Reimbursement of Loan Commitment Fee

An employee appealed the denial of his claim for reimbursement of a fee paid by him when he purchased a home after being transferred. The fee was listed on the bank's closing statement as a 1 percent commitment fee, and listed on the Housing and Urban Development Disclosure/Settlement Statement as a loan origination fee. The claim was disallowed by the Claims Division on the basis that it represented a finance charge under the Truth in Lending Act. The employee claimed on appeal that the fee was similar to Federal Housing Administration (FHA) and Veterans Administration (VA) fees for loan applications which are reimbursable. GAO held that the FHA and VA fees are paid to the Government to defray the costs of such things as appraisals and credit reports, and they are distinguishable from a loan origination fee which is paid to a lending institution as part of its price for extending credit. Therefore, the previous disallowance was sustained.