The U.S. Department of Housing and Urban Development and many state agencies provide housing assistance to needy individuals and their families.  Unfortunately, unscrupulous individuals fraudulently acquire low-income and Section 8 housing vouchers, which prevents those who truly need the benefit from receiving assistance.  Sometimes, even the landlords have been known to participate in the scam.

Today’s Fraud of the Day reads like a script for a reality television show, Housing Fraud Gone Wild. According to the Telegram & Gazette, from 2008 – 2012, the Worchester Housing Authority (WHA) reviewed 2,000 suspected cases and discovered close to $1.6 million in housing fraud.  A possible idea for upcoming episodes of this fraud reality series could include a woman who failed to report that her husband (who has a salary that pushes them over the qualifying limit) was sharing her Section 8 housing benefits by living with her.  A dramatic episode could cover a patriotic landlord, who reported that a veteran was living in his Section 8 housing even though the veteran decided not to live there.  And then there’s the heartwarming story of a needy resident living in an elderly community who drives a luxury car. (I guess he forgot to add that last zero on the income line of his application.)  Yes, these are all real examples of fraud discovered through the recent WHA investigation.

Even though the amount of fraud discovered by these types of investigations is significant, there is little incentive to take legal action against the perpetrators.  After adding in the costs for investigating the fraud, the WHA ends up losing money.  (This is a problem.)  The WHA is allowed to use two-thirds of the recovered money from state public housing fraud, but the other one-third reduces the federal subsidy received on a dollar-for-dollar basis.  In the case of Section 8 leasing fraud, the WHA can use 50 percent of the repaid money for the administration of the program.  The other 50 percent is allotted to the Housing Assistance Program reserve, which helps with the cost of rental payments for people who have vouchers.  (Wow, this is progressive and making a huge impact.)

Here’s the good news.  Since the investigations began over five years ago, the amount of fraud has decreased.  The WHA attributes the decline to resident education and word-of-mouth.  The WHA regularly holds resident orientations and communicates the penalties for committing housing fraud.  The residents are also introduced to their property’s own personal fraud investigator.  (A new version of neighborhood watch?)  It helps to publicize that actions have consequences and honesty is always the best policy. (Imagine that.)

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