Tenant Knowledge Center  

Income Discrepancies and Repayment Agreements

Investigating Discrepancies
O/As must investigate and confirm possible income discrepancies of $2,400 or more as disclosed on the EIV Income Discrepancy Report. They must also investigate and confirm other possible errors that may result in over or underpayment of HUD subsidy, e.g., tenants reported by SSA as being deceased, tenants receiving multiple subsidies, etc.

O/As may not suspend, terminate, reduce, make a final denial of rental assistance, or take any other adverse action against an individual based solely on the data in EIV.
When the tenant disputes the employment and income information in EIV, the O/A must independently verify the disputed information by obtaining third party verification directly from the third party source.

The O/A must notify the tenant of the results of any third party verification and request the tenant come into the office, within 10 days of notification, to discuss the results (see Chapter 8, Paragraph 8-17 of Handbook 4350.3 REV-1). The tenant may contest the findings in the same manner as applies to other information and findings relating to eligibility factors.

If the O/A determines that the tenant is in non-compliance with his/her lease because he/she knowingly provided incomplete or inaccurate information, the O/A must follow the guidance in Chapter 8, Section 3 of Handbook 4350.3 REV-1, for terminating the tenant’s tenancy and Chapter 8, Paragraph 8-18 for the requirements on filing a civil action against the tenant to recover improper subsidy payments.

Where fraud is suspected, the O/A should report this to the HUD OIG Office of Investigation in the District that has jurisdiction in the state the project is located.

Unreported or Underreported Income

If the O/A determines the tenant unreported or underreported his/her income, the O/A must go back to the time the unreported or underreporting of income started, not to exceed the 5-year limitation that the tenant was receiving assistance described on forms HUD-9887 and HUD-9887-A, and calculate the difference between the amount of rent the tenant should have paid and the amount of rent the tenant was charged. The O/A must notify the tenant of any amount due and their obligation to reimburse the O/A. A record of this calculation must be provided to the tenant and also retained in the tenant’s file. Tenants with unreported income that goes back further than 5 years can be reported to the OIG for fraud. (See Section IX.C on Tenant Repayment of Unreported or Underreported Income.)

The O/A must have the form HUD-50059(s) on file that was in effect during the period(s) that the tenant had unreported or underreported income, 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 income included on the form. If the O/A does not have this historical information, the O/A cannot go back to the tenant for unreported or underreported income.

Tenant Repayment of Unreported or Underreported Income

1. Tenant’s Obligation to Reimburse
Tenants are obligated to reimburse the O/A if they are charged less rent than required by HUD’s rent formula due to underreporting or failure to report income. The tenant is required to reimburse the O/A for the difference between the rent that should have been paid and the rent that was charged. (See Paragraph 18 of the HUD Model Lease for Subsidized Programs, Paragraph 14 of the Section 202/8 and 202/162 PAC lease and Paragraph 12 of the Section 202 and Section 811 PRAC leases found in Appendix 4 and Paragraph 8-13.A.5 of Handbook 4350.3 REV-1.)

Note: Tenants are not required to reimburse the O/A for undercharges caused solely by the O/A’s failure to follow HUD’s procedures for computing rent or assistance payments. (See Chapter 8, Paragraph 8-20.B.2, of Handbook 4350.3 REV-1

 Repayment Options
Tenants can repay amounts due:

  1. In a lump sum payment; or
  2. By entering into a repayment agreement with the O/A; or
  3. A combination of (1) and (2), above.

Tenants who do not agree to repay amounts due in accordance with 2.a, above, will be in non-compliance with their lease agreement and may be subject to termination of tenancy. (See Paragraph 8-13.A.5 of Handbook 4350.3 REV-1.)

Tenants may also be required to repay funds to the O/A due to a:

  1. Civil action taken by the O/A, or
  2. Court action as a result of an OIG audit.

Repayment Agreements

The tenant and O/A 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 O/A 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

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 amount of 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.

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

New repayment agreements 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 non-compliance and may be subject to termination of their lease.
  3. Contain a clause whereby the terms of the agreement will 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 O/A.
  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 O/A.

O/As must not apply a tenant’s monthly rent payment towards the repayment amount owed that would result in an accumulation of late rent payments. The monthly payment due on the repayment agreement is in addition to the tenant’s monthly rent payment.

Return to Tenant FAQ