B-176780, NOV 20, 1972
Highlights
A-56 SPECIFICALLY STATES THAT THE COST OF MORTGAGE INSURANCE IS NOT A REIMBURABLE ITEM OF EXPENSE. EVEN IF THE INSURANCE WAS NOT FOR HIS PROTECTION. JR.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 10. LEBAUBE HAS SUBMITTED EVIDENCE SHOWING THAT THE MORTGAGE INSURANCE WAS PURCHASED BY THE LENDER AND PROTECTS THE FINANCIAL INSTITUTION AGAINST LOSS FOR TAKING THE ADDITIONAL RISK IN MAKING 90 PERCENT CONVENTIONAL LOANS. LEBAUBE BELIEVES HE IS ENTITLED TO REIMBURSEMENT SINCE THE INSURANCE IS NOT FOR HIS PROTECTION BUT THAT OF THE LENDER. A-56 SPECIFICALLY STATES THAT THE COST OF MORTGAGE INSURANCE IS NOT A REIMBURSABLE ITEM OF EXPENSE. CONSISTENTLY HOLD THAT THIS TYPE OF EXPENSE IS NOT REIMBURSABLE.
B-176780, NOV 20, 1972
CIVILIAN PERSONNEL - MORTGAGE INSURANCE FEE DECISION DENYING CERTIFICATION FOR PAYMENT OF A CLAIM BY ROBERT A. LEBAUBE, AN EMPLOYEE OF IRS, FOR REIMBURSEMENT OF A FEE FOR MORTGAGE GUARANTY INSURANCE AND A REVIEW FEE IN CONNECTION WITH OBTAINING SUCH INSURANCE. SECTION 4.2D OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 SPECIFICALLY STATES THAT THE COST OF MORTGAGE INSURANCE IS NOT A REIMBURABLE ITEM OF EXPENSE, EVEN IF THE INSURANCE WAS NOT FOR HIS PROTECTION, BUT TO PROTECT THE LENDER.
TO MR. C. H. JENKINS, JR.:
FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 10, 1972, REFERENCE ADFF:SB, REQUESTING A DECISION AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT A CLAIM BY MR. ROBERT A. LEBAUBE, AN EMPLOYEE OF YOUR AGENCY, FOR REIMBURSEMENT OF A FEE FOR MORTGAGE GUARANTY INSURANCE AND A REVIEW FEE IN CONNECTION WITH OBTAINING SUCH INSURANCE.
THE RECORD INDICATES THAT IN CONNECTION WITH HIS TRANSFER TO GREENSBORO, NORTH CAROLINA, MR. LEBAUBE ON AUGUST 12, 1971, PAID AN AMOUNT OF $222 INCIDENT TO THE PURCHASE OF A RESIDENCE. THAT AMOUNT CONSISTS OF $202, THE ANNUAL PREMIUM FOR THE FIRST YEAR OF MORTGAGE INSURANCE, AND $20, AN APPRAISAL REVIEW FEE CHARGED BY THE MORTGAGE INSURANCE COMPANY. YOUR AGENCY DISALLOWED THESE ITEMS ON THE BASIS OF DECISION B-162673, NOVEMBER 13, 1967. MR. LEBAUBE HAS SUBMITTED EVIDENCE SHOWING THAT THE MORTGAGE INSURANCE WAS PURCHASED BY THE LENDER AND PROTECTS THE FINANCIAL INSTITUTION AGAINST LOSS FOR TAKING THE ADDITIONAL RISK IN MAKING 90 PERCENT CONVENTIONAL LOANS. THE LENDER PASSES THIS COST ON TO THE BORROWER AS AN ADMINISTRATIVE CHARGE. MR. LEBAUBE BELIEVES HE IS ENTITLED TO REIMBURSEMENT SINCE THE INSURANCE IS NOT FOR HIS PROTECTION BUT THAT OF THE LENDER.
SECTION 4.2D OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 SPECIFICALLY STATES THAT THE COST OF MORTGAGE INSURANCE IS NOT A REIMBURSABLE ITEM OF EXPENSE. OUR DECISIONS, THEREFORE, CONSISTENTLY HOLD THAT THIS TYPE OF EXPENSE IS NOT REIMBURSABLE. SEE B-169204, DECEMBER 9, 1971, COPY ENCLOSED, AND DECISIONS CITED THEREIN. ACCORDINGLY, THERE IS NO BASIS FOR REIMBURSEMENT TO MR. LEBAUBE OF THE COST OF THE MORTGAGE INSURANCE.