Board of Contract Appeals

                    General Services Administration

                         Washington, D.C. 20405

 

            _______________________________________________

 

                           February 29, 2000

            _______________________________________________

 

 

                            GSBCA 15198-RELO

 

 

                     In the Matter of JON M. RUSSO

 

 

        Jon M. Russo, Burlington Township, NJ, Claimant.

 

        Capt.  Sloan  M.  Pye,   Assistant  Staff  Judge   Advocate,

   Department  of  the Air  Force,  McGuire AFB,  NJ,  appearing for

   Department of the Air Force.

 

   BORWICK, Board Judge.

 

        Claimant,  John M.  Russo,  a  civilian  employee  with  the

   Department  of  the  Air Force,  was  permanently  transferred to

   McGuire Air  Force Base  (AFB), New Jersey.   In  connection with

   that  transfer, he purchased  a house in  Burlington, New Jersey,

   and  sought reimbursement  of  real estate  transaction expenses.

   The  agency denied claimant reimbursement of the loan application

   fee and that part of the premium for the mortgage title insurance

   policy representing the owner's title  insurance, concluding that

   the  Joint Travel Regulations  (JTR) made reimbursement  of those

   expenses  unallowable.   Claimant  filed a  claim  at this  Board

   contesting the agency's  conclusion.  For  the reasons below,  we

   sustain the decision of the agency.  

 

        Claimant  sought reimbursement of the mortgage lender's loan

   application fee of $171.  The agency denied reimbursement because

   the  mortgage was not a Department  of Veterans Affairs (VA) or a

   Federal Housing  Administration  (FHA) mortgage.    Claimant  was

   reimbursed the mortgage lender's origination fee of $267.37.  

 

        Claimant  also sought  reimbursement  of  a title  insurance

   premium  of $1367.    The agency  investigated  this expense  and

   established  that  $699 of  that  amount  was  for owner's  title

   insurance  and $668  was for  lender's title  insurance.   In New

   Jersey,  the  two  premiums  are  separable.    As  explained  by

   claimant's mortgage lender,  the owner's title insurance  in this

   case was for a title insurance policy that protected the buyer of

   the  home from any prior liens  or judgments having been filed on

   the property.   Claimant's mortgage  lender did not require  as a

   condition of  the loan  that claimant  purchase owner's  mortgage

   insurance.  Instead, the mortgage lender required that the lender

   obtain  "lender's  title  insurance  to  confirm  that  the  loan

   property is free and clear of unacceptable unauthorized liens and

   encumbrances  and to  insure  the validity  and  priority of  our

   lien."

 

 

        The  JTR    provide that  the  term  "reimbursable expenses"

   includes "FHA  or VA fee  for a loan  application."   JTR C14002-

   A.4.a.(1).   Claimant  says  that  his mortgage  was  a "Cost  of

   Savings Index (COSI) loan" and  that "[t]his is a Federal lending

   program."  Claimant does not identify the federal agency involved

   in  administering what  seems on  its face  to be  a conventional

   adjustable  rate mortgage.    Regardless,  the  JTR  only  allows

   reimbursement  of   FHA  or   VA  loan   application  fees,   not

   reimbursement of application fees for other loans.

 

        The  cost  of the  owner's  title  insurance policy  may  be

   reimbursed provided it is a prerequisite to financing or the cost

   of the  owner's title insurance  is inseparable from the  cost of

   the other  insurance that  is a prerequisite  to financing.   JTR

   14002-A.4.a(9).    Here,  the agency  has  demonstrated  that the

   owner's mortgage insurance was not a prerequisite for financing--

   only  the lender's  title insurance  was.   The  premium for  the

   owner's mortgage insurance was separable from the premium for the

   lender's title  insurance.  That being the case, reimbursement of

   owner's  title insurance is specifically prohibited by JTR 14002-

   A.4.b(1).  The agency paid  that portion of the premium allocable

   to the lender's title insurance.  As the agency correctly applied

   the JTR in  this matter, the Board  sustains the decision of  the

   agency.  

 

 

 

                                      __________________________

                                      ANTHONY S. BORWICK

                                      Board Judge