Board of Contract Appeals

                    General Services Administration

                         Washington, D.C. 20405

 

                           __________________

 

                            October 24, 2000

                           __________________

 

 

                            GSBCA 15397-RELO

 

 

                   In the Matter of LaDONNA S. BOOKER

 

 

        LaDonna S. Booker, Clinton, MD, Claimant.

 

        Genila  Queen,  PCS  Claims Officer,  Real  Estate Division,

   Baltimore  District,  United  States  Army  Corps  of  Engineers,

   Baltimore, MD, appearing for Department of the Army.

 

   HYATT, Board Judge.

 

        In July 2000, claimant, LaDonna S. Booker, purchased a house

   in Clinton, Maryland  incident to a  permanent change of  station

   (PCS) authorized  in  April  2000.   Ms.  Booker  challenges  the

   decision of the  United States Army Corps of  Engineers (Army) to

   disallow  a portion  of  the  real  estate  transaction  expenses

   claimed.  In  particular, the Army determined that  her claim for

   an  "up-front mortgage  insurance premium" was  unallowable under

   applicable regulations.  

 

        After closing on the new  house, Ms. Booker filed a DD  Form

   1705,  "Application for Reimbursement of Expenses Incurred by DoD

   Civilian Employee  Upon Sale or  Purchase (or both)  of Residence

   Upon  a Change  of  Duty  Station."   Among  other expenses,  she

   claimed  the  amount of    $3225.38,  which  was reflected  as  a

   "mortgage  title policy."    The PCS  claims  office denied  this

   portion of the claim on August 23, 2000.

 

        In preparing  her claim  for submission  to  the Board,  Ms.

   Booker  clarified her application  for reimbursement to  show the

   amount of $3225.38  as an "up-front mortgage  insurance premium,"

   rather than as a mortgage title policy.  She has also submitted a

   letter from U.S. Home Mortgage Corporation explaining this term:

 

             The definition of Up Front Mortgage Insurance

             Premium  is the premium paid to FHA to insure

             the loan.  This premium is to defer the  cost

             if  the loan should go into foreclosure.  The

 

             borrower may finance 100%  of the premium  or

             pay it in cash, but may not finance a portion

             thereof.     It  is  in  no   fashion  hazard

             insurance or property loss coverage.  

 

                               Discussion

 

        In response to Ms. Booker's  claim, the Army points out that

   the amount claimed is  not reimbursable under the Federal  Travel

   Regulation (FTR).  Specifically,  section 302-6.2(d)(2)(i) of the

   FTR  provides  that  the  following  items of  expenses  are  not

   reimbursable:  "[o]wner's title  insurance policy, 'record title'

   insurance policy, mortgage insurance or insurance against loss or

   damage of  property,  and  optional insurance  paid  for  by  the

   employee in connection  with the purchase of a  residence for the

   protection of the employee."

   42  CFR  302-6.2(d)(2)(i)  (1999).   The  pertinent  Joint Travel

   Regulations (JTR)  provision states the  same rule.   JTR C14002-

   A.4.b(1).  

 

        We have previously addressed this issue in denying the claim

   of Rebecca Manning, GSBCA 14586-RELO, 98-2 BCA   29,981, where we

   pointed   out  that  the  FTR  explicitly  states  that  mortgage

   insurance  is a  non-reimbursable item  of expense.   We  further

   noted in Manning that the General Accounting  Office (GAO), which

   previously  decided these  claims,  also  consistently held  that

   mortgage insurance  is not  a reimbursable  real estate  expense.

   Based on the  most recent information provided  by claimant, this

   expense clearly appears to constitute mortgage insurance -- i.e.,

   a payment made for the protection of the lender in the event of a

   default   by    the   buyer    over   the    lifetime   of    the

   loan.[foot #] 1    See   Steven  B.  Love,  B-257892   (Jan.  25,

   1995); Bruce R. Wheeler, B-249621 (Jan. 19, 1993).  As such,  the

   Army properly disallowed this expense.

   ___________________________

 

                                           CATHERINE B. HYATT

                                           Board Judge

                                                                    

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        [foot #] 1 We   note   that  initially   this   expense  was

   identified  as   mortgage  title   insurance.     Mortgage  title

   insurance, if purchased  for the protection of the  lender in the

   event of  a defect in the  title, may be reimbursable  under some

   circumstances.  Manning.  Mortgage title insurance which benefits

                   _______

   the owner is not reimbursable unless required by the lender  as a

   condition of financing.  The  record before us, however, does not

   support a finding  that the expense claimed was  to provide title

   insurance for the lender or was owner's  title insurance required

   by the lender  as a condition of  obtaining financing.  James  A.

                                                           _________

   Fairley, B-258932 (Sept. 19, 1995).

   _______

 

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