Unauthorized Assistance and Restitution

• What is it?

• What do I do about it?

• Why do I Care?

• 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

Restitution of RA and Overage

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 should have been done

Carry through the recalculations to the end of the

tenant 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

How do I determine what the effective date should be for the revised cert?

• 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

What Needs to be in the Packet for RD

Notice to Borrower/TenantOnce 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.

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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

• 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.

Restitution of RA and Overage