B-162673, JUN. 3, 1968

B-162673: Jun 3, 1968

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YOU INVITE ATTENTION TO THE FACT THAT IN SOUTH CAROLINA THE COST OF MORTGAGE INSURANCE FOR THE BENEFIT OF THE LENDER IS A CUSTOMARY CHARGE BY LENDING INSTITUTIONS MAKING HOME LOANS IN EXCESS OF 70 PERCENT OF THE APPRAISED VALUE OF THE REAL ESTATE. IN VIEW THEREOF AND SINCE THE LENDER RATHER THAN THE PURCHASER IS THE BENEFICIARY UNDER THE INSURANCE POLICY YOU CONSIDER THAT THE COST THEREOF IS REIMBURSABLE UNDER SECTION 4.2 OF BUREAU OF THE BUDGET CIRCULAR NO. UNDER THE CUSTOM OF THE AREA THE PURCHASE OF SUCH A POLICY IS A DEVICE USED IN LIEU OF THE USUAL TITLE SEARCH . AN ITEM WHICH IS SPECIFICALLY REIMBURSABLE UNDER SECTION 4.2 OF THE REGULATIONS . THAT DECISION IS NOT CONSTRUED AS APPLICABLE TO ANY SITUATION OTHER THAN THE SPECIFIC SITUATION THEREIN CONSIDERED.

B-162673, JUN. 3, 1968

TO MR. JOHN W. SINDERS:

WE REFER TO YOUR LETTER OF APRIL 19, 1968, REQUESTING RECONSIDERATION OF OUR DECISION OF NOVEMBER 13, 1967, WHICH SUSTAINED THE DISALLOWANCE OF YOUR CLAIM FOR $486 REPRESENTING THE COST OF A MORTGAGE GUARANTY INSURANCE POLICY PAID BY YOU AS AN ITEM OF CLOSING COSTS WHEN YOU PURCHASED A RESIDENCE INCIDENT TO YOUR TRANSFER OF OFFICIAL STATION FROM HINES, ILLINOIS, TO COLUMBIA, SOUTH CAROLINA.

YOU INVITE ATTENTION TO THE FACT THAT IN SOUTH CAROLINA THE COST OF MORTGAGE INSURANCE FOR THE BENEFIT OF THE LENDER IS A CUSTOMARY CHARGE BY LENDING INSTITUTIONS MAKING HOME LOANS IN EXCESS OF 70 PERCENT OF THE APPRAISED VALUE OF THE REAL ESTATE. THE VETERANS ADMINISTRATION REGIONAL OFFICE IN COLUMBIA, SOUTH CAROLINA, CONFIRMS SUCH FACT. IN VIEW THEREOF AND SINCE THE LENDER RATHER THAN THE PURCHASER IS THE BENEFICIARY UNDER THE INSURANCE POLICY YOU CONSIDER THAT THE COST THEREOF IS REIMBURSABLE UNDER SECTION 4.2 OF BUREAU OF THE BUDGET CIRCULAR NO. A-56. IN SUPPORT OF YOUR POSITION YOU QUOTE FROM OUR DECISION OF JUNE 27, 1967, B-161459.

THE DECISION OF JUNE 27, 1967, DEALT WITH THE QUESTION OF THE PROPRIETY OF REIMBURSING AN EMPLOYEE FOR AMOUNTS PAID FOR AN OWNER'S TITLE INSURANCE POLICY PROCURED BY THE SELLER OF THE PROPERTY FOR THE BENEFIT OF THE PURCHASER AS A MEANS OF ESTABLISHING THAT THE SELLER HAD A MARKETABLE TITLE TO SUCH PROPERTY. UNDER THE CUSTOM OF THE AREA THE PURCHASE OF SUCH A POLICY IS A DEVICE USED IN LIEU OF THE USUAL TITLE SEARCH -- AN ITEM WHICH IS SPECIFICALLY REIMBURSABLE UNDER SECTION 4.2 OF THE REGULATIONS -- AND MUST BE OBTAINED IN ORDER TO PROCURE FINANCING ON THE PROPERTY.

THAT DECISION IS NOT CONSTRUED AS APPLICABLE TO ANY SITUATION OTHER THAN THE SPECIFIC SITUATION THEREIN CONSIDERED. WE DO NOT CONSIDER IT TO HAVE ANY BEARING UPON THE PROPRIETY OF THE ALLOWANCE OF YOUR CLAIM. FOR THE REASONS STATED IN OUR DECISION OF NOVEMBER 13, 1967, TO YOU, THE AMOUNT PAID BY YOU FOR THE MORTGAGE GUARANTY INSURANCE IS NOT REIMBURSABLE AND THE DECISION OF NOVEMBER 13 HEREBY IS AFFIRMED.

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