TKC - Frequently Asked Questions
What are HUD's rules for Repayment Agreements?
If it is determined that a tenant: a.) failed to provide the owner with interim changes in income or other factors; b.) submitted incorrect information on any application, certification or recertification, and/or: c.) failed to report income received; and as a result is charged less than the amount required by HUDs formulas, 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 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.
*The tenant is not required to reimburse the owner for undercharges caused solely by the owner's failure to follow HUDs procedures for computing rent or assistance payments.
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 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 (unless the tenant agrees to pay more).
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 owner/agent.
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.
Owners/agents 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.
The tenant and O/A must both agree on the terms of the repayment agreement. You may wish to consult with HUD’s Housing Counseling Agency in your area to assist you 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.