B-223240, SEP 8, 1986, OFFICE OF GENERAL COUNSEL

B-223240, SEP 8, 1986, OFFICE OF GENERAL COUNSEL

OFFICERS AND EMPLOYEES - TRANSFERS - REAL ESTATE EXPENSES - LOAN ORIGINATION FEE DIGEST: A TRANSFERRED EMPLOYEE CLAIMED A 3 PERCENT LOAN ORIGINATION FEE, BUT THE AGENCY LIMITED REIMBURSEMENT TO 1 PERCENT. THE EMPLOYEE'S CLAIM FOR AN ADDITIONAL 2 PERCENT FEE IS RETURNED TO THE AGENCY FOR FURTHER CONSIDERATION, BECAUSE THERE IS NO INDICATION THAT THE AGENCY CONTACTED THE LOCAL OFFICE OF HUD TO DETERMINE THE CUSTOMARY LOAN ORIGINATION FEE FOR THE LOCALITY OF THE EMPLOYEE'S NEW RESIDENCE. SINCE THE RECORD SUBMITTED SHOWS THE EMPLOYEE INCURRED LOAN ORIGINATION FEES TOTALING 3 PERCENT OF THE LOAN AMOUNT, AND HIS CLAIM WAS FILED IN ACCORDANCE WITH PROVISIONS OF THE FEDERAL TRAVEL REGULATIONS ADDRESSING REQUIRED SUPPORTING DOCUMENTS, IT BECOMES THE RESPONSIBILITY OF THE DISBURSING AGENCY TO OBTAIN ANY ADDITIONAL DOCUMENTATION FROM HUD TO DISALLOW THE EMPLOYEE'S CLAIM.

MR. CONRAD R. HOFFMAN:

DIRECTOR, OFFICE OF

BUDGET AND FINANCE (CONTROLLER)

VETERANS ADMINISTRATION

WASHINGTON. D.C. 20420

YOUR LETTER OF MAY 27, 1986, ASKS OUR HELP IN DETERMINING WHAT AMOUNTS MAY BE REIMBURSED TO MR. ROBERT B. GIBNEY IN CONNECTION WITH HIS PURCHASE OF A HOME IN MONROEVILLE, PENNSYLVANIA. YOU INDICATE THAT THE VETERANS ADMINISTRATION HAS DISALLOWED PART OF MR. GIBNEY'S CLAIM BECAUSE HE FAILED TO SUBMIT A STATEMENT FROM THE LOCAL OFFICE OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) DOCUMENTING THE AMOUNT OF THE LOAN ORIGINATION FEES CUSTOMARILY CHARGED IN THE PITTSBURGH AREA. YOU FURTHER STATE THAT YOUR OFFICE "CONTINUALLY RECEIVES NOTIFICATION FROM CLAIMANTS THAT SOME LOCATIONS OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT REFUSE TO REPLY TO A REQUEST FOR THE REASONABLE AND CUSTOMARY CHARGES IN A GIVEN LOCALE FOR THE LOAN ORIGINATION FEE." FOR THE REASONS WHICH FOLLOW WE ARE RETURNING THIS MATTER TO YOU FOR FURTHER CONSIDERATION IN LIGHT OF OUR DECISION IN EGBERT H. THOMPSON AND SAM LOSOYA, B-217603 AND B-217584, SEPTEMBER 4, 1985, AND OUR IMPRESSION THAT THE AGENCY'S RESPONSIBILITY IN THIS CASE GOES FURTHER THAN YOU MAY BE AWARE.

SIMPLY STATED, MR. GIBNEY PURCHASED A HOME IN MONROEVILLE, PENNSYLVANIA, FOR WHICH THE CLOSING STATEMENT SUBMITTED AS PART OF THE RECORD HERE SHOWS A TOTAL OF 3 PERCENT LOAN ORIGINATION FEES PAID AND DOCUMENTED. BASED ON INSTRUCTIONS FROM YOUR OFFICE, THE VETERANS ADMINISTRATION PAYMENT CENTER LIMITED THE REIMBURSEMENT TO MR. GIBNEY TO 1 PERCENT PENDING A LETTER FROM HUD STATING WHAT THE REASONABLE AND CUSTOMARY FEE WAS IN THE MONROEVILLE, PENNSYLVANIA, AREA. FOR OUR CONSIDERATION YOU HAVE ENCLOSED WITH YOUR SUBMISSION A COPY OF OUR DECISION IN ROGER J. SALEM, 63 COMP.GEN. 456 (1984). THUS, THE RECORD SUBMITTED BY YOU INCLUDES DOCUMENTATION SHOWING THAT MR. GIBNEY INCURRED LOAN ORIGINATION FEES TOTALING 3 PERCENT OF THE LOAN AMOUNT, BUT YOU HAVE RESTRICTED HIS REIMBURSEMENT BECAUSE HE DID NOT PROVIDE A STATEMENT FROM THE LOCAL OFFICE OF HUD THAT WOULD PERMIT YOU TO REIMBURSE HIM ANY MORE THAN 1 PERCENT IN THIS INSTANCE.

AT THE OUTSET, WE NOTE THAT 5 U.S.C. SEC. 5724A(A)(4) (1982) AUTHORIZES REIMBURSEMENT FOR THE EXPENSES AN EMPLOYEE INCURS IN SELLING AND PURCHASING A NEW RESIDENCE PURSUANT TO A PERMANENT CHANGE OF STATION. EFFECTIVE OCTOBER 1, 1982, THE IMPLEMENTING REGULATIONS IN PARA. 2-6.2D(1) OF THE FEDERAL TRAVEL REGULATIONS (FTR), INCORP. BY REF., 41 C.F.R. SEC. 101-7.003 (1983), WERE AMENDED TO PERMIT REIMBURSEMENT FOR LOAN ORIGINATION FEES AND SIMILAR CHARGES WHICH ARE NOT SPECIFICALLY DISALLOWED BY FTR PARA. 2-6.2D(2). SEE ROBERT E. KIGERL, 62 COMP.GEN. 534 (1983). UNDER FTR PARA. 2-6.2D(1), REIMBURSEMENT FOR A LOAN ORIGINATION FEE IS LIMITED TO THE AMOUNT CUSTOMARILY CHARGED IN THE LOCALITY OF THE EMPLOYEE'S NEW RESIDENCE. SEE PATRICIA A. GRABLIN, B-211310, OCTOBER 4, 1983.

INTERPRETING THE "CUSTOMARY CHARGE" LIMITATION STATED IN FTR PARA. 2 6.D(1), WE HELD IN GARY A. CLARK, B-213740, FEBRUARY 15, 1984, THAT AN AGENCY MAY RELY ON TECHNICAL ASSISTANCE PROVIDED BY THE LOCAL OFFICE OF HUD IN DETERMINING THE CUSTOMARY LOAN ORIGINATION FEE IN A GIVEN LOCALITY. WE RECOGNIZED IN CLARK THAT THE INFORMATION SUPPLIED BY HUD DOES NOT ESTABLISH INFLEXIBLE RATES OR LIMIT THE CHARGES WHICH MAY BE IMPOSED BY LENDERS. HOWEVER, WE HELD THAT THIS INFORMATION CREATES A REBUTTABLE PRESUMPTION AS TO THE PREVAILING LOAN ORIGINATION FEE CHARGED IN THE AREA, AND IS CONTROLLING IN THE ABSENCE OF EVIDENCE OVERCOMING THAT PRESUMPTION. SEE ALSO CHRISTOPHER P. JOLLY, B-217081, MARCH 8, 1985.

IN ROGER J. SALEM, CITED ABOVE, AN EMPLOYEE INCURRED A 5 PERCENT LOAN FEE WHICH WAS CHARACTERIZED ON THE SETTLEMENT STATEMENT AS A "LOAN ORIGINATION FEE." THE AGENCY ALLOWED THE EMPLOYEE REIMBURSEMENT FOR 1 PERCENT OF THE LOAN AMOUNT, BASED ON HUD'S ADVICE THAT A 1 PERCENT LOAN ORIGINATION FEE WAS CUSTOMARY IN THE LOCALITY. WE DENIED THE EMPLOYEE'S CLAIM FOR THE ADDITIONAL 4 PERCENT, DETERMINING UNDER THE PARTICULAR CIRCUMSTANCES THAT THE BULK OF THE LENDER'S 5 PERCENT CHARGE REPRESENTED A MORTGAGE DISCOUNT OR "POINTS," REIMBURSEMENT FOR WHICH IS SPECIFICALLY PROHIBITED BY FTR PARA. 2-6.2D(2)(B). WE CONCURRED WITH THE AGENCY'S DETERMINATION TO ALLOW THE EMPLOYEE REIMBURSEMENT FOR A 1 PERCENT LOAN ORIGINATION FEE BASED ON HUD'S ADVICE, BUT CONCLUDED OUR DECISION BY SUGGESTING THAT THE PROBLEM INVOLVED IN SALEM WOULD BE AVOIDED IF FTR PARA. 2-6.2(1) WAS AMENDED TO IMPOSE A SPECIFIC PERCENTAGE LIMITATION ON REIMBURSEMENT FOR LOAN ORIGINATION FEES.

IN OUR RECENT DECISION IN THOMPSON AND LOSOYA, CITED ABOVE, WE DECLINED TO READ SALEM AS IN ITSELF IMPOSING A 1 PERCENT LIMITATION ON LOAN ORIGINATION FEES, OR AS OTHERWISE EFFECTING AN AGENCY'S RESPONSIBILITY UNDER THE EXISTING PROVISIONS OF FTR PARA. 2-6.2D(1) TO REIMBURSE SUCH FEES IN ACCORDANCE WITH INFORMATION OBTAINED FROM LOCAL OFFICES OF HUD. IN THOMPSON AND LOSOYA, THE VETERANS ADMINISTRATION (VA) HAD REDUCED TWO EMPLOYEES' CLAIMS FOR LOAN ORIGINATION FEES IN THE RESPECTIVE AMOUNTS OF 3 AND 3 1/2 PERCENT TO 1 PERCENT EACH, CITING OUR DECISION IN SALEM. DISAGREED WITH THE VA'S DETERMINATION IN BOTH INSTANCES, FINDING THAT NEITHER DETERMINATION HAD BEEN BASED ON INFORMATION OBTAINED FROM HUD. HOLDING THAT LOAN ORIGINATION FEES ARE REIMBURSABLE TO THE EXTENT THEY DO NOT EXCEED THE LOCAL, CUSTOMARY CHARGES QUOTED BY HUD, WE HANDLED THE TWO EMPLOYEES' CLAIMS AS FOLLOWS: (1) WE ALLOWED THE FIRST EMPLOYEE'S CLAIM FOR A 3 PERCENT LOAN ORIGINATION FEE, BECAUSE INFORMATION HE HAD OBTAINED INDEPENDENTLY FROM HUD SHOWED THAT FEES CUSTOMARILY CHARGED BY LOCAL LENDERS RANGED FROM 2 1/2 TO 3 1/2 PERCENT; AND (2) WE REMANDED THE SECOND EMPLOYEE'S CLAIM FOR A 3 1/2 PERCENT FEE TO THE VA, SUGGESTING THAT THE CERTIFYING OFFICER OBTAIN THE RELEVANT INFORMATION FROM HUD.

IN THIS CASE, AS IN THOMPSON AND LOSOYA, WE FIND NO INDICATION THAT YOUR OFFICE HAS CONTACTED THE LOCAL OFFICE OF HUD TO DETERMINE THE CUSTOMARY LOAN ORIGINATION FEE CHARGED IN THE MONROEVILLE, PENNSYLVANIA, AREA. YOUR AGENCY SHOULD OBTAIN THIS INFORMATION, AND THEN RESOLVE MR. GIBNEY'S CLAIM FOR ADDITIONAL REIMBURSEMENT OF LOAN ORIGINATION FEES IN ACCORDANCE WITH THE FOREGOING STANDARDS. IN SO ADVISING YOU, WE ARE ALSO MINDFUL THAT PARAGRAPH 2-6.3(A) (SUPP. 4, AUG. 23, 1982), OF THE FEDERAL TRAVEL REGULATIONS REQUIRE EMPLOYEES TO FURNISH APPROPRIATE FORMS FOR CLAIMING REIMBURSEMENT FOR EXPENSES OF REAL ESTATE TRANSACTIONS, AND THAT SUCH AMOUNTS CLAIMED MUST BE SUPPORTED BY DOCUMENTATION SHOWING THAT THE EXPENSE WAS IN FACT INCURRED AND PAID BY THE EMPLOYEE. FOR THIS PURPOSE THE REGULATION ADVISES THAT THE REQUIRED SUPPORTING DOCUMENTS SHOULD INCLUDE (1) THE SALES AGREEMENT, (2) THE PURCHASE AGREEMENT, (3) PROPERTY SETTLEMENT DOCUMENTS, (4) LOAN CLOSING STATEMENTS, AND (5) INVOICES OR RECEIPTS FOR OTHER BILLS PAID. AS YOU CAN SEE THERE IS NO AFFIRMATIVE OBLIGATION ON THE PART OF AN EMPLOYEE TO SUBMIT PARTICULARIZED FINDINGS PROVIDED BY HUD TO SUPPORT THEIR ENTITLEMENTS. RATHER, WE FIND THAT THE ENTIRE THRUST OF PARA. 2-6.3(A) OF THE FTR IS TO PROVIDE THE AGENCY WITH A RESOURCE, NAMELY HUD, TO ASSIST IN DETERMINING WHETHER THE EMPLOYEE'S CLAIMED ENTITLEMENT IS IN ANY WAY EXCESSIVE GIVEN THE CONDITIONS IN THE LOCAL GEOGRAPHIC AREA. AS A RESULT, ONCE THE EMPLOYEE HAS SUBMITTED THE SUPPORTING DOCUMENTATION IN ACCORDANCE WITH CURRENTLY APPLICABLE FTR PROVISIONS, IT BECOMES THE RESPONSIBILITY OF THE DISBURSING AGENCY, THE VETERANS ADMINISTRATION IN THIS CASE, TO OBTAIN ANY DOCUMENTATION WHICH MAY BE REQUIRED TO DISALLOW THE EMPLOYEE'S CLAIM.

WE ARE ENCLOSING A COPY OF THE THOMPSON AND LOSOYA DECISION, WITH THE HOPE THAT THIS INFORMATION WILL BE OF ASSISTANCE TO YOU.