Unauthorized Assistance and
Restitution
• What is it?
• What do I do about it?
• Why do I Care?
Restitution of RA and Overage
• What is restitution of RA?
– Also called RA payback, it is the repayment of unauthorized RA
that was received in error. This happens when a tenant does not
report a change that would increase their NTC and lower the RA
paid on their behalf. This also happens if a tenant reports a change
and management does not recertify as required by regulations.
• What is restitution of Overage?
– Same as above, only the unreported change puts the tenant NTC
over the basic rent which means they should have been paying
overage and not receiving any RA. The unauthorized RA and the
overage has to be paid back.
Restitution of RA and Overage
• Who is responsible for detecting unauthorized assistance?
– Borrowers have the primary responsibility per 7 CFR §3560.703 (b)
– Rural Development also conducts tenant file reviews and may
identify repayment of assistance as well
• Who is responsible for paying any money that is due?
– If the tenant failed to report a change, then the tenant is responsible
for repayment
– If management made an error or did not recertify when the tenant
notified them of the change, then the borrower or management is
responsible depending on the management agreement.
Restitution of RA and Overage
• What do I do when I find a problem?
– Once you have all the documentation, you submit a packet to RD
for review.
– After RD review and concurrence, you will need to send a
preliminary notice of unauthorized assistance or a demand letter to
the tenant depending on the circumstances. See 7 CFR §3560.704
(b) and 7 CFR §3560.709 (c)
– If the tenant agrees to pay in full, notify RD.
– If the tenant needs to make payment arrangements, the payback
schedule must be approved by RD prior to implementation. See 7
CFR §3560.705 (c)
Restitution of RA and Overage
• What needs to be in the packet for RD?
– Copies of Certification packet that was in place
at time of change
– Corrected Cert and documentation
– Current Certification
– Narrative
Date the recert
should have
been done
Line through
information to be
changed, but leave
it legible. Write in
new amount and
carry forward
Remember, when income changes, the
amount of allowable medical also
changes and must be adjusted on the
corrected cert. Forgetting this step is a
common error.
Date the
recert
Carry
through
should have
the
been done
recalculations to
the end of the
tenant cert
How do I determine what the effective date
should be for the revised cert?
– Tenant has a 4/1/07 cert
– Tenant has income change 10/12/07
– Per your lease, how long does the tenant have to notify
you of a change. Lets say 10 days.
– IF the tenant notified you on time it would have been
by 10/22/07.
– How long would it reasonably take to verify everything
for the recertification? Lets say 2 weeks.
• Remember—if the last verifications were more than 90
days old, you would have had to re-verify all the
information to do the recert, not just the income change.
– The Cert would have been ready by 11/5/07 making it
effective 12/1/07
What Needs to be in the Packet for RD
• Current Recertification
– A copy of the new recert if there is one.
Usually errors are found when doing an annual
recert. No matter when it is found, recert the
tenant as soon as you can verify all the
information to get them paying the right
amount. Then you have time to work on the
revised/corrected
What Needs to be in the Packet for RD
• Narrative
– This is the summary of what you have sent
•
•
•
•
Explain the why, when, how
Explain special circumstances
Ask specific questions
Anything you feel is important for RD review
Notice to Borrower/Tenant
Once RD has concurred with your determination, HB Letter 304,
Preliminary Determination notice will include:
• Reasons determined to be unauthorized;
• Amount to be repaid and specify the parties responsible for repayment;
• Establish a place and time to meet to discuss issues;
• Advise tenants they may present facts, figures, written records, or other
information which might alter the determination;
• RD form 3560-65 should be sent out with this letter.
10
Restitution of RA and Overage
•
Once everything is done, how are payments
submitted to RD?
–
–
CSC in St Louis will send a payment coupon to the
tenant monthly until it is paid in full.
Tenants will send payments directly to CSC
Restitution of RA and Overage
• What if the Tenant vacates without paying back
the unauthorized assistance?
– Once a tenant vacates, you notify RD immediately that
the tenant has vacated and provide a forwarding address
or other contact information if it is available.