B-251556, March 31, 1993

B-251556: Mar 31, 1993

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CIVILIAN PERSONNEL Relocation Residence transaction expenses Loan origination fees Reimbursement Amount determination Claim for reimbursement of a loan origination fee in excess of 1 percent of the loan amount is denied because the lender's administrative charges are not itemized as required by section 302-6.2(d)(1)(ii) of the Federal Travel Regulation. Or a mortgage discount and is customary in the area do not satisfy the itemization requirement. You have denied reimbursement on the basis of our decision Sherree W. You ask that we reconsider our position on the basis that most lenders cannot or will not itemize their administrative costs involved in their loan origination fees. The Federal Travel Regulations were changed in 1987 to limit reimbursement of loan origination fees to 1 percent unless an itemization of the lender's administrative charges is provided.

B-251556, March 31, 1993

CIVILIAN PERSONNEL Relocation Residence transaction expenses Loan origination fees Reimbursement Amount determination Claim for reimbursement of a loan origination fee in excess of 1 percent of the loan amount is denied because the lender's administrative charges are not itemized as required by section 302-6.2(d)(1)(ii) of the Federal Travel Regulation. General, explanatory letters from the lender indicating that the fee does not include interest, points, or a mortgage discount and is customary in the area do not satisfy the itemization requirement.

Mr. Claude F. Pickelsimer, Jr. Director, Financial Management Office Centers for Disease Control Department of Health & Human Services Atlanta, Ga. 30333

Dear Mr. Pickelsimer:

This further replies to your letter of December 1, 1992, concerning whether Mr. Billy R. Litchfield, Jr., an employee of Centers for Disease Control (CDC), Department of Health & Human Services, may be reimbursed for a loan origination fee more than 1 percent of the loan amount without an itemization of the lender's administrative charges involved in the loan origination fee. You have denied reimbursement on the basis of our decision Sherree W. Anderson, B-246809, Mar. 31, 1992, but you ask that we reconsider our position on the basis that most lenders cannot or will not itemize their administrative costs involved in their loan origination fees.

As explained in Wayne Pfeffer, B-234288, Feb. 8, 1990, cited in the Anderson decision, the Federal Travel Regulations were changed in 1987 to limit reimbursement of loan origination fees to 1 percent unless an itemization of the lender's administrative charges is provided. This is in furtherance of the requirement to show by clear and convincing evidence that the amount charged does not include prepaid interest, points, or a mortgage discount. The general limitation of 1 percent was established with the view that, except in unusual cases, it provides a fair and sufficient reimbursement for legitimate administrative costs.

Our decisions rendered in 1990 that were cited in Sherree W. Anderson clearly established that general explanatory letters from the lender, such as are involved in Mr. Litchfield's case, are not sufficient to satisfy the itemization requirement. Copies of those decisions are enclosed. While the CDC travel office helping Mr. Litchfield with his relocation may have been unaware of the requirements of the regulations and our decisions interpreting them, the regulations as interpreted by those earlier decisions required an itemization long before Mr. Litchfield relocated. Any erroneous advice he may have received about the itemization requirement cannot serve as a basis to authorize reimbursement contrary to the requirements of the regulations. Riva Fralick, et al., 64 Comp.Gen. 472 (1985).

It is our view that the Sherree W. Anderson decision and decisions cited therein correctly interpret the itemization requirement stated in section 302-6.2(d)(1)(ii) of the Federal Travel Regulation. Since Mr. Litchfield has not provided the required itemization, your disallowance of the amount he claims in excess of 1 percent was correct and it is sustained.