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                             February 7, 1997
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                             GSBCA 13907-RELO


                     In the Matter of PETER C. WAGNER


     Peter C. Wagner, Washington, DC, Claimant.

     Deborah A. Osipchak, Manager, Financial Policy and
Administrative Branch, Department of Transportation, Federal
Aviation Administration, Washington, DC.

BORWICK, Board Judge. 

     Mr. Peter Wagner, an employee of the Maritime Administration,
claims entitlement to reimbursement of $3,300 for a Department of
Veterans Affairs (VA) funding fee incurred in the purchase of his
new home after his permanent change of station (PCS) transfer from
Port Arthur, Texas to Washington, DC.  On November 26, 1992,
claimant reported to his new station in Washington, DC.  On October
21, 1994, claimant received a one year extension of the time period
to seek reimbursement for real estate expenses.  On November 9,
1995, claimant closed on the purchase of his home in the Washing-
ton, DC metropolitan area.  

     Claimant used a VA loan to finance the purchase of his house. 
As stated on the settlement sheet, claimant incurred an expense of
$1,683 for a loan origination fee and an expense of $3,300 for a
"VA funding fee."  The agency disallowed the reimbursement of the
funding fee because it considered that fee to be a non-reimbursable
finance charge under the Federal Travel Regulation (FTR).  Claimant
maintains that the funding fee is an allowable charge because it is
similar to the reimbursable VA loan application fee and because the
FTR makes such a "similar" fee reimbursable.     

     The FTR lists as a reimbursable miscellaneous expense a VA
loan application fee.  41 CFR 302-6.2(d)(1)(i) (1994) (FTR 302-
6.2(d)(1)(i)).  It also lists as a reimbursable expense "other fees
and charges similar in nature to those listed in paragraph (d)(1)-
(i) through (v) of this section [which includes the VA loan
application fee] unless specifically prohibited in paragraph (d)(2)
of this section."  FTR 302-6.2(d)(1)(vi).  Paragraph (d)(2) of
Section 302-6.2 includes in its list of non-reimbursable expenses:
"no fee, cost, charge, or expense determined to be part of a
finance charge under the Truth in Lending Act . . . and Regulation
Z issued by the Board of Governors of the Federal Reserve System." 
FTR 302-6.2(d)(2)(v).  The General Accounting Office held that the
VA funding fee is a finance charge within the meaning of Regulation
Z because it is imposed in connection with the extension of credit,
rather than for services rendered without regard to whether the
credit was sought or obtained.  Anders E. Flodin, 64 Comp. Gen. 674
(1985); 62 Comp. Gen. 456 (1983). 

     The version of Regulation Z in effect at the time of claim-
ant's house settlement provided in pertinent part:

     (a) [The finance charge] includes any charge payable
     directly or indirectly by the consumer and imposed di-
     rectly or indirectly by the creditor as an incident to
     or a condition of the extension of credit.    

     (b) Example of finance charge.  The finance charge in-
     cludes the following types of charges. . . .

     (3) Points, loan fees, assumption fees, finder's fees
     and similar charges.

     . . . .

     (5) Premiums or other charges for any guarantee or in-
     surance protecting the creditor against the consumer's
     default or other credit loss.  

12 CFR 226.4 (1995).  

     Statute requires the VA to assess a loan fee as a condition of
that Department's making, guaranteeing, or insuring a loan to
veterans.  38 U.S.C.  3729.   The fee is intended to be comparable
to the loan fee assessed as points in a conventional mortgage.  S.
Rep. No. 504, 97th Cong., 2d Sess. 248 (1982), reprinted in 1982
U.S.C.C.A.N. 1641, 1825.  

     Pursuant to that statutory requirement, the VA assesses a
funding fee for the various types of loans it makes, insures, or
guarantees.  38 CFR 36.4312(e).  This fee is payable by the lender
and may be paid out of the proceeds of the loan.  38 CFR
36.4312(e)(3),(b) (1994).  The funding fee is a finance charge
within the meaning of the version of Regulation Z in effect when
claimant closed on his house--12 CFR 226.4(a)(1995)--and is ther-
efore not a reimbursable expense under the FTR.  



                              _________________________
                              ANTHONY S. BORWICK
                              Board Judge