Request for Advance Decision Regarding Transfer Expenses

An advance decision was requested regarding the reclaim of a Department of Housing and Urban Development employee for expenses incurred in connection with the purchase of a residence upon his transfer. The expenses claimed, which were previously disallowed by his agency, include: (1) title insurance premium; (2) change in record fee; (3) recording fee; and (4) notary fee. With regard to the recording fee and notary fee, the applicable regulations permit the following: reimbursement of these fees, if they are customarily paid by a purchaser to the extent which they do not exceed the amount customarily paid in the locality of the residence. Since the employee had already been reimbursed by his agency for the amounts customarily paid in his area for recording and notary fees, there is no authority to pay the additional amounts despite the fact that the employee may have been charged higher fees. With regard to the change of record fee, the settlement statement listed this as an assumption fee paid to the bank. GAO has long held that a loan transfer fee or loan assumption fee is not reimbursable because it is regarded as a finance charge, despite the fact that such a fee may merely reflect administrative costs. With regard to the title insurance premium, the employee stated that the holder of the second trust required that he obtain a title insurance policy. The record showed that the employee purchased his residence in part by assuming an existing mortgage. This mortgage was already insured by a mortgage title policy which is a reimbursable expense. The title insurance policy the employee purchased was an owner's title insurance policy. Applicable regulations specifically preclude reimbursement for this type of policy. Therefore, the employee may not be reimbursed for the title insurance. Accordingly, the additional expenses disallowed by the agency should not be paid to the employee.