B-172560, JUN 2, 1971

B-172560, JUN 2, 1971

CIVILIAN EMPLOYEE - TRANSFER OF STATION - INCIDENTAL EXPENSES REGARDING CLAIM BY RICHARD J. PIDGEON, EMPLOYEE OF THE COMMERCE DEP'T., FOR EXPENSES INCURRED INCIDENT TO TRANSFER OF OFFICIAL STATION. UNDER OFFICE OF MANAGEMENT AND BUDGET CIR. NO. A-56, CLAIMS FOR CREDIT REPORT, MORTGAGE CONSOLIDATION, DRAWING SECOND MORTGAGE, STATE TAX AND COST OF RECORDING SECOND MORTGAGE ARE REIMBURSABLE. AS FOR LEGAL FEES, NO PAYMENT MAY BE MADE UNTIL THIS CHARGE IS ITEMIZED. OTHER EXPENSES CLAIMED: FINANCE CHARGES AND ITEMS INCIDENT TO CONSTRUCTION PAID BY SELLER, ARE NOT REIMBURSABLE.

TO MR. HOMER MCINTYRE:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 31, 1971, REQUESTING OUR DECISION AS TO THE ALLOWABILITY OF LEGAL FEES AND MISCELLANEOUS COSTS ON A VOUCHER FOR $2,351.85 IN FAVOR OF MR. RICHARD J. PIDGEON, AN EMPLOYEE OF YOUR AGENCY, COVERING REIMBURSEMENT FOR EXPENSES INCURRED IN THE PURCHASE OF A RESIDENCE INCIDENT TO HIS TRANSFER FROM WASHINGTON, D.C., TO NEW YORK, NEW YORK, ON NOVEMBER 1, 1970, UNDER THE PROVISIONS OF SUBSECTIONS 4.2C AND D OF CIRCULAR NO. A-56, AS AMENDED, PROMULGATED BY THE BUREAU OF THE BUDGET (NOW OFFICE OF MANAGEMENT AND BUDGET).

LEGAL FEES AND MISCELLANEOUS COSTS ARE ITEMIZED AS FOLLOWS:

CREDIT REPORT FEE $ 10.00

APPROVAL FEE CHARGED BY BANK FOR HANDLING

TRANSACTION OF APPROVING AND PROCESSING

NEW MORTGAGE 500.00

LEGAL FEE CHARGED FOR DRAWING MORTGAGE

CONSOLIDATION AND EXTENSION AGREEMENTS 175.00

RECORDING FEE 59.20

FEE FOR DRAWING SECOND MORTGAGE 50.00

RECORDING FEE FOR SECOND MORTGAGE 8.55

STATE MORTGAGE TAX PAYABLE ON SECOND

MORTGAGE 30.00

FEE FOR LEGAL SERVICES 450.00

*LOAN PROCESSING AND COMMITMENT FEE

(SHOWN ON VOUCHER AS $205) 285.00

*APPRAISAL FEE 105.00

*BANK LEGAL FEE 235.00

*MORTGAGE TAX 225.00

*RECORDING FEES 9.10

*INSPECTION FEE 60.00

*SURVEY 150.00

TOTAL $2,351.85 ITEMS MARKED "*" WERE PAID INITIALLY BY THE SELLER, A BUILDING COMPANY. MR. PIDGEON REIMBURSED THE SELLER FOR THESE ITEMS WHEN HE ASSUMED THE ORIGINAL MORTGAGE AT THE TIME OF CLOSING.

REGARDING THE ABOVE CHARGES THE REAL ESTATE PURCHASE CONTRACT READS IN PERTINENT PART AS FOLLOWS:

"33. SECOND MORTGAGE

AT TIME OF CLOSING, SELLERS AGREE TO ACCEPT AS PART OF THE PURCHASE MONIES HEREUNDER, A VALID SECOND MORTGAGE AND BOND ON THE PREMISES EXECUTED BY BOTH SELLERS. SAID LIENS SHALL BE DRAWN ON THE STANDARD FORMS OF THE N.Y. BOARD OF TITLE UNDERWRITERS AND SHALL BE DRAWN BY THE ATTORNEY FOR THE SELLER AT THE EXPENSE OF THE PURCHASERS WHO SHALL ALSO PAY THE MORTGAGE RECORDING TAX AND RECORDING FEES. SAID SECOND MORTGAGE SHALL BE IN THE PRINCIPAL AMOUNT OF $6,000.00 WITH INTEREST AT 7-1/2% PER ANNUM AND PAYABLE IN EQUAL MONTHLY INSTALLMENTS OF $71.23.

"34. CLOSING COSTS:

THE PARTIES ACKNOWLEDGE THAT THERE IS PRESENTLY A LIEN ON THE PREMISES OF A BUILDING LOAN FIRST MORTGAGE HELD BY THE PUTNAM COUNTY SAVINGS BANK IN THE AMOUNT OF $30,000.00 WHICH SHALL BE ASSUMED BY PURCHASERS AT CLOSING. PURCHASERS AGREE TO PAY ALL COSTS IMPOSED BY THE PUTNAM COUNTY SAVINGS BANK AND TITLE COMPANY IN CONNECTION WITH THE INCREASE TO SAID MORTGAGE TO $34,000.00 INCLUDING BANK ATTORNEY'S FEE, MORTGAGE TAX, TITLE AND RECORDING CHARGES ETC.. IN ADDITION PURCHASERS SHALL REIMBURSE SELLER AT CLOSING IN GOOD FUNDS THE FOLLOWING CLOSING COSTS INCURRED BY SELLER IN CONNECTION WITH THE EXISTING MORTGAGE.

"LOAN PROCESSING & COMMITMENT FEE $ 285.00

APPRAISAL FEE 105.00

BANK LEGAL FEE 235.00

MORTGAGE TAX 225.00

RECORDING FEES 9.10

INSPECTION FEE 60.00

SURVEY 150.00

TOTAL $1,069.10"

SUBSECTIONS 4.2C AND D (IN PERTINENT PART) OF CIRCULAR NO. A-56, AS AMENDED BY TRANSMITTAL MEMORANDUM NO. 5, PROVIDE 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.

"D. MISCELLANEOUS COSTS. 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 THEY ARE CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY PAID IN THE LOCALITY OF THE RESIDENCE: FHA OR VA FEE FOR LOAN APPLICATION; COSTS OF PREPARING CREDIT REPORTS; MORTGAGE AND TRANSFER TAXES; STATE REVENUE STAMPS; AND SIMILAR FEES AND CHARGES. *** THE COST OF A MORTGAGE TITLE POLICY PAID FOR BY THE EMPLOYEE ON A RESIDENCE PURCHASED BY HIM IS REIMBURSABLE BUT COSTS OF OTHER TYPES OF INSURANCE PAID FOR BY HIM, SUCH AS *** MORTGAGE INSURANCE *** ARE NOT REIMBURSABLE ITEMS OF EXPENSE. *** NOTWITHSTANDING THE ABOVE, 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. ***

"IN CASES INVOLVING CONSTRUCTION OF A RESIDENCE, REIMBURSEMENT OF EXPENSES WOULD INCLUDE THOSE ITEMS OF EXPENSE WHICH ARE COMPARABLE TO EXPENSES THAT ARE REIMBURSABLE IN CONNECTION WITH THE PURCHASE OF EXISTING RESIDENCES AND WILL NOT INCLUDE EXPENSES WHICH RESULT FROM CONSTRUCTION."

THE FEE FOR A CREDIT REPORT ON MR. PIDGEON ($10), THE LEGAL FEE CHARGED FOR DRAWING THE MORTGAGE CONSOLIDATION AND EXTENSION AGREEMENTS ($175), AND THE FEES FOR DRAWING THE SECOND MORTGAGE ($50), RECORDING IT ($8.55), AND THE STATE MORTGAGE TAX THEREON ($30) ARE REIMBURSABLE ITEMS AND MAY BE PAID IF OTHERWISE PROPER.

SUBSECTION 4.2D OF CIRCULAR NO. A-56 STATES THAT FINANCE CHARGES ARE NOT REIMBURSABLE. IN THIS CONNECTION TRANSMITTAL MEMORANDUM NO. 5 OF JUNE 26, 1969, AMENDING THE CIRCULAR, SPECIFICALLY STATES THAT LENDER'S LOAN ORIGINATION FEE IS NOT A REIMBURSABLE EXPENSE. ACCORDINGLY, THE $500 FEE CHARGED BY THE BANK FOR HANDLING THE TRANSACTION OF APPROVING AND PROCESSING THE NEW MORTGAGE IS NOT REIMBURSABLE.

THE ITEM OF $59.20 SHOWN AS A RECORDING FEE CONTAINS CHARGES WHICH TOTAL $44.65 REPRESENTING RECORDING FEES FOR THE MORTGAGE EXTENSION AGREEMENT AND NEW MORTGAGE, MORTGAGE TAX, AND A FEE FOR RECORDING THE DEED. THE BALANCE CONSISTS OF A CHARGE OF $13 FOR MORTGAGE INSURANCE AND A CHARGE OF $1.55 FOR "FILING AFF FOR 5255." THE CHARGES TOTALING $44.65 COVER REIMBURSABLE EXPENSES AND MAY BE PAID. THE CHARGE FOR MORTGAGE INSURANCE IS NOT REIMBURSABLE UNDER THE PROVISIONS OF SUBSECTION 4.2D OF CIRCULAR NO. A-56. THE CHARGE OF $1.55 IS NOT SUFFICIENTLY IDENTIFIED TO PERMIT PAYMENT AT THE PRESENT TIME.

UNDER SUBSECTION 4.2C OF CIRCULAR NO. A-56 THE PURCHASER MAY BE REIMBURSED COSTS OF SEARCHING TITLE, PREPARING ABSTRACT, AND LEGAL FEES FOR A TITLE OPINION. THERE IS NO PROVISION FOR REIMBURSEMENT OF LEGAL FEES FOR CONSULTING OR ADVISING THE PURCHASER. ALSO, THE REIMBURSABLE COSTS MUST BE ITEMIZED SINCE THERE IS NO PROVISION FOR PAYMENT OF AN ALL INCLUSIVE SERVICE "LEGAL FEE." B-163203, MARCH 24, 1969, COPY ENCLOSED. THE FEE OF $450 PAID TO MR. PIDGEON'S ATTORNEY IS AN ALL INCLUSIVE FEE AND, THEREFORE, IS NOT ALLOWABLE AT THE PRESENT TIME. HOWEVER, SHOULD MR. PIDGEON OBTAIN AN ITEMIZED STATEMENT OF CHARGES, THE ITEMS LISTED ABOVE AS REIMBURSABLE MAY BE ALLOWED.

THE REMAINING ITEMS REPRESENT REIMBURSEMENT OF ITEMS PAID BY THE SELLER INCIDENT TO THE CONSTRUCTION OF THE RESIDENCE PURCHASED BY MR. PIDGEON AND WHICH NORMALLY WOULD BE INCLUDED IN THE SALES PRICE FOR THE COMPLETED RESIDENCE. THE FACT THAT THESE ITEMS WERE LISTED SEPARATELY AND DEDUCTED FROM THE ORIGINAL SALES PRICE DOES NOT CHANGE THEM INTO EXPENSES OF THE PURCHASER. IN VIEW THEREOF, THE ITEMS IN QUESTION ARE NOT ALLOWABLE.

THE VOUCHER RETURNED HEREWITH MAY BE PROCESSED ONLY IN ACCORDANCE WITH THE ABOVE.