June 20, 1997 GSBCA 13721-RELO In the Matter of BRENT T. WAHLQUIST Brent T. Wahlquist, Alton, IL, Claimant. Charles M. Albrecht, Certifying Officer, Office of Surface Mining, Reclamation and Enforcement, Denver, CO, appearing for Department of the Interior. GOODMAN, Board Judge. Brent T. Wahlquist is an employee of the Department of the Interior. He submitted a claim for reimbursement of real estate expenses incurred when he sold his residence in Dumfries, Prince William County, Virginia, in April 1995 as the result of a change in his official duty station. The agency denied reimbursement of certain expenses totalling $4,050.01 -- loan origination fee ($1,789.50), loan discount fee ($667.69), and various closing costs totalling $2,144.89. By letter dated May 28, 1996, the agency requested a decision from the General Accounting Office (GAO) pursuant to 31 U.S.C.  3529 as to whether such expenses should be paid. Apparently no attempt was made by either Mr. Wahlquist or the agency before submission and denial of the initial claim to determine the prevailing practice in the Prince William County area as to who customarily pays closing costs in the sale of a residence. After the initial voucher was denied, the agency and Mr. Wahlquist submitted additional information concerning the custom in that area. The agency contacted the Department of Veterans Affairs (VA) in Roanoke, Virginia, as this was a VA loan. The VA told the agency that the seller "normally pays a good portion of the loan discount and closing costs the largest percentage of the time, and that a loan origination fee is considered part of the closing costs. The agency then contacted the Washington, DC, office of Housing and Urban Development (HUD) for guidance concerning local custom for the Prince William County, Virginia, area. A representative suggested that the agency contact a title company. The agency then contacted the title company which prepared the settlement statement for Mr. Wahlquist. The title company informed the agency by letter dated May 20, 1996, that it is local custom in the area of Prince William County, Virginia, for the seller to contribute funds towards the buyer s closing costs. Mr. Wahlquist s realtor provided information for seventeen homes that had sold in the area in 1994 and 1995. Ten homes were sold with VA loans; nine of the VA loans had seller assistance of $2,500 to $8,400. Over sixty percent of the homes were sold with VA loans and the buyers paid some closing costs. The realtor also sent a letter dated May 20, 1996, stating that [t]he local practice for sellers in the area for years has been to pay various closing costs for the buyer which can include the buyer s closing costs on a VA loan, loan discount, and [loan] origination fee. Loan Origination Fee The agency disallowed reimbursement of the buyer s loan origination fee of $1,780.50 (one percent of the loan amount) paid by Mr. Wahlquist on the basis that such costs are customarily paid by the buyer and not by the seller, citing to a decision of the GAO, Nicholas Berg, B-229026 (Aug. 8, 1988). This decision cited the Federal Travel Regulation (FTR), which provides that loan origination fees are reimbursable to the seller of a residence at the old official duty station to the extent that they do not exceed amounts customarily charged in the locality of the residence and if they are customarily paid by the seller. 41 CFR 302-6.2(d)(1)(ii) (1996) (FTR 302-6.2(d)(1)(ii)). However, the decision relied upon by the agency in disallowing reimbursement concerned the sale of a house in Miami, Florida. In Christopher L. Chretien, GSBCA 13704-RELO, 97-1 BCA  28,701 (1996), we stated: An expense is "customarily" paid if, by long and unvarying habitual actions, constantly repeated, such payment has acquired the force of a tacit and common consent within a community. The information supplied by the agency and Mr. Wahlquist is sufficient to establish that in April 1995, sellers customarily paid closing costs in the Prince William County, Virginia, area when a VA loan is used. Accordingly, pursuant to FTR 302- 6.2(d)(1)(ii), Mr. Wahlquist is entitled to be reimbursed for this type of fee in the amount not to exceed one percent of the loan without itemization of the lender's administrative charges. As the loan origination fee is one percent of the loan in this instance, Mr. Wahlquist is entitled to reimbursement of $1,780.50. Loan Discount Fee The agency also disallowed a loan discount fee in the amount of $667.69. FTR 302.6.2(d)(2)(ii) clearly states that "mortgage discounts" are not reimbursable. This is true regardless of who customarily pays. "Loan discounts" and "mortgage discounts" are synonymous. The agency properly disallowed reimbursement of the loan discount fee. Other Closing Costs The agency denied reimbursement of various closing costs subject to a decision advising as to entitlement. As stated above, the information supplied by the agency and Mr. Wahlquist is sufficient to establish that at the relevant time, sellers customarily paid closing costs in the Prince William County, Virginia, area when a VA loan is used. We must examine the FTR to determine whether the specific costs claimed are reimbursable if customarily paid by the seller. Title Examination ($272.49) The costs of searching title are reimbursable pursuant to FTR 302-6.2(c) if customarily paid by the seller, not to exceed amounts customarily charged in the locality of the residence. Accordingly, this cost is reimbursable unless the agency has information indicating that the amount sought exceeds the amounts customarily charged in the locality. Title Insurance - Lender's ($479.60) and Owner's ($246) Coverage Mr. Wahlquist seeks reimbursement of the cost of lender's and owner's title insurance coverage in the amounts of $479.60 and $246. Again, FTR 302-6.2(c) provides for reimbursement of the cost of a title insurance policy where customarily furnished by the seller. However, FTR 302-6.2(d)(2)(i) states that owner s title insurance is not reimbursable except as provided in FTR 302- 6.2(d)(1). The exception as stated in FTR 302-6.2(d)(1)(ix) allows reimbursement of owner s title insurance, provided it is a prerequisite to financing or the transfer of the property; or if the cost . . . is inseparable from the cost of other insurance which is a prerequisite to financing. There is no indication in the record that the cost of owner s title insurance was a prerequisite to financing or the transfer of the property, rather than for the protection of the buyer. The cost is separable from the cost of the lender s coverage. Thus, the amount of $246 is not reimbursable. See, e.g., Dawn S. Daugherty, GSBCA 14065-RELO (June 5, 1997). Lender s title insurance is reimbursable. The amount claimed ($479.60) may be paid unless the agency has information indicating that it is not within the range customarily charged in the locality. Endorsements for Environmental/Planned Urban Development ($50) Mr. Wahlquist seeks reimbursement of the cost of preparing endorsements for the environmental/planned unit development. Presumably, this is a legal instrument required in the settlement process. FTR 302-6.2(c) provides for reimbursement of the cost of preparing conveyances, other instruments, and contracts and related notary and recording fees, where customarily furnished by seller. The record does not reflect whether the amount claimed is within the range customarily charged in the locality. The agency must determine the customary amount before making payment and, if necessary, limit the amount of reimbursement to the customary amount. Deed Recording Fee ($14) and Mortgage Recording Fee ($15) Mr. Wahlquist seeks reimbursement of the cost of the deed recording fee ($14) and the mortgage recording fee ($15). FTR 302- 6.2(c) provides for reimbursement of the cost of preparing conveyances, other instruments, and contracts and related notary and recording fees, where customarily furnished by the seller. As the amounts charged are those determined by the local courts, it is assumed that they are within the range customarily charged for such services. Mr. Wahlquist is entitled to reimbursement for these amounts. City, County Tax/Stamps for Deed and Mortgage ($180.70) and State Tax/Stamps for Deed and Mortgage ($542.10) Mr. Wahlquist seeks reimbursement of the cost of city, county tax/stamps for deed and mortgage in the amount of $180.70 and state tax/stamps for deed and mortgage in the amount of $542.10. FTR 302-6.2(d)(1)(iv), (v), and (vi) provide for reimbursement of the cost of mortgage and transfer taxes, state revenue stamps, and other fees and charges similar in nature unless specifically prohibited. As the amounts charged are those determined by the local authorities, it is assumed that they are within the range customarily charged for such services. Mr. Wahlquist is entitled to reimbursement for these amounts. Survey ($200) Mr. Wahlquist seeks reimbursement of the cost of a survey in the amount of $200. Again, FTR 302-6.2(c) provides for reimbursement of the cost of "making surveys." The record does not reflect whether the amount claimed is within the range customarily charged in the locality. The agency must determine the customary amount before making payment and if necessary, limit the amount of reimbursement to the customary amount. Summary of Entitlement to Reimbursement Except for the loan discount fee, Mr. Wahlquist is entitled to reimbursement for the costs incurred and for which this opinion has been requested. Consistent with this opinion, the agency may pay those costs unless it has information indicating that they are in excess of those customarily paid in the locality. If any cost is deemed excessive, payment should be limited to that which is customarily charged. _______________________ ALLAN H. GOODMAN Board Judge