A. Tenant’s Obligation to Repay

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1. The tenant must reimburse the owner for the difference between the rent the tenant should have paid and the rent he/she was actually charged, if the tenant:

   • a. Fails to provide the owner with interim changes in income or other factors;

   • b. Submits incorrect information on any application, certification, or recertification;

   • c. Fails to report income received, and

   • d. As a result, is charged a rent less than the amount required by HUD's rent formulas.

2. The tenant acknowledges his/her obligation to make such reimbursements:

   • a. In paragraph 18 of the Model Lease for Subsidized Programs;

   • b. In paragraph 14 of the Model Lease for Section 202/8 or Section 202 PAC; and

   • c. In paragraph 12 of the Model Leases for Section 202 PRAC and Section 811 PRAC.

3. If the tenant does not pay in full, an owner should enter into a repayment agreement with the tenant to collect these funds over a specific period of time.

4. The tenant is not required to reimburse the owner for undercharges caused solely by the owner's failure to follow HUD's procedures for computing rent or assistance payments.

5. A tenant must reimburse the owner for the total overpayment back to the *time overpayment of assistance started, not to exceed the 5-year limitation that the tenant was receiving assistance discussed in forms HUD-9887 and HUD-9887-A. This 5-year limitation applies for all overpayments of assistance and is not limited to errors found using the EIV system.

6. The owner must have the form HUD-50059(s) on file that was in effect during the period(s) that the overpayment of assistance occurred, along with any supporting documentation, in order to calculate the amount the tenant must reimburse to the owner. The form HUD-50059(s) is the document whereby the tenant(s) certifies to the accuracy of the information recorded on the form. If the owner does not have this historical information, they cannot go back to the tenant for any overpayment of assistance.*

• B. Owner’s Obligation to Repay

  1. The owner is not required to reimburse HUD immediately for overpayments of assistance where the overpayment was caused by the tenant's

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2. *The owner may retain a portion of the repayments they actually collect from the tenants who have improperly reported their income at the time of certification or recertification to help defray the cost of pursuing these cases (this is not limited to cases where the owner has determined fraud).

   • a. Owners may only retain an amount to cover their actual costs, which is the lesser of :

     • (1) Their actual costs, or

     • (2) 20 percent of the amount received from the tenant.

• b. Amounts retained by the owner must be deposited into the project’s operating account to offset the expenses incurred for these cases.

  • c. As with all income and expenses of the project, owners must keep records of the receipt and disbursement of all amounts collected from the tenant for audit purposes. At a minimum, the owner must record:

    • (1) Date and amount(s) received from the tenant;

    • (2) Expenses incurred;

      • Examples of types of expenses incurred include staff time for verifying the unreported income; meeting with tenant; drafting repayment agreements; generating and sending monthly invoices to tenant; generating manual voucher adjustments; collection agency fees, if applicable; and, meeting state requirements.

    • (3) Amount(s) retained; and

    • (4) Voucher date(s) and amount(s) of reimbursement made to HUD.*

3. The owner must reimburse HUD for all other overpayments of assistance where such overpayments were due to the owner's error or the owner's failure to follow HUD's procedures. HUD or the Contract Administrator may permit the owner to repay such overpayments in one lump sum or over a period of time through reduction of normal housing assistance requisitions if immediate repayment in full would jeopardize the financial condition of the property.

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