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Exhibit 7-4: Sample Annual Recertification Third Reminder Notice/Notice of Termination

Taking Action to Address Fraud

HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs · 2026 edition · updated 2026-07-29 · United States

  1. When fraud is present, the authorized course of action for owners to take is termination of tenancy. An owner's authority to pursue eviction in cases of tenant fraud is grounded in the material noncompliance provision contained in both the model lease and in the regulations [24 CFR 247.3] . Material noncompliance includes "knowingly providing incomplete or inaccurate information.”

  2. Fraud can be handled as a civil and/or criminal violation.

    • a. Fraud can be handled as a civil violation by using it as grounds for a termination of tenancy. Providing false information is a material noncompliance with the lease. The owner must seek recovery for subsidy overpayment by asking the court for judgment against the tenant.

    • b. Fraud is handled as a criminal violation when a local or federal prosecutor decides to prosecute the tenant for violation of a state or federal law. To convict the tenant, the prosecutor must show the court that the case contains all the elements of criminal fraud.

  3. When a tenant is evicted for material noncompliance for submitting false, incomplete, or inaccurate information on household income or family composition required for certification or recertification, an owner must file a civil action against the tenant to recover improper subsidy payments. An

HUD Occupancy Handbook Chapter 8: Termination

8/13

8-27

Section 4: Discrepancies, Errors, and Fraud

4350.3 REV-1

owner may consider referring the case for prosecution as a criminal violation, if applicable. Prosecution may be pursued on the local, state, or federal level.

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▸ Contents — HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs
HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs
  1. HUD Handbook 4350.3: Occupancy Requirements of Subsidized Mult…
  2. Exhibit 3-12: Section 8, RAP, and Rent Supplement Programs – S…
  3. Exhibit 3-13: Section 236 Without Additional Assistance – Spec…
  4. Exhibit 3-14: Section 236 With Benefit of Additional Assistanc…
  5. Document Package for Applicant's/Tenant's Consent to the Relea…
  6. Exhibit 7-2: Sample Annual Recertification First Reminder Notice
  7. ▸ Exhibit 7-4: Sample Annual Recertification Third Reminder Noti…
    Overview
    1. Exhibit 7-5: Sample Recertification Interview and Verification…
    2. Dear Tenant:
    3. Exhibit 7-7: Sample Interim Adjustment Initial Notice
    4. Exhibit 7-8: Sample Interim Adjustment Termination of Assistance
    5. CHAPTER 8. TERMINATION
    6. 8-1 Introduction
    7. 8-2 Key Terms
    8. Section 1: Termination of Assistance
    9. 8-3 Key Regulations
    10. Applicability
    11. 8-5 Key Requirements: When Assistance Must Be Terminated
    12. 8-6 Procedures for Terminating or Reinstating Assistance
    13. B. Reinstating Assistance
    14. 8-7 Termination of Assistance Related to Establishing Citizens…
    15. C. Termination of Assistance When Unable to Establish Citizens…
    16. D. Termination of Assistance When a Tenant Allows an Ineligibl…
    17. Section 2: Termination of Tenancy by Lessees
    18. 8-8 Key Regulations
    19. 8-9 Key Requirements
    20. 8-10 Allowable Use of Security Deposits
    21. Section 3: Termination of Tenancy by Owners
    22. 8-11 Key Regulations
    23. 8-12 Overview
    24. 8-13 Material Noncompliance with the Lease
    25. Figure 8-3: Tenant Errors versus Fraud
    26. 4. Repeated minor violations that:
    27. Example – Minor Violations
    28. 5. Nonpayment of rent due under the lease .
    29. B. Procedures for Terminating Tenancy and Providing Notice
    30. 4. Manner of service for all other Section 8 programs.
    31. 8-14 Drug Abuse and Other Criminal Activity
    32. B. Factors to Consider When Terminating Tenancy for Drug Abuse…
    33. Procedures for Accessing Criminal Records
    34. D. Procedures for Terminating Tenancy and Providing Notice
    35. A. Key Requirements
    36. Example – Material Failure to Carry Out Obligations under a St…
    37. B. Procedures for Terminating Tenancy and Providing Notice
    38. 8-16 Other Good Cause
    39. Example – Other Good Cause
    40. Procedures for Terminating Tenancy and Providing Notice
    41. Section 4: Discrepancies, Errors, and Fraud
    42. 8-17 Key Regulations
    43. A. Overview
    44. Program Violations
    45. Investigating and Discovering the Facts
    46. Notifying and Meeting with the Tenant
    47. Determining the Outcome of the Investigation
    48. Example – Unintentional Program Violation
    49. A. Overview
    50. Criminal Violation (Fraud)
    51. C. Documenting Fraud
    52. Taking Action to Address Fraud
    53. A. Requirements Regarding Discrepancies Reported in the EIV Sy…
    54. Nondisclosure of Income Information
    55. Opportunity to Contest
    56. A. Tenant’s Obligation to Repay
    57. 8-22 Tenant Repayment Options
    58. 8-23 Repayment Agreements
    59. 8-24 Reimbursement to Tenant for Overpayment of Rent
    60. 8-25 Reimbursement for Errors Discovered During a Monitoring R…
    61. CHAPTER 9. ENTERPRISE INCOME VERIFICATION (EIV)
    62. 9-1 Introduction
    63. 9-2 Key Terms
    64. Section 1: Enterprise Income Verification (EIV) System
    65. Key Regulations
    66. 9-4 Introduction to the EIV System
    67. 9-5 Mandatory Use of the EIV System
    68. Section 2: EIV Source Data
    69. 9-6 EIV Data
    70. Section 3: EIV Reports
    71. 9-7 Key Regulations
    72. 9-8 Using EIV Reports
    73. 9-9 Documentation to Demonstrate Owners Compliance with Use of…
    74. 9-10 Independent Third Party Verification
    75. 9-11 EIV Income Reports
    76. A. Summary Report
    77. 5. New Admissions
    78. 6. Applicants
    79. C. Income Discrepancy Report
    80. analysis.)
    81. 3. Discrepancy Examples. Example 1: Valid discrepancy
    82. Example 2: Valid discrepancy
    83. Example 3: Invalid discrepancy
    84. D. Other EIV Income Reports
    85. New Hires Report
    86. 9-12 EIV Verification Reports
    87. A. Existing Tenant Search
    88. C. Identity Verification Report
    89. 1. Failed EIV Pre-Screening Report
    90. 2. Failed Verification Report (Failed the SSA Identity Test)
    91. D. Deceased Tenant Report
    92. E. New Hires Report
    93. A. Unreported or Underreported Income
    94. Over-reported income
    95. 9-14 Retention of EIV Reports
    96. 9-15 Requesting Verification of Information from SSA
    97. 9-16 EIV Income Incorrect or Does Not Belong to the Tenant
    98. National Credit Reporting Agencies Contact Information
    99. Section 4: Security of EIV Data
    100. 9-17 Disclosure of EIV Data
    101. C.
    102. 9-18 EIV Rules of Behavior (ROB)
    103. NOTE: HUD staff will check the “CA” box at the bottom of the f…
    104. Section 5: Penalties for Failure to Have Access to or Failure …
    105. 9-19 Penalties for Failure to Have Access To and/or Failure to…
    106. 9-20 Security Training
    107. 9-21 Safeguarding EIV Data
    108. Administrative Safeguards
    109. Physical Safeguards
    110. Section 6: EIV Resources
    111. 9-22 Resource Materials
    112. Chapter 9 Exhibits
    113. Exhibit 9-3: EIV Income Report Information
  8. SAMPLE TENANT CONSENT TO DISCLOSE EIV INCOME INFORMATION
  9. Applying the Model Lease for Subsidized Programs to Individual…
  10. Applying the Model Leases for Section 202 PRAC and Section 811…
  11. Sample Move-In/Move-Out Inspection Form
  12. Memorandum February 5, 2002: Fact Sheets for Project-Based Ass…

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