B-237436, Dec 20, 1989

B-237436: Dec 20, 1989

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CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Mortgage insurance - Reimbursement CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Finance charges DIGEST: This summary letter decision addresses well established rules which have been discussed in previous Comptroller General decisions. The underwriter's fee is not reimbursable. Explains that the underwriter's fee was assessed by the lender as part of the loan approval process and was necessary to secure the loan. HHS properly determined that the fee was a finance charge. Para. 2-6.2c provides that survey fees are reimbursable if they are customarily paid by the buyer. Rains can document that the fee she paid was for such a customarily required service.

B-237436, Dec 20, 1989

CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Mortgage insurance - Reimbursement CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Finance charges DIGEST: This summary letter decision addresses well established rules which have been discussed in previous Comptroller General decisions. To locate substantive decisions addressing this issue, refer to decisions indexed under the above listed index entry.

Rita H. Rains:

The Department of Health and Human Services (HHS) asks whether a reclaim voucher presented by Ms. Rita H. Rains for real estate expenses she incurred when she purchased a new residence in Oklahoma City, Oklahoma, incident to a transfer, should be certified for payment. The underwriter's fee is not reimbursable; however, the claims for survey fees and title insurance expenses may be allowed provided Ms. Rains presents additional evidence.

Underwriter's Fee

The title company's letter of August 3, 1989, explains that the underwriter's fee was assessed by the lender as part of the loan approval process and was necessary to secure the loan. Therefore, HHS properly determined that the fee was a finance charge, and Federal Travel Regulations (FTR), para. 2-6.2d(2)(e) (Supp. 4, Aug. 23, 1982), incorp. by ref., 41 C.F.R. Sec. 101-7.003 (1989), prohibits reimbursement. See Kenneth R. Pedde, B-223797, Apr. 20, 1987, and cases cited.

Survey Fee

FTR, para. 2-6.2c provides that survey fees are reimbursable if they are customarily paid by the buyer. Dennis R. Smetana, B-206051, Sept. 29, 1982. In the absence of evidence showing custom, HHS properly denied reimbursement, but offered the claimant the opportunity to present documentation showing that buyers in Oklahoma City customarily pay survey fees as a required service for the transfer of ownership. See Louis H. Schwartz, B-231485, Jan. 19, 1989. If Ms. Rains can document that the fee she paid was for such a customarily required service, she may be entitled to reimbursement.

Title Insurance

Ms. Rains claimed one-half the total title insurance expenses of $529, which included lender's coverage, owner's coverage and title examination. Since the cost of owner's coverage ordinarily is not reimbursable, HHS disallowed the claim for $264.50. The agency, however, erroneously concluded that where the costs of lender's and owner's coverage are combined in a single bill, reimbursable costs are inseparable.

FTR, para. 2-6.2d(1)(h) specifically provides for reimbursement of lender's title insurance policy charges.

George C. Souders, B-233361, Apr. 7, 1989, 68 Comp.Gen. ***. Recognizing that the cost of title search and related expenses included in the charge for owner's title insurance is reimbursable, we have held that an employee may be reimbursed for an amount equal to the cost of the lender's title insurance policy if purchased separately. James R. Hladick, Jr., 66 Comp.Gen.206 (1987). Here, if Ms. Rains can document the cost of the lender's coverage if purchased alone, HHS may determine the proper allocation of the reimbursable title expenses by subtracting from the cost of the owner's policy the cost of the lender's coverage if purchased separately. See James R. Hladick, Jr., 66 Comp.Gen. 206, supra.