What is necessary to begin a repayment agreement?

In the event that a tenant must reimburse HUD for overpayment of assistance by entering into a repayment agreement with the property, the following policies will ensure accurate accounting measures for both the property and SHCC. Chapter 8, Paragraph 8-20 of HUD Handbook 4350.3 REV-1, Change 3 provides specific guidance in regards to tenants' obligations to repay.

Once a tenant and the owner (the property) have entered into a Repayment Agreement, please follow the following steps to reimburse HUD.

1. Updated, signed certifications retroactive to when the change occurred should be submitted through TRACS on the voucher following the discovery of the overpayment of assistance. This should include corrections for any certifications that were submitted with the incorrect HAP amount during the time of overpayment. Chapter 9, Paragraph 9-5 of the 4350.3 REV-1 requires that owners transmit all tenant certifications and subsidy billings through TRACS. If the tenant refuses to sign the certifications, or has moved out, you will need to determine the amount of assistance that was overpaid to the resident. You cannot submit certifications through TRACS since you will be unable to obtain the tenant signature. Proceed to step 2 below.

2. Get a repayment agreement signed and dated by the tenant. This agreement should be specific and include:

   • Property name and contract number
   • Unit number and tenant name
   • Timeframe that assistance was overpaid
   • Total amount overpaid
   • Explanation of how much the tenant will owe each month

3. The next voucher submission should include adjustments to take back the overpaid HAP subsidy. Chapter 8 Paragraph 8-20 of the HUD 4350.3 says "the owner is not required to reimburse HUD immediately for overpayments of assistance where the overpayment was caused by the tenant's submission of incorrect information." For this reason, you should submit a positive OARQ adjustment to offset the amount deducted from the voucher due to the submission of the corrected certifications. The OARQ amount should equal the total dollar amount owed by the tenant on the repayment agreement.

4. A ledger explaining how much the tenant has repaid should be submitted each month as the repayment occurs. If the tenant has made a payment, please add that amount to your voucher as a separate, negative OARQ. This adjustment should equal the amount on the updated repayment ledger. As the tenant continues to repay, each month there should be another negative OARQ on the voucher, as well as an updated ledger submission.

Example

James Smith in unit 103 received an overpayment of subsidy that was discovered by the property. It was determined that Mr. Smith had a job that he did not report.

Mr. Smith had been receiving subsidy of $600 dollars for January 2007 through March 2007, but new certifications are created to include his employment income and that takes his subsidy payment down to $100 between January 2007 and March 2007.

Regular adjustments that should be on the paper voucher for Mr. Smith in Unit 103:

The total amount of these adjustments comes to $-1,500, reported on the May 2007 voucher. The property submitted a repayment agreement signed and dated by Mr. Smith stating that he owes the property $1,500 and that he will repay that amount with equal payments of $100 over the next 15 months. This amount will be separate, and in addition to his new rent payment.

In order to recoup the $1,500 in the meantime while Mr. Smith is repaying HUD, the property requested a positive $1,500 OARQ on the May 2007 voucher to "wash" the balance out.

The property also submitted a repayment ledger on the May 2007 voucher showing the first payment made by Mr. Smith of $100 on April 1, 2007, and they specifically stated that the amount would be taken out of the May 2007 voucher.

In order to show this repayment to HUD, the property made a $-100 OARQ on the May 2007 voucher to repay HUD.

Southwest Housing Compliance Corporation has found that the steps outlined above provide accurate record keeping and ensure that the property maintains an adequate TRACS compliance percentage with no undue financial burden. In the event of data loss or staff turnover, properties are well protected because SHCC will have accurate data indicating when corrections and income changes occurred.

If you have any questions regarding overpayment of assistance, please contact your TRACS Data Analyst for more information.