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