When a resident does not report or under-reports income, it will affect the amount of assistance they receive. Once this income discrepancy is discovered and verified, corrections to the resident’s previous certifications are required to ensure the correct amount of assistance is paid. He or she may repay in a lump sum; enter into a repayment agreement; or a combination of the two. If the tenant is unable to repay the difference between the original assistance paid and the corrected amount that will include unreported income, a Repayment Agreement should be completed. Repayment Agreements have specific requirements which are outlined in HUD Housing Notice 2013-06. (Visit our Resource Center for a copy of this Notice.)
Properties are required to make the needed corrections to all previous certifications affected by the unreported income amount. These corrections will generate adjustments on the voucher for the change(s) that were made. Properties are required to report all repayment agreements in Section 7 of the MAT30. Detailed information is outlined in MAT User’s Guide Chapter 4 and Chapter 6 as well as instructions posted along with the form on the HUD 5 forms page. In addition to Housing Notice 2013-06, you will find more information about this topic in the HUD Handbook 4350.3, Chapter 8, Section 4 to help with identifying when an owner must investigate; how to distinguish between tenant error and fraud; and how to take action when a discrepancy is found.
The property must enter the agreement information into their software and have an agreement id that is unique to each instance of misreporting. This id is required for the reversal and each payment made. Additional instances of misreporting would require a new agreement id. The reversal (this will be a positive amount to offset the negative adjustments generated by the corrected certifications) and is reported in Repayment Agreements (Section 7) of the MAT30. The reversal amount must not be greater than the adjustments generated by the corrected certifications.
You will find an Excel spreadsheet in the TRACS Industry Specification zip file that will assist you in determining the repayment amount owed. The spreadsheet also includes examples to help you properly reporting it on a voucher.
As payments are received from the tenant, the property will report the payment on their in Section 7 using the agreement id. Owner/Agents may retain a portion of the money collected to cover incurred expenses as result of the unreported income/program violation. The retained funds must be the lesser of the actual cost or 20% of the amount collected from the tenant as detailed in Chapter 8, 8-21, B-2 of HUD Handbook 4350.3.
Please visit the Resources Center to review HUD Notices and Handbooks.