B-180103, JUN 14, 1974

B-180103: Jun 14, 1974

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PRECLUDES REIMBURSEMENT FOR ANY EXPENSE DETERMINED TO BE PART OF FINANCE CHARGE UNDER TRUTH IN LENDING ACT AND LOAN TRANSFER FEE IS REGARDED AS PART OF FINANCE CHARGE UNDER THAT ACT. HIS CLAIM WAS ADMINISTRATIVELY DISALLOWED ON THE BASIS THAT THE JOINT TRAVEL REGULATIONS (JTR) CONTAIN NO AUTHORITY TO REIMBURSE FEES CHARGED BY A LENDING INSTITUTION INCIDENT TO THE INFORMAL ASSUMPTION OF A MORTGAGE. MORRIS DOES NOT BELIEVE THAT THE CITED DECISION IS APPLICABLE TO HIS CLAIM. HE HAS ALSO SUBMITTED A STATEMENT FROM THE LENDING INSTITUTION INVOLVED TO THE EFFECT THAT THE LOAN TRANSFER FEE PAID BY HIM FOR THE LOAN ASSUMPTION WAS NOT A FINANCE CHARGE BUT A SERVICE FEE CHARGED FOR THE TIME AND EXPENSE OF CHANGING THE MORTGAGE INTO HIS NAME.

B-180103, JUN 14, 1974

TRANSFERRED EMPLOYEE MAY NOT BE REIMBURSED FOR LOAN TRANSFER FEE PAID BY HIM IN CONNECTION WITH ASSUMPTION OF LOAN INCIDENT TO PURCHASE OF RESIDENCE BECAUSE PARAGRAPH C8352-1D, VOLUME 2, JTR, PRECLUDES REIMBURSEMENT FOR ANY EXPENSE DETERMINED TO BE PART OF FINANCE CHARGE UNDER TRUTH IN LENDING ACT AND LOAN TRANSFER FEE IS REGARDED AS PART OF FINANCE CHARGE UNDER THAT ACT, NOTWITHSTANDING FACT THAT FEE MERELY COVERS ADMINISTRATIVE COSTS OF ASSUMPTION.

TO MR. EDWIN L. MORRIS:

THIS DECISION INVOLVES THE PROPRIETY OF CERTIFYING FOR PAYMENT A RECLAIM VOUCHER SUBMITTED BY MR. EDWIN L. MORRIS, AN EMPLOYEE OF THE DEFENSE SUPPLY AGENCY, FOR REIMBURSEMENT OF $35 REPRESENTING A REAL ESTATE EXPENSE INCURRED BY HIM IN CONNECTION WITH THE PURCHASE OF A RESIDENCE INCIDENT TO HIS TRANSFER FROM ALBUQUERQUE, NEW MEXICO, TO DALLAS, TEXAS.

THE RECORD INDICATES THAT INCIDENT TO THE PURCHASE OF A RESIDENCE AT HIS NEW DUTY STATION, MR. MORRIS PAID A LOAN TRANSFER FEE OF $35 IN CONNECTION WITH THE ASSUMPTION OF A LOAN ON THE RESIDENCE. CITING B 168674, SEPTEMBER 8, 1972, HIS CLAIM WAS ADMINISTRATIVELY DISALLOWED ON THE BASIS THAT THE JOINT TRAVEL REGULATIONS (JTR) CONTAIN NO AUTHORITY TO REIMBURSE FEES CHARGED BY A LENDING INSTITUTION INCIDENT TO THE INFORMAL ASSUMPTION OF A MORTGAGE. HOWEVER, MR. MORRIS DOES NOT BELIEVE THAT THE CITED DECISION IS APPLICABLE TO HIS CLAIM. HE HAS ALSO SUBMITTED A STATEMENT FROM THE LENDING INSTITUTION INVOLVED TO THE EFFECT THAT THE LOAN TRANSFER FEE PAID BY HIM FOR THE LOAN ASSUMPTION WAS NOT A FINANCE CHARGE BUT A SERVICE FEE CHARGED FOR THE TIME AND EXPENSE OF CHANGING THE MORTGAGE INTO HIS NAME. FURTHERMORE, THE ACCOUNTING AND FINANCE DIVISION OF THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, DALLAS IS OF THE OPINION THAT THE CLAIM IS PAYABLE IN ACCORDANCE WITH PARAGRAPH C8352-1C5 OF VOLUME 2, JTR, CONCERNING LEGAL AND RELATED COSTS.

A LOAN TRANSFER FEE IS A COST RELATED TO THE EXPENSE OF OBTAINING FINANCING FOR THE PURCHASE OF A RESIDENCE. THUS, A LOAN TRANSFER FEE CANNOT BE REGARDED AS BEING A COST SIMILAR TO THE COSTS OF SEARCHING THE TITLE, PREPARING CONVEYANCE INSTRUMENTS, NOTARY OR RECORDING FEES, OR PREPARING A SURVEY FOR THE PURPOSE OF REIMBURSEMENT AS A LEGAL OR RELATED COST UNDER PARAGRAPH C8352-1C5 OF VOLUME 2, JTR. THE ONLY AUTHORITY UNDER WHICH A LOAN TRANSFER FEE MAY PROPERLY BE CONSIDERED FOR REIMBURSEMENT IS PARAGRAPH C8352-1D OF VOLUME 2, JTR, RELATING TO REIMBURSEMENT FOR MISCELLANEOUS COSTS INCURRED BY AN EMPLOYEE IN CONNECTION WITH THE SALE OR PURCHASE OF A RESIDENCE.

PARAGRAPH C8352-1D OF VOLUME 2, JTR, PROVIDES IN PART AS FOLLOWS:

"*** NOTWITHSTANDING THE FOREGOING, NO FEE, COST, CHARGE, OR EXPENSE IS REIMBURSABLE WHICH IS DETERMINED TO BE A PART OF THE FINANCE CHARGE UNDER 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 THIS REGARD DECISIONS OF THE COMPTROLLER GENERAL OF THE UNITED STATES HAVE CONSISTENTLY HELD THAT A LOAN ASSUMPTION FEE OR TRANSFER FEE IS TO BE REGARDED AS A FINANCE CHARGE UNDER REGULATION Z OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, PART 226 OF TITLE 12, CODE OF FEDERAL REGULATIONS, NOTWITHSTANDING THE FACT THAT THE FEE MERELY COVERS THE ADMINISTRATIVE COSTS OF THE LENDING INSTITUTION IN PROCESSING THE ASSUMPTION. B-169158, APRIL 15, 1970; B-178433, JUNE 4, 1973; AND B- 170787, NOVEMBER 17, 1970.

ACCORDINGLY, IT IS HELD THAT THERE IS NO BASIS ON WHICH TO CERTIFY FOR PAYMENT THE VOUCHER SUBMITTED BY MR. MORRIS. THE ACTION OF HIS AGENCY IN DISALLOWING HIS CLAIM WAS CORRECT.