIEU OF CLOSER'S FEE, CREDIT REPORT COST, AND COST OF APPRAISAL, IS REIMBURSABLE. THEREFORE, CLAIM IS ALLOWABLE AND MAY BE REIMBURSED.

TO BUREAU OF LAND MANAGEMENT, UNITED STATES DEPARTMENT OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 7, 1971, REFERENCE 1376 (D- 832), REQUESTING OUR DECISION AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER IN THE AMOUNT OF $175, REPRESENTING A VETERANS ADMINISTRATION APPLICATION FEE PAID BY MR. JERRY P. TOWNSEND, AN EMPLOYEE OF YOUR AGENCY, IN CONNECTION WITH THE PURCHASE OF A RESIDENCE INCIDENT TO A TRANSFER OF STATION FROM SAFFORD, ARIZONA, TO SOCORRO, NEW MEXICO, EFFECTIVE OCTOBER 18, 1970.

THE RECORD INDICATES THAT MR. TOWNSEND OBTAINED A DIRECT LOAN FROM THE VETERANS ADMINISTRATION. THE APPLICATION FEE OF $175 PAID IN CONNECTION WITH SUCH LOAN WAS DISALLOWED ON THE GROUND THAT IT WAS A FINANCE CHARGE. MR. TOWNSEND RECLAIMS THE ITEM AND SUBMITS A LETTER FROM THE VETERANS ADMINISTRATION IN WHICH IT IS STATED THAT AN APPRAISAL FEE, A CREDIT REPORT FEE, AND A CLOSING FEE WERE PAID FROM THE APPLICATION FEE.

SECTION 4.2 OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 PROVIDES FOR REIMBURSEMENT OF VARIOUS EXPENSES INCIDENT TO THE PURCHASE OF A RESIDENCE, INCLUDING A VETERANS ADMINISTRATION FEE FOR LOAN APPLICATION. HOWEVER, THE CIRCULAR ALSO STATES THAT NO FEE IS REIMBURSABLE WHICH IS DETERMINED TO BE 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.

REGULATION Z COVERING THE DETERMINATION OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT STATES IN PERTINENT PART (12 CFR 226.4) AS FOLLOWS:

"(E) EXCLUDABLE CHARGES, REAL PROPERTY TRANSACTIONS. THE FOLLOWING CHARGES IN CONNECTION WITH ANY REAL PROPERTY TRANSACTION, PROVIDED THEY ARE BONA FIDE, REASONABLE IN AMOUNT, AND NOT FOR THE PURPOSE OF CIRCUMVENTION OR EVASION OF THIS PART, SHALL NOT BE INCLUDED IN THE FINANCE CHARGE WITH RESPECT TO THAT TRANSACTION:

"(2) FEES FOR PREPARATION OF DEEDS, SETTLEMENT STATEMENTS, OR OTHER DOCUMENTS.

"(5) APPRAISAL FEES.

"(6) CREDIT REPORTS."

REGULATIONS OF THE VETERANS ADMINISTRATION COVERING DIRECT LOANS TO VETERANS PROVIDES IN PERTINENT PART (38 CFR 36.4504) AS FOLLOWS:

"(B) WITH RESPECT TO A LOAN MADE TO A VETERAN-BORROWER PURSUANT TO AN APPLICATION (VA FORM 26-6921) RECEIVED BY THE VETERANS ADMINISTRATION ON OR AFTER MARCH 3, 1966, THE BORROWER SHALL PAY THE VETERANS ADMINISTRATION THE FOLLOWING:

"(1) $50, OR ONE PERCENT (1%) OF THE LOAN AMOUNT, WHICHEVER IS GREATER, WHICH CHARGE SHALL BE IN LIEU OF THE LOAN CLOSER'S FEE, CREDIT REPORT, AND COST OF APPRAISAL:*** "

SINCE THE APPLICATION FEE COVERS ITEMS WHICH ARE NOT TO BE INCLUDED AS FINANCE CHARGES UNDER REGULATION Z, THE VOUCHER RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE PROPER.