Chapter XXVIII: Processing Tenant Repayment Agreements

Effective: October 2007

Introduction

This policy explains procedures for processing Tenant Repayment Agreements (MSHDA 103 or 103 EIV) with a tenant who has incurred a debt while an active tenant on the Housing Choice Voucher (HCV) program and will clarify when a tenant Repayment Agreement may be renegotiated. An active tenant is defined as an individual/family currently participating (receiving a rental subsidy) in the HCV Program. An inactive tenant is defined as an individual/family not participating (not receiving a rental subsidy) in the HCV Program.

If an active tenant cannot afford to pay back a debt in full and is income eligible for HCV assistance, the MSHDA Housing Agent (HA) or a MSHDA staff member is encouraged to consider executing a Repayment Agreement with the program participant versus terminating the family’s rental assistance. Tenants unwilling to repay MSHDA or keep their Repayment Agreements current will have further violated their program responsibilities and must be canceled from the Housing Choice Voucher (HCV) program. The HA must provide notice of the opportunity for an Informal Hearing when a Repayment Agreement is offered because termination or denial of assistance will result if the participant refuses to sign the Agreement.

If an inactive tenant cannot afford to pay back a debt in full, the MSHDA staff member can consider executing a Repayment Agreement versus sending the debt to collections.

Section A: Tenant Repayment Agreement Parameters

The MSHDA staff member or HA has full responsibility to negotiate Tenant Repayment Agreements for active tenants when appropriate.

The MSHDA staff member or HA can deny or terminate assistance at any time for a tenant's failure to comply with the terms of a Tenant Repayment Agreement (MSHDA 103 or 103 EIV). See Chapter XV, Terminations.

In order to assure program consistency, the following Tenant Repayment Agreement (MSHDA 103/103 EIV) guidelines have been established and must be adhered to:

1. Establish a repayment using a minimum $25 monthly payment.
2. Generally use a 24-month term for repayment unless this term will result in a payment that causes financial hardship.
3. If a 24-month term creates a financial hardship, negotiate a reasonable payment using a maximum of 60 months or contact the MSHDA Resource Specialist(RS) or Fraud Recovery Coordinator for assistance. Example: It was discovered during an annual re-examination that Tenant A owes $3,504 in back rent subsidy due to under-reporting income. The MSHDA 103 was calculated for 24 payments of $146. This payment would result in a hardship on the tenant who said he could only pay $85 per month. The MSHDA 103 was then executed for 42 months: 41 months at $85 and $19 the final month (month 42). In rare cases, a repayment period of longer than 60 months may be negotiated.
4. The repayment plan must start on a date 30-60 days in the future. Example: If you send the Repayment greement to the tenant on August 22, 2007, the repayment plan should not start prior to October 1, 2007.

When a program participant executes a Repayment Agreement and submits their initial payment, the participant alleviates the need to pay off a past due or delinquent account in full. Repayment Agreements require a participant to send monthly payments in order to meet their program responsibilities.

Section B: Calculating a Tenant Repayment

Use the EIV Calculation Worksheet (MSHDA 524) as a tool for determining the amount of subsidy overpayment that must be repaid.

Section C: Establishing a Tenant Repayment Agreement

When a subsidy repayment is required, the HA should use the following procedure to inform a program applicant/participant of their repayment obligation:

1. Send a MSHDA 103/103 EIV to the family for acceptance of the terms and signature. Also include a Applicant Denial/Program Termination Notice (MSHDA 1634b) which identifies three items:
   1. Reason for and amount of the debt;
   2. Action(s) the family must take to remain eligible for assistance; and
   3. Right of family to request an Informal Review/Hearing (or Mediation will be offered to HCV participants with non reported or underreported income via the Notice of Intent to Terminate.)
2. If the active applicant/participant signs the MSHDA 103/103 EIV and does not request an Informal Review/Hearing, the family will continue to receive assistance as long as they adhere to the terms and conditions of the executed Repayment Agreement. The HA or tenant sends the original executed Repayment Agreement to MSHDA Office of Housing Voucher Programs Operations Unit for further processing and placement in the tenant file. If the Repayment Agreement was executed due to EIV/fraud, send the original executed Repayment Agreement to MSHDA Fraud Recovery Coordinator for further processing and placement in the tenant file.
3. If the active applicant/participant does not sign the MSHDA 103/103 EIV but requests an Informal Review/Hearing/Mediation within the designated deadline, refer to Chapter XXVI, Informal Reviews, Mediations, Informal Hearings.
4. If an active participant/applicant does not sign the MSHDA 103/103 EIV nor request an Informal Review/Hearing/Mediation within the designated deadline, proceed with termination of the HCV assistance.
5. If an inactive tenant does not sign the MSHDA 103/103 EIV within the designated deadline, the debt is referred to the appropriate MSHDA staff person for Collection.

The Informal Hearing offered to the participant when initially executing a Repayment Agreement does not waive the participant’s right to an informal hearing if they fail to make scheduled payments and their HCV assistance is later terminated.

Section D: Tracking Executed Tenant Repayment Agreements

The assigned MSHDA staff member reviews Repayment Agreements on a monthly basis to help identify agreements in arrears. If the MSHDA Operations Division does not receive the scheduled payment amount for a period of 60 consecutive days, the Repayment Agreement will be considered in arrears. The assigned MSHDA staff person will:

1. Determine if the participant receives a Utility Assistance Payment (UAP) which can repay the past due amount.
   1. If no UAP exists, the assigned staff member proceeds to #2 below.
   2. If a sufficient UAP exists, the assigned MSHDA staff person will adjust the next months’ UAP to recapture the past due amount. Note: The assigned MSHDA staff person must receive written consent from the tenant to adjust the UAP.
   3. If the Repayment Agreement monthly payment amount exceeds the participant’s UAP amount, the account will remain past due and the assigned MSHDA staff person will proceed to #2 below.
      
2. Send notice to the tenant.

   Active Tenant

   1. Send a Delinquent Repayment Agreement Notice (MSHDA 103a) to the tenant with a copy to the HA.
   2. After 30 days, if the tenant is still delinquent, the assigned MSHDA staff person will send a Program Termination Notice (MSHDA 1634f) and Contract Termination Notice (MSHDA 95) which identifies that the tenant has past due payments on an executed Repayment Agreement and their assistance will be terminated if they do not pay the past due amount within 15 days. The termination date is always the end of the following month, giving the landlord a 30-day notice.
   3. After 20 days, if the tenant is still delinquent, the EOP is entered into Elite by the assigned MSHDA staff person. If the tenant sent the required amount, the assigned MSHDA staff person sends a "Contract Reinstated " Contract Termination Notice (MSHDA 95) to the landlord and the tenant remains on the program.

   Inactive Tenant

   1. Send a Notice of Delinquent Repayment Agreement (MSHDA 103b) to the tenant with a copy to the HA.
   2. After 30 days, if the tenant is still delinquent, MSHDA will refer the debt to the Michigan Department of Treasury for collection and a 20% penalty may be added to the debt to cover the cost of collection services.

Section E: Tenant Repayment Agreements in Arrears

When a tenant is in arrears with their Repayment Agreement payments, it is the responsibility of the assigned MSHDA staff person to determine if the arrearage is cause for Repayment Agreement renegotiation. If the participant cannot afford to comply with their current MSHDA 103/103EIV, the repayment terms may be renegotiated to maintain lease up and to stress repayment obligation.

Renegotiation guidelines for Repayment Agreements include the following:

1. A tenant may renegotiate a MSHDA 103/103 EIV only once.
2. A tenant requesting a second renegotiation must immediately pay the current delinquency and maintain the current repayment or be terminated.
3. A tenant can pay half of the arrearage on a repayment that is 60 days or less delinquent. This action will stop the termination process, but the tenant remains 30 days in arrears.
4. A tenant 61 days or more delinquent must immediately pay the lesser of 50% of the total arrearage or 25% of the entire debt before renegotiating the Repayment Agreement.
5. After the terms of a repayment have been renegotiated, the HA must execute a new MSHDA 103. Write “Revised (and the date)” at the top of the MSHDA 103. Forward the original of the revised Agreement to the assigned MSHDA staff person and a copy to the tenant. Place a copy in the tenant file.

The HA must offer applicants/participants an Informal Review/Hearing to contest an outstanding debt when refusal to pay a debt can result in denial or termination of assistance. If the applicant/participant requests an Informal Review/Hearing, in writing within ten calendar days, the MSHDA staff person must:

1. Forward an Informal Review/Hearing Request (MSHDA 97) to the participant,
2. If a completed MSHDA 97 is received by the MSHDA staff person within ten calendar days, the staff member immediately notifies the RS that an Informal Review/Hearing has been requested and subsequently forwards the request to RS for processing.

Refer to Chapter XXVI, Informal Reviews, Mediations, Informal Hearings.

Referral to Collection Agency: If MSHDA has not collected the debt within six months from the date of the initial Overpayment Notice, MSHDA forwards the file to the Michigan Department of Treasury for collection.

Section F: Tenants with Repayment Agreements and Portability Rights

Participants who are in good standing may exercise their portability rights to another PHA. Participants who have a debt with MSHDA, regardless of whether or not they are current on their executed Repayment Agreement with MSHDA, must pay their debt in full before they will be considered in good standing and approved for exercising portability rights.

A participant who exercised their portability rights into the MSHDA HCV program and subsequently becomes delinquent in their repayment obligations to another PHA can be terminated for violation of program responsibilities. All PHAs have the authority to terminate an applicant/participant who owes a debt to another PHA.

See Chapter XVI, Portability for more information.

Section G: Applicable Forms List