B-176362, AUG 7, 1972

B-176362, AUG 7, 1972

CIVILIAN EMPLOYEE - SALE OF RESIDENCE - EXPENSES DECISION THAT A VOUCHER IN FAVOR OF JOHN F. CODY IN THE AMOUNT OF $601.67, REPRESENTING REAL ESTATE COSTS INCIDENT TO THE SALE AND PURCHASE OF A RESIDENCE, MAY NOT BE CERTIFIED FOR PAYMENT. THE SERVICE CHARGE OF $350 APPEARS TO BE IN THE NATURE OF A LOAN ORIGINATION FEE AND REIMBURSEMENT OF IT WOULD APPEAR TO BE PRECLUDED BY OMB CIRCULAR NO. A-56 AND REGULATION Z (12 CFR 226.4), ISSUED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE BOARD. THE OTHER ITEMS ARE NOT PROVIDED FOR IN THE APPLICABLE REGULATIONS AND, THEREFORE, REIMBURSEMENT IS NOT AUTHORIZED.

TO MR. CARL FANUCCI:

THIS REFERS TO YOUR LETTER OF JUNE 23, 1972, WITH ENCLOSURES, ENCLOSING A VOUCHER IN FAVOR OF MR. JOHN F. CODY IN THE AMOUNT OF $601.67 REPRESENTING REAL ESTATE COSTS INCIDENT TO THE SALE AND PURCHASE OF A RESIDENCE, AND REQUESTING OUR DECISION WHETHER SUCH VOUCHER MAY BE CERTIFIED FOR PAYMENT.

MR. CODY, AN EMPLOYEE OF THE BUREAU OF NARCOTICS AND DANGEROUS DRUGS (BNDD) WAS TRANSFERRED FROM WASHINGTON, D.C., TO PITTSBURG, PENNSYLVANIA. IN CONNECTION WITH THE TRANSFER THE EMPLOYEE SOLD HIS RESIDENCE IN BALTIMORE, MARYLAND, FROM WHICH HE APPARENTLY COMMUTED TO HIS OLD OFFICIAL DUTY STATION AND PURCHASED A RESIDENCE AT HIS NEW DUTY STATION.

THE REAL ESTATE EXPENSES DISALLOWED BY BNDD AND WHICH THE EMPLOYEE HAS RECLAIMED ARE AS FOLLOWS:

A. SERVICE CHARGE ON PURCHASE OF NEW RESIDENCE $350.00

B. FEE FOR TEMPORARY FINANCING OF MORTGAGE

PENDING SALE OF OLD RESIDENCE 167.67

C. TRAVEL EXPENSES TO BALTIMORE, MARYLAND, FOR

EMPLOYEE AND WIFE FOR SETTLEMENT OF OLD

RESIDENCE 84.00

TOTAL $601.67

SECTION 4.2 OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 PROVIDES FOR REIMBURSEMENT OF VARIOUS EXPENSES INCIDENT TO RESIDENCE TRANSACTIONS. THE CIRCULAR ALSO STATES THAT NO FEE IS REIMBURSABLE WHICH IS DETERMINED TO BE PART OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT, TITLE 1, PUBLIC LAW 90-321, AND REGULATION Z ISSUED PURSUANT THERETO BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

REGULATION Z COVERING THE DETERMINATION OF THE FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT STATES IN PERTINENT PART (12 CFR 226.4) AS FOLLOWS:

"(A) GENERAL RULE. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE AMOUNT OF THE FINANCE CHARGE IN CONNECTION WITH ANY TRANSACTION SHALL BE DETERMINED AS THE SUM OF ALL CHARGES, PAYABLE DIRECTLY OR INDIRECTLY BY THE CUSTOMER, AND IMPOSED DIRECTLY OR INDIRECTLY BY THE CREDITOR AS AN INCIDENT TO OR AS A CONDITION OF THE EXTENSION OF CREDIT, WHETHER PAID OR PAYABLE BY THE CUSTOMER, THE SELLER, OR ANY OTHER PERSON ON BEHALF OF THE CUSTOMER TO THE CREDITOR OR TO A THIRD PARTY, INCLUDING ANY OF THE FOLLOWING TYPES OF CHARGES:

"(1) INTEREST, TIME PRICE DIFFERENTIAL, AND ANY AMOUNT PAYABLE UNDER A DISCOUNT OR OTHER SYSTEM OF ADDITIONAL CHARGES.

"(2) SERVICE, TRANSACTION, ACTIVITY, OR CARRYING CHARGE."

THE SERVICE CHARGE OF $350 APPEARS TO BE IN THE NATURE OF A LOAN ORIGINATION FEE. IN VIEW THEREOF REIMBURSEMENT OF THIS ITEM WOULD BE PRECLUDED BY THE PROVISIONS OF REGULATION Z AND CIRCULAR NO. A-56.

AS TO THE ITEM OF $167.67, WE NOTE THAT THERE IS NO PROVISION IN THE REGULATIONS AUTHORIZING REIMBURSEMENT OF ANY COSTS INCURRED IN MORTGAGING THE RESIDENCE AT THE OLD STATION TO OBTAIN TEMPORARY FINANCING ON A RESIDENCE AT THE NEW STATION. MOREOVER, AS INDICATED ABOVE, INTEREST CHARGES ARE SPECIFICALLY PRECLUDED FROM REIMBURSEMENT.

CONCERNING REIMBURSEMENT OF THE EXPENSES OF RETURNING TO BALTIMORE, MARYLAND, FOR THE PURPOSE OF SETTLEMENT ON THE SALE OF THE OLD RESIDENCE, THE REGULATIONS LIKEWISE MAKE NO PROVISION FOR EXPENSES OF THIS NATURE.

THE VOUCHER WHICH IS RETURNED HEREWITH MAY NOT BE CERTIFIED FOR PAYMENT.