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B-220133 1 (1986-03-13)

handle is hein.gao/gaobadmfl0001 and id is 1 raw text is: THE COMPTROLLER GENERAL OICISION . . OP THE UNITEO TATES SWASHINGTON. 0. C. 20549 FILE: B-220133 DATE: March 13, 1986 MATTER OF: Robert F. Novak - Real Estate Expenses - Loan Origination Fee - Mortgage Discount DIGEST: In connection with his purchase of a house at his new duty station, a transferred employee was advised that he would have to pay a 3 percent loan origination fee. How- ever, at the closing the fee was stated and collected as a 1 percent loan origination fee and a 2 percent discount fee. The agency permitted reimbursement of only the 1 percent fee. Since HUD states that the customary and reasonable rate for a loan origination fee is 3 percent; since there is no indication that the interest rdte on the employee's mortgage was adjusted down- ward upon payment of the 2 percent fee; and since both the lending institution and the settlement agent state that the percentage split is solely a function of the lender's accounting method, we find that the 2 per- cent fee is not a finance charge. There- fore, the employee is entitled to recover the additional 2 percent fee to the extent his total recovery will not exceed the statutory limit. Conrad R. Hoffman, Director, Office of Budget and Finance, Veterans Administration (VA), requests our decision concerning Mr. Robert F. Novak's reclaim for a 2 percent fee classified by the employee as a loan origination fee. For the reasons stated below, we find that the 2 percent fee does represent a part of the loan origination fee and Mr. Novak may be reimbursed to the extent that his recovery will not exceed the statutory limit. BACKGROUND Effective April 2, 1984, Mr. Novak was transferred from Marion, Indiana, to Butler, Pennsylvania, where he purchased a new home for $48,000. Incident to his transfer

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