B-214724, AUG 15, 1984

B-214724: Aug 15, 1984

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THE AGENCY DENIED HIS CLAIM FOR REIMBURSEMENT ON THE BASIS THAT THE FEE WAS A FINANCE CHARGE AND THEREFORE NOT REIMBURSABLE UNDER FEDERAL TRAVEL REGULATIONS PARA. 2 6.2D (MAY 1973). FTR PARA. 2-6.2D WAS AMENDED TO SPECIFICALLY PERMIT REIMBURSEMENT OF LOAN ORIGINATION FEES AND "OTHER FEES AND CHARGES SIMILAR IN NATURE" FOR TRANSFERS EFFECTIVE AFTER OCTOBER 1. THE LOAN ASSUMPTION FEE INVOLVED HERE IS SIMILAR IN NATURE TO A LOAN ORIGINATION FEE SINCE IT WAS INTENDED TO COVER THE SAME TYPE OF SERVICES. HOPPE: AN EMPLOYEE APPEALS THE FEDERAL BUREAU OF INVESTIGATION'S DENIAL OF HIS CLAIM FOR REIMBURSEMENT OF A LOAN ASSUMPTION FEE ON THE BASIS OF A RECENT CHANGE TO THE FEDERAL TRAVEL REGULATIONS PERMITTING REIMBURSEMENT OF A LOAN ORIGINATION FEE OR OTHER FEES SIMILAR IN NATURE. /1/ THE EMPLOYEE ARGUES THAT A LOAN ASSUMPTION FEE IS SUFFICIENTLY SIMILAR TO A LOAN ORIGINATION FEE.

B-214724, AUG 15, 1984

OFFICERS AND EMPLOYEES - TRANSFERS - REAL ESTATE EXPENSES - LOAN ASSUMPTION FEE DIGEST: AN EMPLOYEE INCURRED A 1 PERCENT LOAN ASSUMPTION FEE UPON PURCHASING A RESIDENCE AT HIS NEW DUTY STATION. THE AGENCY DENIED HIS CLAIM FOR REIMBURSEMENT ON THE BASIS THAT THE FEE WAS A FINANCE CHARGE AND THEREFORE NOT REIMBURSABLE UNDER FEDERAL TRAVEL REGULATIONS PARA. 2 6.2D (MAY 1973). FTR PARA. 2-6.2D WAS AMENDED TO SPECIFICALLY PERMIT REIMBURSEMENT OF LOAN ORIGINATION FEES AND "OTHER FEES AND CHARGES SIMILAR IN NATURE" FOR TRANSFERS EFFECTIVE AFTER OCTOBER 1, 1982. THE LOAN ASSUMPTION FEE INVOLVED HERE IS SIMILAR IN NATURE TO A LOAN ORIGINATION FEE SINCE IT WAS INTENDED TO COVER THE SAME TYPE OF SERVICES. ACCORDINGLY, THE EMPLOYEE MAY BE REIMBURSED IF OTHERWISE PROPER.

JAMES D. HOPPE:

AN EMPLOYEE APPEALS THE FEDERAL BUREAU OF INVESTIGATION'S DENIAL OF HIS CLAIM FOR REIMBURSEMENT OF A LOAN ASSUMPTION FEE ON THE BASIS OF A RECENT CHANGE TO THE FEDERAL TRAVEL REGULATIONS PERMITTING REIMBURSEMENT OF A LOAN ORIGINATION FEE OR OTHER FEES SIMILAR IN NATURE. /1/ THE EMPLOYEE ARGUES THAT A LOAN ASSUMPTION FEE IS SUFFICIENTLY SIMILAR TO A LOAN ORIGINATION FEE, THE REIMBURSEMENT OF WHICH IS SPECIFICALLY AUTHORIZED BY REGULATION, TO WARRANT REIMBURSEMENT. BECAUSE THE LOAN ASSUMPTION FEE AS DESCRIBED IN THIS CASE MEETS THE CRITERIA ESTABLISHED IN EDWARD W. AITKEN, B-214101, MAY 7, 1984, 63 COMP.GEN. , REIMBURSEMENT OF THE CLAIM IS ALLOWED.

MR. JAMES D. HOPPE, A SPECIAL AGENT OF THE FEDERAL BUREAU OF INVESTIGATION (FBI), WAS TRANSFERRED FROM CHICAGO, ILLINOIS, TO DALLAS, TEXAS, EFFECTIVE MAY 4, 1983. FOLLOWING THE PURCHASE OF A RESIDENCE AT THE NEW DUTY STATION, MR. HOPPE SUBMITTED A VOUCHER FOR REIMBURSEMENT WHICH INCLUDED THE AMOUNT OF $624.63 FOR A LOAN ASSUMPTION FEE, REPRESENTING 1 PERCENT OF THE UNPAID BALANCE OF THE LOAN. THE FBI DENIED REIMBURSEMENT OF THIS AMOUNT ON THE BASIS THAT SEVERAL DECISIONS OF THE COMPTROLLER GENERAL HAVE HELD THAT LOAN ASSUMPTION FEES ARE FINANCE CHARGES WITHIN THE MEANING OF REGULATION Z, 12 C.F.R. SEC. 226.4(A) (1981), AND ARE NOT REIMBURSABLE UNDER THE FEDERAL TRAVEL REGULATIONS, PARA. 2-6.2D (SUPP. 1, NOV. 1, 1981), INCORP. BY REF., 41 C.F.R. SEC. 101 -7.003 (1983).

MR. HOPPE NOTES THAT A RECENT AMENDMENT TO THE FEDERAL TRAVEL REGULATIONS REVISED PARAGRAPH 2-6.2D TO PERMIT REIMBURSEMENT OF A LOAN ORIGINATION FEE OR OTHER SIMILAR CHARGES. HE ARGUES THAT A LOAN ASSUMPTION FEE IS SIMILAR TO A LOAN ORIGINATION FEE, AND REFERS TO A COMPTROLLER GENERAL'S DECISION WHICH FOUND THE TWO TYPES OF FEES COMPARABLE. FURTHERMORE, HE HAS SUPPLIED A PHOTOCOPY OF A LETTER FROM THE COMPANY THAT PROCESSED THE LOAN ASSUMPTION WHICH STATES THAT THE LOAN ASSUMPTION FEE IS CHARGED TO COVER THE "COMPANY'S TIME IN PROCESSING THE ASSUMPTION, ALL PAPERWORK AND COMPUTER WORK." HE REPORTS THAT A COMPANY REPRESENTATIVE ORALLY ADVISED HIM THAT A LOAN ASSUMPTION FEE IS CHARGED TO COVER THE SAME TYPE OF SERVICES FOR WHICH A LOAN ORIGINATION FEE IS CHARGED TO INDIVIDUALS OBTAINING A NEW LOAN. FINALLY, HE CONTENDS THAT THE LOAN ASSUMPTION FEE WAS NOT INCLUDED AS A FINANCE CHARGE IN THE TRUTH IN LENDING DISCLOSURE AND IS THEREFORE NOT A FINANCE CHARGE.

THE FBI IS CORRECT IN ITS CONTENTION THAT OUR DECISIONS HAVE HELD THAT LOAN ORIGINATION FEES AND LOAN ASSUMPTION FEES MAY NOT BE REIMBURSED UNDER FTR PARA. 2-6.2D UNLESS THE ELEMENTS OF THE FEE WERE ITEMIZED INTO SPECIFIC CHARGES WHICH WERE EXCLUDED FROM THE DEFINITION OF A FINANCE CHARGE. FOR EXAMPLE, SEE STANLEY KEER, B-203630, MARCH 9, 1982, AND DEAN A. TAYLOR, B-184626, FEBRUARY 12, 1976. HOWEVER, DECISIONS SUCH AS KEER AND TAYLOR INVOLVED TRANSFERS EFFECTIVE PRIOR TO OCTOBER 1, 1982, AND INTERPRETED THE PROVISIONS OF FTR PARA. 2-6.2D, WHICH THEN PROHIBITED THE REIMBURSEMENT OF ANY FEE, COST, CHARGE OR EXPENSE WHICH IS DETERMINED TO BE A PART OF A FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT, TITLE I, 15 U.S.C. SECS. 1601-1667 (1982), AS IMPLEMENTED BY REGULATION Z, 12 C.F.R. SEC. 226.4 (1983). THUS, AS REQUIRED BY THE FTR PROVISIONS IN EFFECT AT THAT TIME, OUR DECISIONS APPLIED THE CRITERIA ESTABLISHED BY REGULATION Z TO THE SPECIFIC ELEMENTS OF A LOAN ORIGINATION OR ASSUMPTION FEE TO DETERMINE IF THE INDIVIDUAL ELEMENTS CONSTITUTED A FINANCE CHARGE AND WERE NOT REIMBURSABLE.

HOWEVER, EFFECTIVE OCTOBER 1, 1982, THE GENERAL SERVICES ADMINISTRATION AMENDED FTR PARA. 2-6.2D TO SPECIFICALLY AUTHORIZE REIMBURSEMENT FOR LOAN ORIGINATION FEES, AND OTHER FEES AND CHARGES SIMILAR IN NATURE, IF CUSTOMARILY PAID BY THE SELLER OR PURCHASER OF A RESIDENCE, AS APPLICABLE, TO THE EXTENT THAT THE AMOUNT CLAIMED DOES NOT EXCEED AMOUNTS CUSTOMARILY PAID IN THE LOCALITY. SEE GENERAL SERVICES ADMINISTRATION BULLETIN FPMR A -40, SUPPLEMENT 4, AUGUST 23, 1982. THE AMENDMENT ALSO MODIFIED PARAGRAPH 2-6.2D TO PROVIDE THAT A LOAN ORIGINATION FEE MAY BE REIMBURSED NOTWITHSTANDING THAT IT IS A FINANCE CHARGE UNDER REGULATION Z IF IT IS OTHERWISE PROPER.

THUS, IN ROBERT E. KIGERL, 62 COMP.GEN. 534 (1983), WE APPLIED THESE NEW PROVISIONS TO A CLAIM FOR REIMBURSEMENT OF A LOAN ORIGINATION FEE AND HELD THAT REIMBURSEMENT WAS PROPER NOTWITHSTANDING THE FEE MAY CONSTITUTE A FINANCE CHARGE WITHIN THE MEANING OF REGULATION Z, SUPRA. SUBSEQUENTLY, IN EDWARD W. AITKEN, B-214101, MAY 7, 1984, 63 COMP.GEN. , WE HELD THAT A LOAN ASSUMPTION FEE MAY BE REIMBURSED IF IT INVOLVES SIMILAR CHARGES AND FEES TO THOSE COVERED BY A LOAN ORIGINATION FEE AND IF IT IS ASSESSED INSTEAD OF A LOAN ORIGINATION FEE. SEE ALSO GARY L. BARLOW AND TERRY R. COOPER, B-213741, JULY 23, 1984. RECENTLY, WE HAVE DISCUSSED THE NATURE OF LOAN ORIGINATION FEES AND NOTED THAT IN ALLOWING REIMBURSEMENT OF THEM IT WAS THE INTENT THAT THE LENDING INSTITUTION'S ADMINISTRATIVE EXPENSES PASSED ON TO THE PURCHASER OF A RESIDENCE WOULD BE REIMBURSED, BUT NOT THAT LOAN DISCOUNTS OR POINTS WOULD BE REIMBURSED. SEE ROGER J. SALEM, B-214018, JUNE 27, 1984, 63 COMP.GEN. . THUS, THE DETERMINANT FACTORS IN MR. HOPPE'S CASE ARE WHETHER THE LOAN ASSUMPTION FEE THAT HE WAS CHARGED IS SIMILAR IN NATURE TO A LOAN ORIGINATION FEE AND THAT IT DOES NOT CONSTITUTE A LOAN DISCOUNT OR POINTS.

AS DETAILED ABOVE, MR. HOPPE HAS PROVIDED AN EXPLANATION OF THE CHARGE WHICH SHOWS THAT THE LOAN ASSUMPTION FEE IS INTENDED TO COVER THE ADMINISTRATIVE EXPENSES INCURRED IN PROCESSING THE ASSUMPTION. THIS IS IDENTICAL TO THE USUAL CHARACTERIZATION OF A LOAN ORIGINATION FEE. SEE DEAN E. TAYLOR, B-184626, FEBRUARY 12, 1976. THERE IS NO OTHER INDICATION THAT THE FEE WAS A LOAN DISCOUNT OR POINTS. ADDITIONALLY, IT DOES NOT APPEAR THAT MR. HOPPE WAS CHARGED ANOTHER FEE TO COVER CHARGES SIMILAR TO THOSE COVERED BY A LOAN ORIGINATION FEE. THUS, WE FIND THAT IN THIS CASE THE LOAN ASSUMPTION FEE PAID BY MR. HOPPE IS SIMILAR TO A LOAN ORIGINATION FEE AND MAY BE REIMBURSED.

HOWEVER, BEFORE MAKING REIMBURSEMENT, THE FBI SHOULD ENSURE AS REQUIRED BY FTR PARA. 2-6.2D THAT THE AMOUNT CLAIMED BY MR. HOPPE DOES NOT EXCEED THE AMOUNT CUSTOMARILY PAID BY A PURCHASER OF A RESIDENCE IN THE LOCALITY.

/1/ THE CLAIM WAS FORWARDED FOR AN ADVANCE DECISION BY KEVIN D. ROONEY, ASSISTANT ATTORNEY GENERAL FOR ADMINISTRATION, DEPARTMENT OF JUSTICE.