Detecting and Preventing Fraud on HUD funded Properties Edgewood Management Webinar Presentation.

Detecting and Preventing Fraud on HUD funded PropertiesEdgewood ManagementWebinar Presentation

Goals of this Webinar

•Define what HUD considers FRAUD•How to Detect possible Program

Violations•How to Correct Violations when found•How to Prevent Program Violations

What is HUD Fraud?

•Chapter 8, Section 4 of the 4350.3 covers HUD’s procedures for addressing discrepancies and errors and the actions that owners/managers must take when they suspect the data in a Resident’s file is incorrect or inaccurate.

•HUD separates incorrect or inaccurate information into two categories. ▫Unintentional program errors▫Intentional program errors (FRAUD)

Intentional vs. UnintentionalIntentional Unintentional

• This is an issue that involves an action or inaction that breaches the lease, regulations or other program requirements.▫ Example: Allowing

another person to move in to their unit without obtaining permission of management

• This is an issue that was caused because the tenant misunderstands or forgets the rules. When first confronted with the issue, the site should view it as an error.▫ Example: Not reporting

the birth of a new child

Procedures for Addressing Discrepancies and Errors• Investigate

▫Confront the Resident with information provided by the Resident and the conflicting information

▫Obtain additional information from other persons or agencies

▫Take additional actions to verify either the Resident supplied information and/or the conflicting information

▫ If an intentional misstatement or withholding information cannot be substantiated through documentation the owner/manager MUST treat the case as an intentional program violations.

• Notify and Meet with the Resident▫ The Owner/Manager must notify the Resident in

writing of the error and identify what is believed to be incorrect.

▫ The Resident must be given 10 days to meet with the owner/manager and discuss the allegations.

▫ The Resident must be informed that failure to do so may result in the termination of the resident’s tenancy.

▫ The meeting must be conducted by someone in management who has not been involved in any manner with the review of the allegedly false information.

▫ A written final decision, based solely on the facts presented and discussed at the meeting with Resident, must be provided to the Resident within 10 days of the meeting. The written decision must state the basis for the determination.

▫ For Residents with a disability, all notices must be in a form accessible to the Resident and all meetings must be held in a location accessible to the Resident.

• Determining the Outcome ▫ If after meeting with the Resident:

the owner/manager is convinced that the Resident supplied information is correct, the owner/manager should document the file accordingly and close the investigation.

the owner/manager determines that the provision of inaccurate information was an unintentional program violation, the owner/manager should correct the Resident’s rent, provide notice of the rent change, and in the Resident is unable to pay the full amount, enter into a repayment agreement. If the income adjustment shows that the Resident no longer

qualifies for the program, they may remain in the property subject to making repayments and paying market rent

If the Resident refuses to pay the new rent or repay the previously paid subsidy the owner may terminate tenancy.

Additionally, civil actions may be files to recover the funds.▫ If after meeting with the Resident the owner

determines that the tenant knowingly provided inaccurate or incomplete information, AND this con be substantiated through documentation, the owner needs to pursue the incident as Fraud.

Procedures for Addressing Fraud• Documentation need to Establish Fraud

▫The Resident was made aware of program requirements and prohibitions (i.e. all required documents are signed by the resident).

▫They intentionally misstated or withheld some material information: Witnessed statements by the Resident False names and/or social security numbers Documents falsified, forged, or altered by the

Resident ***This is a partial list please see page 8-25 of the

4350.3 for a complete list***

•Taking action to address Fraud▫The authorized course of action for

owners/managers to take is termination of tenancy.

▫Authority to pursue this action grounded in the following: The material non-compliance of the lease and

in the regulations [24 CFR 247.3]. Material non-compliance includes “knowingly providing incomplete or inaccurate information.”

Detecting possible Program Violations and Fraud• Enterprise Income Verification System (EIV)

▫EIV is updated on a monthly basis and contains the following information Social Security and SSI information New hire information Quarterly updates for employment (both federal

and non-federal) Quarterly updates for unemployment

• Owners/Managers should be reviewing EIV data during all interims and annuals

• Keep an eye out on your property• Listen to the property gossip

Processing Repayment Agreements in OneSite•**Policy Change**•Once it has been determined that a

Resident owes subsidy back to HUD and cannot repay the amount in full, the owner/manager must complete a retroactive certification in OneSite.

•The following steps are an outline. A full manual with screenshots and examples is currently in process of being created.

• Before processing the retroactive certification in OneSite print the Resident / Resident Ledger and the Resident / Subsidy Ledger.

• Enter the retro active income, asset, and expense information.

• Create a certification effective for when the income/certification should have been effective

• Once the certification has been finalized, enter into the ledger cards and reverse the charges (increases on the Resident and decreases on the Subsidy) that was posted in OneSite by the certification.

• Create the FRUAD charge on the FRAUD journal in the amount equal to the certification posted on the Resident ledger.

•Once all ledger corrections have been made, navigate to the Administration tab/Affordable Processing/HAP Request.

•Click on the More link and choose the manual adjustment link

•Enter a manual adjustment on the HAP that is equal to the amount that was decreased on the subsidy ledger. (This amount should be entered as a positive number)

•**Please note that when a HAP Request that contains manual adjustments is finalized, OneSite will post additional charges to the subsidy ledger. These will also need to be reversed.**

Preventing Program Violations and Fraud•There is no surefire way to prevent all

program violations and fraud. The best prevention tips that we can give you is to inform and empower your residents from the moment they walk in your door as an applicant.