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B-208839 1 (1983-04-22)

handle is hein.gao/gaobadlbb0001 and id is 1 raw text is: \TECOMPTROLLER GENEAL< / -r: \\THE DECISION F . o1 THE UNITEO BTATEg' ' WASHINGTON. D.C. 20548 FILE: B-208839 DATE: April 22, 1983 MATTER OF: Joseph Ralph Hogan DIGEST: Employee may not be reimbursed for a loan assumption fee paid to finance the purchase of a residence at his new duty station. This fee is a finance charge within the meaning of Regulation Z, 12 C.F.R. 226.4(2), and therefore is not a reimbursable real estate expense under para. 2-6.2d of the FTR. Mr. Joseph Ralph Hogan, an employee of the Department of Housing and Urban Development, transferred from Tampa, Florida, to Jacksonville, Florida, where he purchased a residence on August 22, 1980. As part of the settlement costs, he paid a loan assumption fee of $419.76, and he claims reimbursement of this amount. Both the employing agency and our Claims Group dis- allowed reimbursement because the loan assumption fee was a finance charge under Reg-ulation Z, 12 C.F.R. 226.4(a) (1980), and therefore not reimbursable under paragraph 2-6.2d of the Federal Travel Regulations (FTR) (FPMR 101-7) (May 1973). We agree and sustain the Claims Group's disal- lowance (Z-2831314, August 31, 1982). To finance the purchase of the home, Mr. Hogan assumed the seller's obligation to make monthly payments on the mortgage loan balance of $41,942.40. The loan assumption fee of $419.76 was a cost imposed by the mortgage lender to transfer the loan obligation to Mr. Hogan. He believes that the loan assumption fee should be reimbursed since it was a mandatory cost of purchase that was reasonable in amount as compared to the cost of paying off the loan and obtaining new financing. In this regard he states that the seller's mortgage instrument provided for a $1,325 prepayment pen- alty that would have been due if the loan had been paid off and he points out that considerably higher closing costs would have been incurred if he had obtained a new loan. 9J

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