B-169158, APR. 15, 1970
Highlights
NOTWITHSTANDING LENDER STATES ASSUMPTION TRANSFER FEE IS NOT FINANCE CHARGE BUT 1% ASSESSMENT COVERING EXPENSE OF TRANSFERRING LOAN TO BUYER. SINCE LOAN ASSUMPTION OR TRANSFER FEE IS REGARDED AS FINANCE CHARGE UNDER 12 CFR. HENDRIX: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 11. WHICH WAS THE DATE OF THE CLOSING STATEMENT. THE CLAIM WAS ADMINISTRATIVELY DISALLOWED ON THE GROUND THAT IN B-164906. OUR OFFICE STATED THAT ASSUMPTION FEE IS DEFINED AS A SIMILAR FEE TO LOAN APPLICATION OR LOAN ORIGINATION FEE AND THESE TYPES OF FEES NOW ARE PRECLUDED FROM PAYMENT UNDER BUREAU OF THE BUDGET CIRCULAR NO. THE LENDER STATES THAT THE ASSUMPTION TRANSFER FEE IS NOT A FINANCE CHARGE. THE AMOUNT ASSESSED ($219.56) IS 1 PERCENT OF THE BALANCE DUE ON THE LOAN AS SHOWN ON THE AMORTIZATION SCHEDULE AND IS A CHARGE MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN TRANSFERRING THE LOAN PRESUMABLY FROM THE SELLER TO THE BUYER.
B-169158, APR. 15, 1970
OFFICERS AND EMPLOYEES--TRANSFERS--RELOCATION EXPENSES--HOUSE PURCHASE- LOAN ASSUMPTION FEE TRANSFERRED EMPLOYEE EFFECTING SETTLEMENT OF RESIDENCE PURCHASE ON JULY 11, 1969, MAY NOT BE REIMBURSED LOAN ASSUMPTION FEE, NOTWITHSTANDING LENDER STATES ASSUMPTION TRANSFER FEE IS NOT FINANCE CHARGE BUT 1% ASSESSMENT COVERING EXPENSE OF TRANSFERRING LOAN TO BUYER, SINCE LOAN ASSUMPTION OR TRANSFER FEE IS REGARDED AS FINANCE CHARGE UNDER 12 CFR, PART 226, IMPLEMENTING TRUTH IN LENDING ACT, AND JUNE 26, 1969 REVISION OF BOB CIR. NO. A-56 NOW PRECLUDES PAYMENT OF SUCH CHARGE. SEE COMP. GEN. DECS. CITED.
TO MRS. EVELYN C. HENDRIX:
REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 11, 1970, WITH ENCLOSURES, REQUESTING A DECISION FROM OUR OFFICE AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER IN FAVOR OF MR. AUBREY J. DREW FOR REIMBURSEMENT OF $219.56 REPRESENTING REAL ESTATE EXPENSES INCURRED IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT HIS NEW DUTY STATION IN DALLAS, TEXAS.
THE $219.56 REPRESENTS A LOAN ASSUMPTION FEE IN CONNECTION WITH THE PURCHASE OF A RESIDENCE ON JULY 11, 1969, WHICH WAS THE DATE OF THE CLOSING STATEMENT. THE CLAIM WAS ADMINISTRATIVELY DISALLOWED ON THE GROUND THAT IN B-164906, DATED AUGUST 12, 1968, OUR OFFICE STATED THAT ASSUMPTION FEE IS DEFINED AS A SIMILAR FEE TO LOAN APPLICATION OR LOAN ORIGINATION FEE AND THESE TYPES OF FEES NOW ARE PRECLUDED FROM PAYMENT UNDER BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969.
THE LENDER STATES THAT THE ASSUMPTION TRANSFER FEE IS NOT A FINANCE CHARGE. THE AMOUNT ASSESSED ($219.56) IS 1 PERCENT OF THE BALANCE DUE ON THE LOAN AS SHOWN ON THE AMORTIZATION SCHEDULE AND IS A CHARGE MADE BY THE MORTGAGEE TO COMPENSATE FOR EXPENSES INCURRED IN TRANSFERRING THE LOAN PRESUMABLY FROM THE SELLER TO THE BUYER.
IN ADDITION TO THE DECISION PREVIOUSLY REFERRED TO, WE HAVE SPECIFICALLY HELD THAT A LOAN ASSUMPTION FEE OR TRANSFER FEE IS TO BE REGARDED AS A FINANCE CHARGE UNDER REGULATION Z OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (12 CFR, PART 226), PUBLISHED FEBRUARY 11, 1969, 34 F.R. 2002 ET SEQ; EFFECTIVE JULY 1, 1969, IMPLEMENTING THE TRUTH IN LENDING ACT. SEE B-168359 DATED JANUARY 2, 1970, COPY ENCLOSED.
ACCORDINGLY, THE VOUCHER WHICH IS RETURNED HEREWITH MAY NOT BE CERTIFIED FOR PAYMENT.