Agency guarantees capture about $6.4 million in fraudulent claims for emergency rent assistance
More than 400 applications asking for about $6.4 million in emergency housing assistance have been identified as possible cases of fraud by MaineHousing and 10 community agencies that help administer the year-old relief program.
But the vast majority of them have not been funded, and the rate of fraudulent claims appears to be relatively low compared to other pandemic relief programs. The program also appears to be effective in preventing evictions, according to court data.
Since its launch in March 2021, the program has provided approximately $200 million in federally funded housing assistance to more than 20,000 households statewide.
The $6.4 million in potentially fraudulent claims represent approximately 3% of the funds provided so far, and only a fraction of those claims have received funding.
Of the 351 cases reviewed through March 31, only four applicants have received funding, totaling nearly $21,000. The state is trying to recover nearly all of it, while referring 14 cases to law enforcement, according to an audit prepared for the MaineHousing Board of Commissioners.
By comparison, about 15% of the $11.8 million in loans issued under the federal Paycheck Protection Program went to potentially fraudulent claims, according to an estimate.
MaineHousing director Daniel Brennan said his agency knew the rental assistance program would likely be targeted by fraudsters and believes the safeguards in place are working.
“We have a process in place to flag suspicious apps and check for things that didn’t seem right,” Brennan said in an email. “The vigilant community action agency workers who process applications in conjunction with our fraud prevention team ensure that these benefits go to those who are eligible and in need, and not to the scammers who cheat a program intended to help the Mainers to face tough times.”
About 80% of cases flagged for investigation through March 31 were ultimately found to be fraudulent, according to the audit. And the average amount of funding sought in a fraudulent application rose from $12,600 in 2021 to $17,600 in the first quarter of 2022.
“Locally, fraud is largely driven by tenants” who are ineligible, MaineHousing spokesman Scott Thistle said in an email. “But in multiple/similar requests received where a large amount of (rent arrears) is requested and the landlord is out of state, they are likely neither real tenants nor real landlords.”
Signs of possible fraud include claims exceeding $12,000 per household, higher than expected monthly rents for an area, inconsistent or out-of-state mailing addresses for a landlord, no proof of residency for the tenant, no lease or proof of ownership is submitted by the landlord, requests that checks be made out or sent to someone other than the landlord, or the tenant requests to be paid directly.
Through March 31, 83% of suspected fraud cases were reported by 10 community action agencies handling claims, while the rest were reported by family, friends, neighbours, co-workers, tenants, owners and law enforcement.
Ryan Quinn, who coordinates rental assistance for the Opportunity Alliance, which serves Cumberland County, said his office is seeing an increase in fraudulent claims, especially among out-of-state landlords and automated systems. apparent, or “bots”.
“We certainly seem to be seeing an increase in these apps, but we’re confident that through our processing and certification process, we’re capturing them before payments are made,” Quinn said in an email.
The Opportunity Alliance reported 28 cases of suspected fraud, according to the audit. That’s only 8% of suspected fraud cases, while administering about 25% of rental assistance in the state.
“From our experience of reviewing a large number of apps that we have shut down, there is a consistent pattern that almost looks like a ‘BOT like’ in appearance with nonsense names, emails, all capitals used throughout the app, etc,” Quinn said. , etc.”
York County Community Action Corp. received 121 potentially fraudulent claims, the highest number of any regional agency. Executive Director Barbara Crider could not be reached for an interview Thursday afternoon.
While the vast majority of alleged claims have not received funding, the state has paid nearly $21,000 of alleged fraudulent claims to four claims and is seeking recovery of more than $19,000 in Small Claims Court, according to the audit. And 14 cases were referred to law enforcement, with 10 requests seeking more than $195,000 being referred to federal authorities and four requests seeking nearly $32,000 being referred to local law enforcement.
MaineHousing said the most common type of fraud occurs in batches of similar requests that list the same support reasons and contain similar grammar and spelling errors.
Maine has received about $350 million in federal funding for rent relief since the pandemic began.
As of June 1, more than $201.5 million in rental assistance had been approved for 26,516 households statewide, according to MaineHousing.
Households in Cumberland County received the most funding (nearly $52 million), followed by York ($35 million), Penobscot ($27 million) and Androscoggin ($21 million). Sixty-three percent of aid went to female heads of households.
The rent relief program appears to be finding its way to the people who need it most and preventing a flood of evictions.
Court records show eviction filings for January and February were the lowest in 15 years.
In January, 324 formal evictions were filed in Maine courts, compared to 355 in January 2021 and 501 in January 2020. In February, only 247 evictions were filed, compared to 269 in February 2021 and 413 in February 2020.
“As I read, the rent relief program is likely the biggest reason why (the number of) eviction filings are still below the historical average,” said Greg Payne, the governor’s senior adviser on eviction. lodging.
MaineHousing recently announced changes to the relief program in hopes of stretching funding through next winter.
Since June 1, MaineHousing has capped reimbursements for people staying in hotels, reduced the length of time a person can receive assistance from 18 months to 12 months, reduced income eligibility by 80% of the median income of the region at 50% and no longer allows people already living in subsidized housing to participate.
Without the changes, MaineHousing estimated the remaining $150 million in funding would have run out this fall.
“We hope that recent eligibility changes will allow us to maintain the program through the spring of 2023, so that those experiencing the greatest financial hardship will still be able to access rent relief assistance this fall and during coming winter,” Thistle said.
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