Board of Contract Appeals

                    General Services Administration

                         Washington, D.C. 20405

 

 

 

                                                    

 

                           November 21, 2000

                                                    

 

 

                            GSBCA 15419-RELO

 

 

                 In the Matter of WAYMON T. SAXON, JR.

 

 

        Waymon T. Saxon, Jr., Duluth, GA, Claimant.

 

        Berlitta  Garnett,  Travel   Coordinator,  Veterans  Affairs

   Medical Center (Atlanta), Decatur,  GA, appearing for  Department

   of the Army.

 

   DANIELS, Board Judge (Chairman).

 

        The Department  of Veterans  Affairs  transferred Waymon  T.

   Saxon, Jr., to Atlanta, Georgia, in July 1999.  Mr. Saxon and his

   wife  later purchased  a home  near this  new duty station.   The

   agency  reimbursed the employee  for all transaction  expenses he

   incurred in buying the house, save four:  lender's inspection fee

   ($75),  Georgia  residential  loan  fee  ($6.50),  processing fee

   ($300), and administration fee ($625).  Mr. Saxon has asked us to

   review the agency's denial of reimbursement of these expenses.

 

        The only  document in the  record which bears on  the issues

   raised  is  a  letter from  Southeastern  Mortgage  and Financial

   Services,  Inc., to  Mr. Saxon.    The letter  explains that  the

   inspection fee was paid to  an appraiser.  The original appraisal

   was made before the construction of  a new house on the  property

   was complete.   The $75 fee  was an extra charge  imposed because

   the  appraiser  had  to  return   to  the  property  and  perform

   supplemental  work to complete  his appraisal.   The  letter also

   explains  that the  other  fees  were charged  by  the lender  in

   addition to  a one-percent loan  origination fee, and  that these

   fees are standard and necessary prerequisites for the making of a

   mortgage loan.

 

        The information  provided by Southeastern  Mortgage confirms

   that the agency's determination not to reimburse the employee for

   any of the fees was correct.  

 

        Under the Federal Travel Regulation (FTR), "[t]he  customary

   cost of an appraisal . . . may be reimbursed."  41 CFR 302-6.2(b)

   (1999).   However, expenses  that result  from construction  of a

   residence and would not have  been incurred if the property being

   purchased  were an existing residence are  not reimbursable.  Id.

   302-6.2(d)(1)(x),  (2)(vi).  Because  the appraisal fee  at issue

   was charged only because Mr. Saxon was buying a newly-constructed

   house, it is not reimbursable.

 

 

        As to the other fees in  question, the FTR states that "[n]o

   fee,  cost, charge,  or  expense  determined to  be  part of  the

   finance charge"  is reimbursable, unless  specifically authorized

   by the regulation.   41 CFR 302-6.2(2)(v).   The fees in question

   fall within this category, since they are imposed by the creditor

   as  an incident to the extension of  credit.  Gerald Fediw, GSBCA

   14256-RELO,  98-1  BCA     29,513  (1997).    One  of  the  items

   specifically   authorized    by   the   FTR    as   reimbursable,

   notwithstanding its being part of the finance  charge, is "[l]oan

   origination fees and similar charges such as loan assumption fees

   and loan  transfer fees."   Id. 302-6.2(d)(1)(ii).  The  fees Mr.

   Saxon paid may be reimbursable if they fall within this category.

   The FTR limits reimbursement for these fees, however:

 

        Reimbursement may exceed 1 percent [of the loan amount]

        only  if the  employee shows  by  clear and  convincing

        evidence that:

 

             (A)  The higher rate does not include prepaid

             interest, points, or a mortgage discount; and

 

             (B)  The higher  rate is  customarily charged

             in  the  locality  where  the  residence   is

             located.

 

   Id.

 

        Mr. Saxon has already been reimbursed for a loan origination

   fee  of  one  percent  of  the loan  amount.    The  letter  from

   Southeastern   Mortgage  does  not   constitute  the   clear  and

   convincing  evidence   needed  to   meet  the   FTR's  test   for

   reimbursement in excess of that one percent.  The letter does not

   address part (A)  of the test, and  since both parts of  the test

   must be  met for reimbursement  to be appropriate, that  ends the

   matter.  Even  if the finding  required under  part (A) had  been

   made, however, Mr. Saxon still could not receive reimbursement of

   the fees in question.   To the  extent that the letter  discusses

   matters  relevant to  part (B), it  says only that  the fees were

   generally charged  in the  community where  Mr. Saxon  lives, not

   that the customary charge for those fees plus other elements of a

   loan  origination fee customarily exceed one  percent of the loan

   amount in that community.

 

        The claim is consequently denied.

 

                                      _________________________ 

                                      STEPHEN M. DANIELS

                                      Board Judge