B-143537, NOV. 23, 1960

B-143537, NOV. 23, 1960

TO COLONEL PAUL E. BRUEHL:

YOUR LETTER OF OCTOBER 24, 1960, REQUESTS, IN EFFECT, THAT WE RECONSIDER OUR DECISION OF AUGUST 10, 1960, B-143537, IN WHICH WE DISALLOWED YOUR CLAIM FOR THE RECOVERY OF MORTGAGE INSURANCE PREMIUM PAYMENTS AMOUNTING TO $175.65.

PRIOR TO AUGUST 30, 1956, SUCH PAYMENTS WERE PROPERLY MADE BY THE DEPARTMENT OF THE ARMY ON A FEDERAL HOUSING ADMINISTRATION (FHA) INSURED MORTGAGE ON PROPERTY WHICH WAS BEING PURCHASED BY YOU AND LOCATED AT 6719 CHAMBERLAIN AVENUE, UNIVERSITY CITY, MISSOURI. ON AUGUST 30, 1956, YOU SOLD THIS PROPERTY TO INDIVIDUALS NOT ENTITLED TO HAVE SUCH PAYMENTS MADE BY THE ARMY IN THEIR BEHALF, BUT FAILED TO NOTIFY THE DEPARTMENT OF THE ARMY OF THE CONVEYANCE. CONSEQUENTLY, THE ARMY CONTINUED MAKING PAYMENTS UNTIL THE CONVEYANCE OF AUGUST 30 WAS DISCOVERED. THE FINANCE CENTER OF THE DEPARTMENT OF THE ARMY ISSUED A PAY ADJUSTMENT AUTHORIZATION AGAINST YOUR ACCOUNT AND THE $175.65 WAS RECOVERED FROM YOU.

OUR DISALLOWANCE WAS BASED UPON ARMY REGULATIONS IN EFFECT AT THE TIME OF CONVEYANCE WHICH PROVIDED FOR TERMINATION OF THE SERVICE MEMBER'S ELIGIBILITY FOR PAYMENTS OF MORTGAGE INSURANCE BY THE ARMY WHEN HIS OWNERSHIP OF THE PROPERTY COVERED BY THE MORTGAGE CEASED. ALSO, IN OUR DISALLOWANCE WE SUGGESTED THAT WHATEVER RIGHTS YOU MAY HAVE TO RECOVER THE MORTGAGE INSURANCE PREMIUMS HERE INVOLVED WOULD APPEAR TO BE FOR ASSERTING AGAINST THE PURCHASERS WHO BENEFITED FROM SUCH PAYMENTS.

IN YOUR REQUEST FOR REVIEW YOU REFER TO THE FOLLOWING SENTENCE FROM OUR DECISION OF AUGUST 10:

"THESE PAYMENTS WERE PAID BY THE DEPARTMENT OF THE ARMY TO THE FEDERAL HOUSING ADMINISTRATION PURSUANT TO SECTION 124 OF THE HOUSING ACT OF 1954, 68 STAT. 603.'

YOU SUGGEST THAT PERHAPS YOUR CLAIM CAN BE CLARIFIED AND FURTHER CORRESPONDENCE AVOIDED, IF, BASED ON THE ABOVE-QUOTED SENTENCE WE ANSWER THE FOLLOWING QUESTION:

"WERE ANY PAYMENTS SUBSEQUENTLY MADE BY THE FEDERAL HOUSING ADMINISTRATION TO THE MORTGAGEE (BANK) FOR THE BENEFIT, OR IN BEHALF, OF THE PURCHASERS OF MY PROPERTY AT 6719 CHAMBERLAIN AVENUE, UNIVERSITY CITY, MISSOURI, AND APPLICABLE IN ANYWAY TO MORTGAGE INSURANCE PREMIUMS?

YOU EXPRESS THE VIEW THAT IF THE ANSWER TO THE FOREGOING QUESTION IS IN THE NEGATIVE THEN MORTGAGE INSURANCE PREMIUMS FOR THE PERIOD IN QUESTION WERE NEVER PAID AND THE LOAN FOR THAT PERIOD WAS UNINSURED; AND THAT PAYMENTS MADE BY THE DEPARTMENT OF THE ARMY TO THE FEDERAL HOUSING ADMINISTRATION CONSTITUTED MERELY A TRANSFER OF FUNDS FROM ONE GOVERNMENT AGENCY TO ANOTHER.

CONCERNING YOUR SPECIFIC QUESTION, YOU SEEM TO BE LABORING UNDER A MISAPPREHENSION CONCERNING THE PAYMENT OF MORTGAGE INSURANCE PREMIUMS. INSURER WOULD NOT PAY INSURANCE PREMIUMS TO THE INSURED. THUS, THE FEDERAL HOUSING ADMINISTRATION, THE INSURER OF THE MORTGAGE LOAN, WOULD NOT PAY MORTGAGE INSURANCE PREMIUMS TO THE MORTGAGEE, THE INSURED (I.E., THE PARTY WHOSE LOAN IS INSURED BY FHA). MOREOVER, GENERALLY THE ONLY PAYMENTS FHA WOULD MAKE TO A MORTGAGEE WOULD BE PAYMENTS ON ACCOUNT OF THE DEFAULT OF THE MORTGAGOR ON THE INSURED LOAN.

IN ANY EVENT A NEGATIVE ANSWER TO YOUR QUESTION WOULD NOT REQUIRE THE CONCLUSION THAT MORTGAGE INSURANCE PREMIUMS FOR THE PERIOD INVOLVED WERE NEVER PAID AND THAT THE LOAN FOR THAT PERIOD WAS UNINSURED. UNDER FHA REGULATIONS THE SERVICE BRANCH CONCERNED IS RESPONSIBLE FOR PAYING ALL MORTGAGE INSURANCE PREMIUMS TO FHA UNTIL IT NOTIFIES THAT AGENCY THAT THE PERIOD OF OWNERSHIP BY THE SERVICEMAN INVOLVED HAS BEEN TERMINATED. THE SAME REGULATIONS MAKE THE MORTGAGEE RESPONSIBLE FOR THE PAYMENT OF ALL SUCH PREMIUMS AFTER IT HAS BEEN NOTIFIED BY FHA THAT THE SERVICEMAN'S PERIOD OF OWNERSHIP HAS BEEN TERMINATED. SEE 24 C.F.R. 225.2 (D) AND 24 C.F.R. 226.2 (B) AND 226.3 (A).

THE RECORD DISCLOSES THAT DURING THE PERIOD IN QUESTION THE DEPARTMENT OF THE ARMY CONTINUED TO MAKE THE MORTGAGE INSURANCE PREMIUM PAYMENTS TO FHA UNDER THE CERTIFICATE OF ELIGIBILITY ISSUED AT YOUR REQUEST. THUS, THE MORTGAGE INSURANCE PREMIUM PAYMENTS WERE MADE AND THE LOAN WAS INSURED FOR THAT PERIOD. MOREOVER, THE MORTGAGEE WAS NOT LIABLE FOR THE MORTGAGE INSURANCE PREMIUM PAYMENTS FOR THE PERIOD INVOLVED, SINCE UNDER THE ABOVE- CITED REGULATIONS THE MORTGAGEE'S RESPONSIBILITY FOR SUCH PAYMENTS DOES NOT COMMENCE UNTIL IT RECEIVES NOTIFICATION FROM FHA THAT THE SERVICEMAN'S PERIOD OF OWNERSHIP HAS BEEN TERMINATED.

HAD YOU NOTIFIED THE DEPARTMENT OF THE ARMY OF YOUR TERMINATION OF OWNERSHIP AS REQUIRED BY PERTINENT ARMY REGULATIONS, THE ARMY PRESUMABLY WOULD HAVE DISCONTINUED ITS PAYMENTS OF MORTGAGE INSURANCE PREMIUMS AND NOTIFIED FHA OF YOUR TERMINATION OF OWNERSHIP THUS ENABLING FHA TO NOTIFY THE MORTGAGEE THAT IT WOULD BE RESPONSIBLE FOR SUCH PAYMENTS IN THE FUTURE. IN ANY EVENT, HAD YOU GIVEN THE REQUIRED NOTICE THE DEPARTMENT OF THE ARMY WOULD NOT HAVE WITHHELD FROM YOUR PAY THE AMOUNT FOR WHICH YOU ARE MAKING CLAIM.

IN CIRCUMSTANCES SUCH AS HERE INVOLVED THE GOVERNMENT IS NOT REQUIRED TO REIMBURSE YOU AND, PRESUPPOSING THAT IT HAS A RIGHT TO DO SO, ATTEMPT TO COLLECT THE MORTGAGE INSURANCE PREMIUM PAYMENTS INVOLVED FROM THE MORTGAGEE. ANY LOSS SUFFERED BY YOU IS A DIRECT RESULT OF YOUR FAILURE TO COMPLY WITH APPLICABLE ARMY REGULATIONS GOVERNING MORTGAGE INSURANCE PREMIUM PAYMENTS. AS SUGGESTED IN OUR DECISION OF AUGUST 10, WHATEVER RIGHT YOU MAY HAVE TO RECOVER THE MORTGAGE INSURANCE PREMIUM PAYMENTS IN QUESTION WOULD APPEAR TO BE FOR ASSERTING AGAINST THE PURCHASERS WHO BENEFITED FROM SUCH PAYMENTS.

IN VIEW OF THE FOREGOING OUR PREVIOUS ACTION IN DISALLOWING YOUR CLAIM IS SUSTAINED.