B-169204, DEC 9, 1971

B-169204, DEC 9, 1971

CIVILIAN EMPLOYEE - REAL ESTATE EXPENSES - CHANGE OF STATION ALLOWING IN PART A CLAIM BY MR. DORMAN M. PHELPS FOR REIMBURSEMENT OF REAL ESTATE PURCHASE EXPENSES INCIDENT TO A CHANGE OF STATION. WHILE A "CREDIT REPORT," "RECORD DEED" AND "TRANSFER FEE" (SIMILAR TO A LOAN ASSUMPTION FEE) ARE ALLOWABLE UNDER OMB CIR. NO. A-56, THE ITEM DESCRIBED AS "MGIC PREMIUM" REPRESENTING A PREMIUM FOR AN INSURANCE POLICY FOR THE PROTECTION OF THE MORTGAGEE IS SPECIFICALLY EXCLUDED BY SUBSECTION 4.2D OF THE CIR. NO. A-56.

TO MR. RICHARD E. MILLER:

THIS WILL REFER TO YOUR LETTER OF OCTOBER 5, 1971, CONCERNING OUR DECISION OF JUNE 2, 1970, ON THE CLAIM OF MR. DORMAN M. PHELPS FOR REIMBURSEMENT OF CERTAIN REAL ESTATE PURCHASE EXPENSES INCURRED INCIDENT TO HIS TRANSFER OF STATION FROM ATLANTA, GEORGIA, TO TAMPA, FLORIDA, IN OCTOBER 1967.

AS YOUR LETTER STATES, OUR DECISION QUESTIONED THE REIMBURSEMENT OF AN ITEM IN THE AMOUNT OF $139 IDENTIFIED AS "ADDITIONAL CLOSING COSTS THAT WERE INCURRED DURING THE ASSUMPTION PROCESS AND PAID BY MR. PHELPS ON NOVEMBER 30, 1967." IN ORDER TO DETERMINE WHETHER THIS IS AN ALLOWABLE ITEM FOR REIMBURSEMENT, WE SUGGESTED THAT IT BE FURTHER EXPLAINED. INDICATED THAT IF IT WERE NOT INCLUDED IN THE PURCHASE PRICE OF MR. PHELPS' RESIDENCE IT MIGHT BE PROPERLY REIMBURSABLE UNDER THE PROVISIONS OF SECTION 4 OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, AS EFFECTIVE UNTIL THE REVISION OF THE CIRCULAR DATED JUNE 26, 1969.

YOU HAVE PROVIDED A COPY OF A LETTER FROM THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF PLANT CITY, BRANDON, FLORIDA, STATING THAT THE $139 WAS NOT INCLUDED IN THE PURCHASE PRICE OF THE HOUSE, AND DESCRIBING SEPARATELY THE CHARGES INCLUDED IN SUCH AMOUNT AS FOLLOWS:

"CREDIT REPORT $ 10.00

TRANSFER FEE 10.00

MGIC PREMIUM 116.75

RECORD DEED 2.25

$139.00"

THE ITEM IDENTIFIED AS "CREDIT REPORT" IN THE AMOUNT OF $10 MAY BE REGARDED AS PROPERLY ALLOWED AS IT IS A FINANCING COST SPECIFICALLY REIMBURSABLE UNDER THE PROVISIONS OF SUBSECTION 4.2D OF CIRCULAR NO. A 56 SUPRA.

LIKEWISE, THE ITEM STATED AS "RECORD DEED" IN THE AMOUNT OF $2.25 WAS REIMBURSABLE, AS SPECIFIED UNDER SUBSECTION 4.2C OF CIRCULAR NO. A-56.

AS TO THE ITEM IDENTIFIED AS "TRANSFER FEE" OF $10, WE ASSUME THIS IS IN THE NATURE OF A LOAN ASSUMPTION FEE FOR WHICH, IN OTHER CASES, WE HAVE ALLOWED REIMBURSEMENT AS BEING SIMILAR TO A LOAN APPLICATION OR LOAN ORIGINATION FEE SPECIFICALLY REIMBURSABLE UNDER THE PROVISIONS OF SUBSECTION 4.2D OF CIRCULAR NO. A-56 PRIOR TO THE REVISION OF JUNE 26, 1969. SINCE MR. PHELPS' REAL ESTATE TRANSACTION WAS CLOSED IN 1967 WHEN SUCH FEES WERE REIMBURSABLE UNDER THE GOVERNING REGULATION, THIS ITEM WAS PROPERLY ALLOWABLE. B-164906, AUGUST 12, 1968, COPY ENCLOSED. CF. B- 168359, JANUARY 2, 1970, COPY ENCLOSED.

WITH RESPECT TO THE ITEM IDENTIFIED AS "MGIC PREMIUM" IN THE AMOUNT OF $116.75, WE UNDERSTAND THIS REPRESENTS THE PREMIUM FOR AN INSURANCE POLICY FOR THE PROTECTION OF THE MORTGAGEE AGAINST LOSS IN THE EVENT OF FORECLOSURE IF INSUFFICIENT MONIES ARE REALIZED TO LIQUIDATE THE MORTGAGE INDEBTEDNESS. OUR DECISIONS HAVE CONSISTENTLY HELD THAT SUBSECTION 4.2D OF CIRCULAR NO. A-56 EXCLUDES THIS TYPE OF INSURANCE FROM CHARGES FOR WHICH REIMBURSEMENT IS AUTHORIZED. SEE B-162673, NOVEMBER 13, 1967; B- 163419, FEBRUARY 26, 1968; B-168416, JANUARY 5, 1971; AND B-170571, NOVEMBER 9, 1970; COPIES ENCLOSED. IN ACCORDANCE WITH THESE DECISIONS, WE HOLD THAT THIS ITEM IS NOT REIMBURSABLE AND THAT MR. PHELPS IS REQUIRED TO REFUND THE $116.75 REPRESENTED THEREBY.