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B-164604, OCT. 21, 1968

B-164604 Oct 21, 1968
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SCHULLERY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 13. WHICH WAS THE SUBJECT OF OUR DECISION OF JULY 29. WE HAVE REVIEWED THE FACTS OF THE CASE INVOLVED IN THAT DECISION IN THE LIGHT OF A LETTER FURNISHED THE CLAIMANT. BECAUSE THERE WAS AN APPARENT CONFLICT BETWEEN THE STATEMENTS IN THAT LETTER AND THOSE CONTAINED IN THE LETTER OF THE DIRECTOR. THE SELLERS ARE PAYING THE BUYERS' CLOSING COSTS. IT IS NORMAL AND EXPECTED THAT THE SELLER PAY THE BUYERS' CLOSING COSTS IN THE OKLAHOMA CITY AREA.'. THE LETTER OF THE MIDLAND MORTGAGE COMPANY WAS IN PERTINENT PART AS FOLLOWS: "IT MAY BE TRUE THAT IN SOME AREAS OF THE UNITED STATES IT IS CUSTOMARY FOR THE PURCHASER TO PAY THE LOAN EXPENSES.

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B-164604, OCT. 21, 1968

TO MR. R. J. SCHULLERY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 13, 1968, YOUR REFERENCE MS-430, WHICH WAS THE SUBJECT OF OUR DECISION OF JULY 29, 1968, B-164604.

PURSUANT TO A CONGRESSIONAL REQUEST, WE HAVE REVIEWED THE FACTS OF THE CASE INVOLVED IN THAT DECISION IN THE LIGHT OF A LETTER FURNISHED THE CLAIMANT, MR. LOUIS H. JACOBSEN, BY THE MIDLAND MORTGAGE COMPANY OF OKLAHOMA CITY, OKLAHOMA. BECAUSE THERE WAS AN APPARENT CONFLICT BETWEEN THE STATEMENTS IN THAT LETTER AND THOSE CONTAINED IN THE LETTER OF THE DIRECTOR, OKLAHOMA CITY OFFICE, FEDERAL HOUSING ADMINISTRATION, WE ASKED THAT OFFICE TO FURNISH US A FURTHER REPORT. ON SEPTEMBER 30, 1968, THE DIRECTOR OF THE OKLAHOMA CITY OFFICE ADVISED US AS FOLLOWS: "AT THE PRESENT TIME, AND THIS HAS BEEN THE CASE FOR THE LAST COUPLE OF YEARS, THE SELLERS ARE PAYING THE BUYERS' CLOSING COSTS. "WHEN A BUYER HAS PAID HIS CLOSING COSTS DIRECT TO THE LENDER HE HAS GENERALLY EFFECTED A REDUCTION IN THE SALES PRICE OF THE PROPERTY. "IN SUMMARY, IT IS NORMAL AND EXPECTED THAT THE SELLER PAY THE BUYERS' CLOSING COSTS IN THE OKLAHOMA CITY AREA.'

THE LETTER OF THE MIDLAND MORTGAGE COMPANY WAS IN PERTINENT PART AS FOLLOWS: "IT MAY BE TRUE THAT IN SOME AREAS OF THE UNITED STATES IT IS CUSTOMARY FOR THE PURCHASER TO PAY THE LOAN EXPENSES, BUT FOR SEVERAL YEARS IN THIS AREA IT HAS BECOME CUSTOMARY FOR THE SELLER TO PAY THE LOAN EXPENSE IN PRACTICALLY EVERY CASE.'

IN VIEW OF THE EVIDENCE NOW IN THE FILE, IT CLEARLY APPEARS THAT IT IS CUSTOMARY FOR THE SELLER OF RESIDENTIAL REAL PROPERTY IN THE OKLAHOMA CITY AREA TO PAY EXPENSES REFERRED TO AS "LOAN EXPENSE" OR "BUYER'S CLOSING COSTS.' IN MR. JACOBSEN'S CASE THOSE EXPENSES INCLUDED THE LOAN ORIGINATION FEE, AND CHARGES FOR PHOTOS AND AMORTIZATION SCHEDULE, ATTORNEY EXAMINATION, SURVEY, CREDIT REPORT AND ABSTRACTING, FILING AND MORTGAGE GUARANTY. ACCORDINGLY, IT IS CONCLUDED THAT MR. JACOBSEN IS ENTITLED TO RETAIN THE AMOUNT PREVIOUSLY REIMBURSED FOR CLOSING COSTS WHICH HE PAID IF OTHERWISE PROPER. IN THAT CONNECTION, MR. JACOBSEN'S VOUCHER CONTAINED AN ITEM FOR $81.25, WHICH IS IDENTIFIED AS CHARGES FOR ABSTRACTING, FILING, AND MORTGAGE GUARANTY. TO THE EXTENT OF THE AMOUNT INCLUDED IN SUCH ITEM FOR THE COST OF MORTGAGE GUARANTY INSURANCE, IT WOULD NOT BE ALLOWABLE AND SHOULD BE RECOVERED. SEE B-162673, NOVEMBER 13, 1967, COPY ENCLOSED.

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