[Request for Decision Concerning Claim for Loan Origination Fee]

The Veterans Administration (VA) requested a decision concerning an employee's claim for reimbursement of a 2-percent loan origination fee incident to the purchase of a home at his new duty station. GAO noted that: (1) the employee entered into a conventional loan agreement with a mortgage company and was advised that a 3-percent loan origination fee was required but, at the time of closing, the mortgage company collected a 1-percent origination fee and a 2-percent discount fee; and (2) VA only reimbursed the employee for the 1-percent origination fee because it believed the discount fee represented a nonrecoverable finance charge. GAO held that: (1) a 3-percent loan origination fee was reasonable and customary for the area; (2) the percentage split was an internal function of the mortgage company's accounting method; (3) an employee may be reimbursed for expenses incurred in the sale or purchase of a residence pursuant to a permanent change of station; (4) the mortgage company confirmed that the 2-percent fee was a part of the loan origination fee; and (5) there was no indication that the interest rate on the employee's mortgage was adjusted downward upon payment of the 2-percent fee. Accordingly, the employee may be reimbursed the additional 2 percent-fee to the extent his total recovery will not exceed the statutory limit.