B-241986, Aug 15, 1991

B-241986: Aug 15, 1991

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An employee was authorized relocation expenses under the Federal Travel Regulation (FTR). In circumstances where original mortgagor was unable to be contacted because it is now defunct. To the effect that the employee was required to take out an owner's title insurance policy as a prerequisite to financing on his new residence is sufficient to permit reimbursement of employee's costs for such a policy. Mortgage insurance or insurance against loss or damage of property is a nonreimbursable item of relocation expenses. Thus employee's claim for reimbursement of a mortgage insurance premium is denied. These charges are reimbursable as incidental expenses under the FTR. Although original mortgagor was unable to be contacted because it is now defunct.

B-241986, Aug 15, 1991

CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Mortgage insurance - Reimbursement DIGEST: 1. An employee was authorized relocation expenses under the Federal Travel Regulation (FTR). In circumstances where original mortgagor was unable to be contacted because it is now defunct, secondary evidence supplied by another mortgagor, which now holds employee's mortgage, and by the Department of Housing and Urban Development, to the effect that the employee was required to take out an owner's title insurance policy as a prerequisite to financing on his new residence is sufficient to permit reimbursement of employee's costs for such a policy. FTR, 41 C.F.R. Sec. 302-6.2(d)(1)(ix) (1990). CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Property titles - Insurance premiums - Reimbursement 2. Mortgage insurance or insurance against loss or damage of property is a nonreimbursable item of relocation expenses, and thus employee's claim for reimbursement of a mortgage insurance premium is denied. FTR, 41 C.F.R. Sec. 302-6.2(d)(2)(i) (1990). CIVILIAN PERSONNEL - Relocation - Miscellaneous expenses - Reimbursement - Eligibility 3. Employee claims miscellaneous expenses (courier and messenger services). If required by mortgagor, these charges are reimbursable as incidental expenses under the FTR, 41 C.F.R. Sec. 302-6.2(f) (1990). Although original mortgagor was unable to be contacted because it is now defunct, we believe that the Settlement Statement, which shows that these costs were imposed by the original mortgagor and paid for by the employee, and the employee's own statement of his claim constitute sufficient secondary evidence that these costs were required by the mortgagor. Thus, employee's claim for these expenses is granted. CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Broker fees - Reimbursement 4. Employee's claim for reimbursement of a real estate commission paid to a broker for the purchase of the employee's residence at his new duty station is not reimbursable. FTR, 41 C.F.R. Sec. 302-6.2(a) (1990). CIVILIAN PERSONNEL - Relocation - Meritorious claims 5. The record does not establish that an employee was given erroneous advice, or justifiably and detrimentally relied on such advice. Thus, we do not find that there is an appropriate basis for reporting his denied claims to Congress under the Meritorious Claims Act, 31 U.S.C. Sec. 3702(d) (1988).

James A. Holmes - Relocation Expenses:

The United States Department of Agriculture (USDA) requests our decision on reimbursement of four items of relocation expenses, totaling $4,944.40 claimed on vouchers submitted by Mr. James A. Holmes, a USDA employee. /1/ For the following reasons, we allow only $495 of Mr. Holmes' claims to be certified for payment.

The USDA authorized Mr. Holmes a permanent change of station from Mobile, Alabama, to Galveston, Texas, in 1989. In connection with that transfer he was also authorized relocation expenses under the Federal Travel Regulation (FTR). After examination by USDA, the following four items, totaling $4,944.40, remain in dispute: a claim of $405 for the owner's title insurance policy portion of his mortgage title insurance; a mortgage insurance premium in the amount of $1,949.40; miscellaneous expenses (courier and messenger services) for $90; a real estate broker's commission for purchase of a new residence in the amount of $2,500. will treat these items seriatim.

Mr. Holmes' first claim of $405 is for the owner's title insurance policy portion of his mortgage title insurance policy. /2/ Title 41 C.F.R. Sec. 302-6.2(d)(1)(ix) (1990) of the FTR does not permit reimbursement for the cost of an owner's title insurance policy unless (1) it is a prerequisite to financing or the transfer of the property, or (2) it is inseparable from the cost of other insurance which is a prerequisite to financing or the transfer of the property.

In the present case, USDA was unable to contact the Mortgage Credit Corporation which originally held the mortgage on Mr. Holmes' property since it is now defunct. However, USDA contacted Knutson Mortgage Corporation, which now holds Mr. Holmes' mortgage, and was informed that it does require that an owner's title insurance policy be taken out as a prerequisite to financing, especially when the residence is purchased from the Department of Housing and Urban Development (HUD), as Mr. Holmes did. USDA also contacted the HUD office in Houston, Texas, and was advised that it is customary in Texas, and very often a mortgagee requirement, for the mortgagor to purchase an owner's title insurance policy at settlement. USDA was also advised that the policy fees are set by the State of Texas Insurance Board and are not competitive.

In these circumstances, we believe that there is sufficient secondary evidence to conclude that the owner's title insurance policy purchased by Mr. Holmes for $405 was a prerequisite to financing on his new residence, and thus is allowable under the FTR, 41 C.F.R. Sec. 302 6.2(d)(1)(ix) (1990). See James A. Schampers, B-233484, July 6, 1990, 69 Comp.Gen. 573, and Guenther Moehrke, B-221059, Aug. 18, 1986.

Mr. Holmes' next claim is for a mortgage insurance premium of $1,949.40. Under the FTR, 41 C.F.R. Sec. 302-6.2(d)(2)(i) (1990), "mortgage insurance or insurance against loss or damage of property" is clearly a nonreimbursable item. See Daniel T. Mates, B-217822, June 20, 1985. Thus, Mr. Holmes' claim for $1,949.40 is denied.

Mr. Holmes also claims $90 in miscellaneous expenses courier and messenger services), which Mr. Holmes paid to the now defunct Mortgage Credit Corporation at settlement. The FTR, 41 C.F.R. Sec. 302-6.2(f) (1990), authorizes reimbursement for other incidental charges which are imposed on a transferred employee as a required service in selling and purchasing residences. Thus, if these costs were required by the mortgagor, they may be reimbursed. 69 Comp.Gen. ***, supra.

Although the original mortgagor, Mortgage Credit Corporation, is now defunct, we believe that the Settlement Statement, which shows that these costs were imposed by the mortgagor and paid for by Mr. Holmes, and Mr. Holmes' own statement of his claim constitute sufficient secondary evidence that these costs were required by the mortgagor. Thus, Mr. Holmes' claim for $90 in miscellaneous expenses is granted.

Finally, Mr. Holmes claims $2,500 for reimbursement of a real estate commission paid to HUD, acting as a broker, for the purchase of his residence at his new duty station. However, the FTR, 41 C.F.R. Sec. 302- 6.2(a) (1990), in relevant part, provides:

"No such broker's fee or real estate commission is reimbursable in connection with the purchase of a home at the new official station."

Thus, Mr. Holmes' claim of $2,500 for a real estate commission is denied.

The USDA also requests whether our Office would be willing to refer any of Mr. Holmes' denied claims to Congress. Under the Meritorious Claims, 31 U.S.C. Sec. 3702(d) (1988), we may refer to Congress certain claims on which we may not authorize payment, but which we believe congress should consider for equitable reasons. See John H. Teele, 65 Comp.Gen. 679 (1986). The record does not establish that Mr. Holmes was given erroneous advice, or justifiably and detrimentally relied on such advice. Thus, we do not find that there is an appropriate basis for reporting his denied claims to Congress under the Meritorious Claims Act, 31 U.S.C. Sec. 3702(d) (1988).

Accordingly, USDA may certify only $495 of Mr. Holmes' claims on his vouchers for payment.

/1/ This matter was submitted by Ms. Jeanne DiGange, Authorized Certifying Officer, USDA, National Finance Center, New Orleans, Louisiana.

/2/ On Mr. Holmes' reclaim voucher, this claim was conjoined with a title search fee claim of $175, and these claims appear in the total amount of $580. The USDA has granted Mr. Holmes' request for reimbursement of the title search fee of $175.