8-23 Repayment Agreements

• A. The tenant and owner must both agree on the terms of the repayment agreement.

The tenant may wish to consult with HUD’s Housing Counseling Agency in their area to assist them in working with the owner to reach agreeable terms for the repayment agreement. See the Housing Counseling Agency website for a listing of agencies for each state at: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

1. Monthly Payment.

The tenant’s monthly payment must be what the tenant can afford to pay based on the family’s income.

The monthly payment plus the tenant’s total tenant payment (TTP) at the time the repayment agreement is executed should not exceed 40 percent of the family’s monthly adjusted income.

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Section 4: Discrepancies, Errors, and Fraud

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Example:

• Family’s monthly adjusted income is $1,230.

• Family’s monthly TTP is $369 (30% of the family’s monthly adjusted income.

• 40% of the family’s monthly adjusted income is $492.

• The monthly payments for the repayment agreement should not exceed $123 per month ($492 - $369 = $123) ($369 monthly TTP+ $123 repayment = $492, 40% of the family’s monthly adjusted income.

2. Repayment Time Period.

The time period for repayment by the tenant of the amount owed.

Example: The tenant agrees to repay $1,000 and agrees to monthly payments of $25.

$1,000/$25 = 40 months (time period).

• B.

  • The repayment agreement must:

  1. Include the total retroactive rent amount owed, the amount of lump sum paid at time of execution of the agreement, if applicable, and the monthly payment amount.

  2. Reference the paragraphs in the lease whereby the tenant is in noncompliance and may be subject to termination of their lease.

  3. Contain a clause whereby the terms of the agreement can be renegotiated if there is a decrease or increase in the family’s income of $200 or more per month.

  4. Include a statement that the monthly retroactive rent repayment amount is in addition to the family’s monthly rent payment, and is payable to the owner.

  5. Late and missed payments constitute default of the repayment agreement and may result in termination of assistance and/or tenancy.

  6. Be signed and dated by the tenant and the owner.

• C. Owners must not apply a tenant’s monthly rent payment towards the repayment amount owned that would result in an accumulation of late rent payments. The

HUD Occupancy Handbook Chapter 8: Termination

8/13

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Section 4: Discrepancies, Errors, and Fraud monthly payment due on the repayment agreement is in addition to the tenant’s monthly rent payment.*