Board of Contract Appeals General Services Administration Washington, D.C. 20405 _______________________ August 17, 1998 _______________________ GSBCA 14604-RELO In the Matter of DAVID P. BROCKELMAN David P. Brockelman, Aurora, CO, Claimant. Mark J. Slowiaczek, Civilian Law Division, Office of General Counsel, Defense Finance and Accounting Service, Denver, CO, appearing for Department of Defense. DeGRAFF, Board Judge. In mid-1997, David P. Brockelman, an employee of the Department of Defense (DoD), transferred from Indiana to Colorado, where he purchased a residence. DoD decided to reimburse Mr. Brockelman for all but three of the expenses that he incurred in connection with his purchase. After Mr. Brockelman asked us to review DoD's decision, DoD agreed to reimburse Mr. Brockelman for one of the three expenses, a loan closing fee. As explained below, DoD correctly decided to deny Mr. Brockelman s request for reimbursement for the two remaining expenses, a home inspection fee and a loan commitment fee. According to the regulations governing Mr. Brockelman s claim for a home inspection fee ($110), a property inspection fee is reimbursable if the inspection was required either by a lender as a condition of the sale or by Federal, state, or local law. 41 CFR 302-6.2(d)(1)(xi) (1997); JTR C14002-A.4.a(11). Mr. Brockelman's lender informed DoD that the inspection fee was not required by state or local law, and was not a condition of financing. DoD denied Mr. Brockelman s claim because he did not establish that the inspection was required either by law or as a condition of the sale. Although Mr. Brockelman disagrees with DoD s decision, he has not provided any facts to show that the decision is incorrect. Because Mr. Brockelman has not established that the home inspection was a required service, DoD properly decided to deny reimbursement for the home inspection fee. According to the regulations governing Mr. Brockelman s claim for a loan commitment fee ($100), a fee is not reimbursable if it is determined to be part of the finance charge under Regulation Z issued by the Board of Governors of the Federal Reserve System. 41 CFR 302-6.2(d)(2)(v); JTR 14002-A.4.b(5). Regulation Z explains that a finance charge is one that is imposed by a creditor as an incident to . . . the extension of credit. 12 CFR 226.4(a) (1997). Although Mr. Brockelman s lender said that the loan commitment fee was used to pay administration costs and transfer costs associated with residential financing, Mr. Brockelman paid his lender a loan origination fee to compensate the lender for such costs. 41 CFR 302-6.2(d)(1)(ii); JTR 14002-A.4.a(2). The General Accounting Office (GAO), which considered claims such as this until mid-1996, explained that a loan commitment fee is a charge imposed by a lender in order to set aside funds for a borrower. Consistent with the GAO's explanation, the Federal Housing Administration in Colorado describes a commitment fee as a "lock-in" fee. The GAO decided that a loan commitment fee was not reimbursable because it was a fee imposed by a creditor incident to the extension of credit. Leslie E. Russell, Jr., B- 217189 (May 6, 1985). We agree with the GAO s conclusion. The loan commitment fee is a finance charge within the meaning of Regulation Z because it was imposed by Mr. Brockelman s lender incident to the extension of credit. Because the loan commitment fee is a finance charge, DoD properly decided to deny reimbursement for the fee. We deny the claim. __________________________________ MARTHA H. DeGRAFF Board Judge