B-182930, MAR 20, 1975
Highlights
SINCE IT IS SPECIFICALLY EXCLUDED AS A REIMBURSABLE ITEM UNDER FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR 101-7). IS THEREFORE EXCLUDED UNDER FTR PARA. 2- 6.2D. WHICH HE EXPLAINED WAS TO PROTECT THE LENDER SHOULD MR. HARDY WAS INFORMED THAT REIMBURSEMENT FOR THESE ITEMS WAS DISALLOWED IN ACCORDANCE WITH FEDERAL TRAVEL REGULATIONS (FPMR 101-7) PARA. 2-6.2D (MAY 1973). PRIVATE MORTGAGE INSURANCE IS FOR THE LENDER'S BENEFIT. IS THEREFORE REIMBURSABLE. REIMBURSEMENT OF REAL ESTATE EXPENSES IS GOVERNED BY THE FEDERAL TRAVEL REGULATIONS (MAY 1973). PARAGRAPH 2-6.2D OF THESE REGULATIONS DRAWS A CLEAR DISTINCTION BETWEEN MORTGAGE TITLE INSURANCE AND OTHER TYPES OF INSURANCE: "*** THE COST OF A MORTGAGE TITLE POLICY PAID FOR BY THE EMPLOYEE ON A RESIDENCE PURCHASED BY HIM IS REIMBURSABLE BUT COSTS OF OTHER TYPES OF INSURANCE PAID FOR BY HIM.
B-182930, MAR 20, 1975
TRANSFERRED EMPLOYEE SEEKS REIMBURSEMENT OF EXPENSES INCURRED WHEN HE PURCHASED A HOUSE INCIDENT TO TRANSFER. EMPLOYEE MAY NOT BE REIMBURSED FOR PRIVATE MORTGAGE INSURANCE, DESIGNED TO PROTECT LENDER IN EVENT OF EMPLOYEE'S DEFAULT, SINCE IT IS SPECIFICALLY EXCLUDED AS A REIMBURSABLE ITEM UNDER FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR 101-7), FTR PARA. 2-6.2D (1973). EMPLOYEE MAY NOT BE REIMBURSED FOR FEE CHARGED BY LENDER FOR REVIEW OF APPRAISAL AND CREDIT REPORT SINCE FEE CONSTITUTES A FINANCE CHARGE UNDER REGULATION Z, AND IS THEREFORE EXCLUDED UNDER FTR PARA. 2- 6.2D.
LEONARD HARDY, JR. - REIMBURSEMENT OF REAL ESTATE EXPENSES:
AN AUTHORIZED CERTIFYING OFFICER OF THE UNITED STATES DEPARTMENT OF AGRICULTURE HAS REQUESTED A DECISION CONCERNING THE PROPRIETY OF REIMBURSING MR. LEONARD HARDY, JR., AN EMPLOYEE OF THE DEPARTMENT'S FARMERS HOME ADMINISTRATION, FOR CERTAIN EXPENSES INCURRED IN SEPTEMBER 1974 WHEN HE PURCHASED A RESIDENCE INCIDENT TO TRANSFER OF STATION.
MR. HARDY'S ORIGINAL CLAIM FOR REAL ESTATE EXPENSES INCLUDED $354.50 FOR PRIVATE MORTGAGE INSURANCE, WHICH HE EXPLAINED WAS TO PROTECT THE LENDER SHOULD MR. HARDY DEFAULT, AND $20 FOR A REVIEW OF THE APPRAISAL AND CREDIT REPORT BY THE LENDER. ON OCTOBER 1, 1974, MR. HARDY WAS INFORMED THAT REIMBURSEMENT FOR THESE ITEMS WAS DISALLOWED IN ACCORDANCE WITH FEDERAL TRAVEL REGULATIONS (FPMR 101-7) PARA. 2-6.2D (MAY 1973). MR. HARDY RESUBMITTED HIS CLAIM ON OCTOBER 11, 1974, CONTENDING THAT LIKE MORTGAGE TITLE INSURANCE, PRIVATE MORTGAGE INSURANCE IS FOR THE LENDER'S BENEFIT, AND IS THEREFORE REIMBURSABLE.
REIMBURSEMENT OF REAL ESTATE EXPENSES IS GOVERNED BY THE FEDERAL TRAVEL REGULATIONS (MAY 1973). PARAGRAPH 2-6.2D OF THESE REGULATIONS DRAWS A CLEAR DISTINCTION BETWEEN MORTGAGE TITLE INSURANCE AND OTHER TYPES OF INSURANCE:
"*** THE COST OF A MORTGAGE TITLE POLICY PAID FOR BY THE EMPLOYEE ON A RESIDENCE PURCHASED BY HIM IS REIMBURSABLE BUT COSTS OF OTHER TYPES OF INSURANCE PAID FOR BY HIM, SUCH AS AN OWNER'S TITLE POLICY, A 'RECORD TITLE' POLICY, MORTGAGE INSURANCE AND INSURANCE AGAINST DAMAGE OR LOSS OF PROPERTY, ARE NOT REIMBURSABLE ITEMS OF EXPENSE. ***"
THE ABOVE REGULATION SPECIFICALLY PRECLUDES REIMBURSEMENT FOR MORTGAGE INSURANCE, AND PRIVATE MORTGAGE INSURANCE, DESIGNED TO PROTECT THE LENDER FROM THE MORTGAGEE'S DEFAULT, IS MORTGAGE INSURANCE UNDER THIS REGULATION. B-181074, AUGUST 27, 1974. THEREFORE, THE $354.50 COST OF SUCH INSURANCE IS NOT REIMBURSABLE.
IN HIS OCTOBER 11, 1974 CLAIM RESUBMISSION MR. HARDY ALSO SOUGHT REIMBURSEMENT FOR THE $20 "PRIVATE MORTGAGE INSURANCE REVIEW FEE." ALTHOUGH CERTAIN FEES ARE REIMBURSABLE, FTR PARA. 2-6.2D (MAY 1973) PROVIDES IN PERTINENT PART:
"*** 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. ***"
REGULATION Z, PUBLISHED AS 12 C.F.R. 226 (1974), SETS THE FOLLOWING STANDARDS FOR DETERMINING WHAT CONSTITUTES AN ELEMENT OF A FINANCE CHARGE.
"(A) GENERAL RULE. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE AMOUNT OF THE FINANCE CHARGE IN CONNECTION WITH ANY TRANSACTION SHALL BE DETERMINED AS THE SUM OF ALL CHARGES, PAYABLE DIRECTLY OR INDIRECTLY BY THE CUSTOMER, AND IMPOSED DIRECTLY OR INDIRECTLY BY THE CREDITOR AS AN INCIDENT TO OR AS A CONDITION OF THE EXTENSION OF CREDIT, WHETHER PAID OR PAYABLE BY THE CUSTOMER, THE SELLER, OR ANY OTHER PERSON ON BEHALF OF THE CUSTOMER TO THE CREDITOR OR TO A THIRD PARTY, INCLUDING ANY OF THE FOLLOWING TYPES OF CHARGES:
"(2) SERVICE, TRANSACTION, ACTIVITY, OR CARRYING CHARGE.
"(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:
"(1) FEES OR PREMIUMS FOR TITLE EXAMINATION, ABSTRACT OF TITLE, TITLE INSURANCE, OR SIMILAR PURPOSES AND FOR REQUIRED RELATED PROPERTY SURVEYS.
"(2) FEES FOR PREPARATION OF DEEDS, SETTLEMENT STATEMENTS, OR OTHER DOCUMENTS.
"(3) AMOUNTS REQUIRED TO BE PLACED OR PAID INTO AN ESCROW OR TRUSTEE ACCOUNT FOR FUTURE PAYMENTS OF TAXES, INSURANCE, AND WATER, SEWER, AND LAND RENTS.
"(4) FEES FOR NOTARIZING DEEDS AND OTHER DOCUMENTS.
"(5) APPRAISAL FEES.
"(6) CREDIT REPORTS."
THE $20 FEE FOR REVIEWING APPRAISAL AND CREDIT REPORTS IS CLEARLY A CHARGE INCIDENT TO THE EXTENSION OF CREDIT AND AS IT IS NOT AMONG THE ITEMS SPECIFICALLY EXCLUDED, IT MUST BE REGARDED AS A FINANCING CHARGE UNDER REGULATION Z. AS SUCH, IT IS NOT REIMBURSABLE.
IN VIEW OF THE ABOVE, MR. HARDY'S RECLAIM VOUCHER MAY NOT BE CERTIFIED FOR PAYMENT.