B-169708, JUL 19, 1971

B-169708, JUL 19, 1971

CIVILIAN EMPLOYEE - CHANGE OF STATION - SALE AND PURCHASE OF RESIDENCE DECISION ALLOWING IN PART CLAIM FOR REIMBURSEMENT OF EXPENSES INCURRED BY HAROLD T. SMITH INCIDENT TO THE TRANSFER OF OFFICIAL STATION FROM KANSAS CITY, MO., TO DENVER, COLO., AND BACK TO KANSAS CITY, WHILE AN EMPLOYEE OF THE OFFICE OF ECONOMIC OPPORTUNITY. THE LENDER'S APPRAISAL FEE OF $50 AND A $10 CREDIT REPORT CHARGE ARE ALLOWABLE EXPENSES. HOWEVER, ATTORNEYS' FEES OF $454.30 MUST BE ITEMIZED TO REFLECT THE TYPE OF SERVICES ALLOWABLE UNDER SECTION 4.2(C) OF OMB CIR. NO. A-56. FURTHER, THE CLAIM FOR $6,117 REPRESENTING ADDITIONAL INTEREST COST OF AN 8 PERCENT MORTGAGE AS COMPARED WITH THE 6 PERCENT MORTGAGE ON CLAIMANT'S FORMER HOME MUST BE DISALLOWED UNDER OMB CIR. NO. A-56, SECTIONS 4.2(D) AND (E).

TO MR. HAROLD T. SMITH:

FURTHER REFERENCE IS MADE TO YOUR CLAIM FOR ADDITIONAL REIMBURSEMENT OF EXPENSES INCIDENT TO THE TRANSFER OF YOUR OFFICIAL DUTY STATION FROM KANSAS CITY, MISSOURI, TO DENVER, COLORADO, AND BACK TO KANSAS CITY, WHILE AN EMPLOYEE OF THE OFFICE OF ECONOMIC OPPORTUNITY.

THE RECORD SHOWS THAT YOUR OFFICIAL DUTY STATION WAS TRANSFERRED FROM KANSAS CITY, MISSOURI, TO DENVER, COLORADO, EFFECTIVE JANUARY 5, 1970 (STANDARD FORM 50, JANUARY 2, 1970). WHEN YOU REPORTED ON THAT DAY, IT WAS DISCOVERED THAT THERE WAS A LACK OF OFFICE SPACE AND YOU WERE "OUTSTATIONED" BACK TO THE KANSAS CITY OFFICE OF THE OFFICE OF ECONOMIC OPPORTUNITY. STANDARD FORM 50, ISSUED MARCH 13, 1970, CORRECTED PRIOR PERSONNEL ACTION EFFECTIVE JANUARY 5, 1970, TO REFLECT THE "OUTSTATIONING" AT KANSAS CITY, AND NOTED THAT THE ACTUAL MOVE TO DENVER WOULD BE ACCOMPLISHED AFTER JUNE 1, 1970, DEPENDENT UPON THE AVAILABILITY OF SPACE. BY STANDARD FORM 50, DATED AUGUST 7, 1970, YOUR OFFICIAL DUTY STATION WAS TRANSFERRED FROM DENVER TO KANSAS CITY, EFFECTIVE AUGUST 9, 1970.

IN YOUR CURRENT VOUCHER YOU CLAIM LOAN ORIGINATION, APPRAISAL, AND CREDIT REPORT FEES, WHICH WERE PREVIOUSLY DISALLOWED BY OUR CLAIMS DIVISION. ADDITION, YOU NOW CLAIM REIMBURSEMENT FOR ATTORNEY'S FEES, ADDITIONAL MORTGAGE INTEREST, TEMPORARY QUARTERS ALLOWANCE FOR THE PERIOD FROM JANUARY 17 TO AUGUST 8, 1970, AND YOUR SON'S SCHOOL TRANSPORTATION COST WHILE OCCUPYING TEMPORARY QUARTERS FROM JANUARY 7 TO 16, 1970.

ON DECEMBER 22, 1969, AFTER RECEIPT OF TRAVEL AUTHORIZATION DATED DECEMBER 4, 1969, YOU ENTERED INTO A CONTRACT FOR THE SALE OF YOUR RESIDENCE AT 11408 EAST 62ND STREET, RAYTOWN, MISSOURI, AND THE SALE WAS COMPLETED ON JANUARY 6, 1970. ON JANUARY 8, 1970, AFTER TRANSFER BACK TO KANSAS CITY, YOU CONTRACTED FOR THE PURCHASE OF ANOTHER RESIDENCE AT 11212 EAST 61ST TERRACE, RAYTOWN, MISSOURI. THIS PURCHASE WAS COMPLETED ON JANUARY 17, 1970. IN CONNECTION WITH THAT PURCHASE YOU NOW RECLAIM REIMBURSEMENT FOR THE LENDER'S LOAN ORIGINATION FEE OF $230, LENDER'S APPRAISAL FEE OF $50, AND A $10 CREDIT REPORT CHARGE, WHICH WERE DISALLOWED BY OFFICE SETTLEMENT OF JUNE 19, 1970.

SECTION 4.2D OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969, PROVIDES THAT NO FEE, COST, CHARGE, OR EXPENSE IS REIMBURSABLE WHICH IS DETERMINED TO BE A PART OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT, TITLE I, PUBLIC LAW 90-321, AND REGULATION Z ISSUED PURSUANT THERETO BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

SUPPLEMENTING SECTION 106 OF THE ACT (15 U.S.C. 1605), SECTION 226.4(A) OF REGULATION Z (12 CFR, PART 226), EFFECTIVE JULY 1, 1969, PROVIDES THAT FINANCE CHARGES INCLUDE LOAN FEE, POINTS, FINDER'S FEE, OR SIMILAR CHARGE. A LOAN ORIGINATION FEE IS A FINANCE CHARGE AND REIMBURSEMENT IS NOT AUTHORIZED UNDER CIRCULAR A-56, AS REVISED. DECISION B-168407, DECEMBER 22, 1969, AND DECISION B-171056, NOVEMBER 27, 1970, COPIES ENCLOSED.

SECTION 226.4(A) ALSO PROVIDES, GENERALLY, THAT APPRAISAL FEES AND CHARGES FOR CREDIT REPORTS ARE INCLUDED AS FINANCE CHARGES. HOWEVER, IF THEY ARE MADE IN CONNECTION WITH ANY REAL PROPERTY TRANSACTION, PROVIDED THEY ARE BONA FIDE, REASONABLE IN AMOUNT, AND NOT FOR THE PURPOSE OF CIRCUMVENTION OR EVASION OF THIS PART, THEY ARE NOT INCLUDED AS FINANCE CHARGES (SECTION 226.4(E). IN THE PRESENT CIRCUMSTANCES REIMBURSEMENT MAY BE MADE FOR THE CREDIT REPORT CHARGE AND FOR THE LENDER'S APPRAISAL FEE. SEE DECISION B-171056, SUPRA.

YOU NOW CLAIM REIMBURSEMENT FOR ATTORNEYS' FEES OF $454.30, AND YOU HAVE SUBMITTED AN UNITEMIZED BILL FOR THAT AMOUNT WHICH ONLY INDICATES THAT SERVICES WERE RENDERED TO SEPTEMBER 29, 1970. YOU SAY THAT THE SERVICES WERE FOR THE PERIOD FROM MARCH 20 TO SEPTEMBER 29, 1970, AND WERE NECESSARY IN THE CIRCUMSTANCES AS THE AGENCY PERSONNEL OFFICER DID NOT GUIDE NOR COUNSEL YOU, ALTHOUGH SUCH ASSISTANCE WAS REQUESTED.

SECTION 4.2 OF CIRCULAR NO. A-56 PROVIDES AS FOLLOWS:

"C. LEGAL AND RELATED COSTS. TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES, THE FOLLOWING EXPENSES ARE REIMBURSABLE WITH RESPECT TO THE SALE AND PURCHASE OF RESIDENCES IF THEY ARE CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION OR IF CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE; COSTS OF (1) SEARCHING TITLE, PREPARING ABSTRACT, AND LEGAL FEES FOR A TITLE OPINION, OR (2) WHERE CUSTOMARILY FURNISHED BY THE SELLER, THE COST OF A TITLE INSURANCE POLICY; COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS, AND CONTRACTS; RELATED NOTARY FEES AND RECORDING FEES; COSTS OF MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES; AND SIMILAR EXPENSES. COSTS OF LITIGATION ARE NOT REIMBURSABLE."

WE HAVE HELD THAT THE ABOVE PROVISION DOES NOT PERMIT THE PAYMENT OF AN INCLUSIVE LEGAL FEE, AND THAT ONLY THOSE PARTS OF SUCH FEE WHICH REPRESENT SERVICES OF THE TYPE ENUMERATED THEREIN, AND NOT LEGAL REPRESENTATION AND COUNSELING, ARE REIMBURSABLE. SEE DECISION B 169621, JUNE 25, 1970, COPY ENCLOSED.

AS THE LEGAL SERVICES PERFORMED HAVE NOT BEEN ITEMIZED, AND, ALSO, AS IT APPEARS THAT THEY DID NOT INCLUDE SERVICES OF A TYPE REFERRED TO IN SECTION 4.2C, ABOVE, AS REIMBURSABLE, REIMBURSEMENT FOR SUCH FEES MAY NOT BE AUTHORIZED.

YOU CLAIM PAYMENT OF $6,117, THE ANTICIPATED ADDITIONAL INTEREST COST OF YOUR PRESENT 8 PERCENT MORTGAGE, AS COMPARED WITH THE 6 PERCENT MORTGAGE ON YOUR FORMER HOME, FOR THE 25-YEAR TERM OF EACH MORTGAGE.

SECTION 4.1 OF CIRCULAR NO. A-56 PROVIDES THAT THE GOVERNMENT WILL REIMBURSE AN EMPLOYEE FOR EXPENSES REQUIRED TO BE PAID BY HIM IN CONNECTION WITH THE SALE OF ONE RESIDENCE AT HIS OLD OFFICIAL STATION AND THE PURCHASE OF ONE DWELLING AT HIS NEW OFFICIAL STATION. SECTION 4.2D PROVIDES THAT INTEREST ON LOANS, POINTS, AND MORTGAGE DISCOUNTS ARE NOT REIMBURSABLE. ADDITIONALLY, SECTION 4.2 PROVIDES AS FOLLOWS:

"E. LOSSES DUE TO PRICES OR MARKET CONDITIONS AT THE OLD AND NEW POSTS OF DUTY. LOSSES DUE TO FAILURE TO SELL A RESIDENCE AT THE OLD OFFICIAL STATION AT THE PRICE ASKED, OR AT ITS CURRENT APPRAISED VALUE, OR AT ITS ORIGINAL COST, OR DUE TO FAILURE TO BUY A DWELLING AT THE NEW OFFICIAL STATION AT A PRICE COMPARABLE TO THE SELLING PRICE OF THE RESIDENCE AT THE OLD OFFICIAL STATION, AND ANY SIMILAR LOSSES, ARE NOT REIMBURSABLE."

REIMBURSEMENT MAY BE MADE FOR CERTAIN EXPENSES WHICH ARE PAID BY AN EMPLOYEE AT OR ABOUT THE TIME OF THE SALE OR PURCHASE OF A RESIDENCE. UPON PURCHASE OF YOUR HOME YOU DID NOT PAY $6,117 IN INTEREST CHARGES, WHICH ARE ANTICIPATED FUTURE COSTS, AND WHICH IN ANY EVENT, WOULD NOT BE REIMBURSABLE IN ACCORD WITH SECTION 4.2D. WE VIEW THE ACCEPTANCE OF A MORTGAGE WITH AN 8 PERCENT INTEREST RATE ON YOUR NEW HOME, WHERE THE MORTGAGE INTEREST RATE WAS 6 PERCENT ON THE HOME SOLD IN CONNECTION WITH A TRANSFER OF YOUR DUTY STATION, TO BE A "SIMILAR LOSS" WITHIN THE SCOPE OF 4.2E OF THE CIRCULAR. FOR THESE REASONS, YOUR CLAIM FOR ANTICIPATED INTEREST CHARGES OF $6,117, IS DISALLOWED.

IN YOUR VOUCHER YOU CLAIM ADDITIONAL TEMPORARY QUARTERS ALLOWANCE FOR PERIODS FROM JANUARY 17 TO 25, JANUARY 26 TO JUNE 14, JUNE 15 TO 23, AND JUNE 24 TO AUGUST 8, 1970. YOU RECEIVED THE ALLOWANCE FOR THE PERIOD FROM JANUARY 6 THROUGH 16, 1970.

SECTION 2.5 OF THE CIRCULAR PROVIDES FOR PAYMENT OF SUBSISTENCE EXPENSES OF AN EMPLOYEE AND HIS IMMEDIATE FAMILY WHILE OCCUPYING TEMPORARY QUARTERS WHEN AN EMPLOYEE IS TRANSFERRED TO A NEW OFFICIAL STATION. WHEN THE NEW OFFICIAL STATION IS LOCATED IN THE 50 STATES, THE EXPENSES MAY BE PAID FOR A PERIOD OF NOT MORE THAN 30 CONSECUTIVE DAYS WHILE NECESSARILY OCCUPYING TEMPORARY QUARTERS.

WE HAVE HELD THAT THERE IS NO ENTITLEMENT TO THE ALLOWANCE WHERE AN EMPLOYEE OR HIS FAMILY OCCUPIES PERMANENT QUARTERS AT THE NEW STATION. SEE DECISION B-161363, MAY 8, 1967, COPY ENCLOSED.

YOUR IMMEDIATE "OUTSTATIONING" FROM DENVER TO KANSAS CITY ON JANUARY 5, 1970, SERVED TO TRANSFER YOUR DUTY STATION BACK FROM DENVER TO KANSAS CITY, AS OF THAT DATE. FROM JANUARY 6 THROUGH 16, 1970, YOU AND YOUR FAMILY RESIDED AT MOTELS AT INDEPENDENCE, MISSOURI, AND YOU HAVE RECEIVED TEMPORARY QUARTERS ALLOWANCE FOR THIS PERIOD. HOWEVER, ON JANUARY 17, 1970, THE PURCHASE OF YOUR RESIDENCE AT 11212 EAST 61ST TERRACE, RAYTOWN, WAS COMPLETED AND WE ASSUME YOU MOVED INTO THE RESIDENCE AT THAT TIME. NOTE THAT YOU HAVE NOT SUBMITTED RECEIPTS FOR MOTELS OR OTHER ACCOMMODATIONS FOR ANY PERIOD AFTER JANUARY 17, 1970. ACCORDINGLY, WE MUST HOLD THAT YOU ARE NOT ENTITLED TO TEMPORARY QUARTERS ALLOWANCE FOR THE ADDITIONAL PERIOD CLAIMED.

YOU CLAIM $16 FOR YOUR SON'S TRANSPORTATION FROM THE RAMADA INN TO NORFLEET SCHOOL FOR THE PERIOD FROM JANUARY 7 TO 16, 1970, DURING WHICH TIME YOU OCCUPIED TEMPORARY QUARTERS. SECTION 2.5D(1) OF CIRCULAR A-56 STATES THAT EXPENSES OF LOCAL TRANSPORTATION INCURRED FOR ANY PURPOSE DURING OCCUPANCY OF TEMPORARY QUARTERS WILL BE DISALLOWED. IN VIEW OF THIS PROVISION, EXPENSES OF YOUR SON'S TRANSPORTATION TO SCHOOL WHILE OCCUPYING TEMPORARY QUARTERS ARE DENIED.

A SETTLEMENT WILL BE ISSUED IN YOUR FAVOR IN DUE COURSE FOR THE CREDIT REPORT CHARGE OF $10 AND FOR THE LENDER'S APPRAISAL FEE OF $50.