More than 400 applications seeking roughly $6.4 million in emergency rental 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 those did not get funded, and the rate of fraudulent applications 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 it began in March 2021, the program has provided about $200 million in federally funded rental assistance to more than 20,000 households statewide.
The $6.4 million in potentially fraudulent relief claims represents about 3 percent of the funds provided so far, and only a fraction of those claims received any funding.
Of the 351 cases investigated through March 31, only four applicants received funding – a total of nearly $21,000. The state is trying to recover nearly all of it, while also referring 14 cases to law enforcement, according to an audit prepared for the MaineHousing Board of Commissioners.
By comparison, about 15 percent of the $11.8 million in loans provided under the federal Paycheck Protection Program were issued to potentially fraudulent claims, according to one estimate.
MaineHousing Director Daniel Brennan said his agency knew the rental assistance program would likely be targeted by fraudsters and believes the safeguards put in place are working.
“We set up a process to flag suspicious applications and vet things that didn’t look right,” Brennan said in an email. “The vigilant workers at the community action agencies that process applications working with our fraud prevention team ensures these benefits go to those who are eligible and needy, and not to scammers who would cheat a program meant to help Mainers facing hard times.”
About 80 percent of the cases flagged for investigation through March 31 were ultimately deemed 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 don’t qualify, MaineHousing spokesman Scott Thistle said in an email. “But in the multiple/similar applications received where a large amount of (back rent) is requested and the landlord is out-of-state, they are likely neither real tenants nor real landlords.”
Signs of possible fraud include requests exceeding $12,000 per household, higher monthly rents than expected for an area, a landlord’s inconsistent or out-of-state mailing addresses, no proof of residence for the tenant, no lease or proof of ownership is submitted by the landlord, requests that checks be made out to or sent to someone other than the landlord, or the tenant requests to be paid directly.
Through March 31, 83 percent of the suspected fraud cases were flagged by 10 community action agencies processing applications, while the rest were reported by family, friends, neighbors, co-workers, tenants, landlords and law enforcement.
Ryan Quinn, who coordinates the rental assistance for the Opportunity Alliance, which serves Cumberland County, said his office is experiencing an increase in fraudulent claims, particularly among out-of-state landlords and apparent automated systems, or “bots.”
FLAGGING FRAUD
“We definitely seem to be experiencing an uptick in these applications, but feel confident that through our processing and certification process, we are catching these before payments go out,” Quinn said in an email.
The Opportunity Alliance has flagged 28 suspected fraud cases, according to the audit. That’s only 8 percent of the suspected fraud cases, while administering about 25 percent of the rental assistance in the state.
“In our experience reviewing a lot of the applications that we have closed, there is a consistent pattern that presents as almost like ‘BOT like’ in appearance with non-sensical names, emails, all caps used through the entire application, etc.,” Quinn said. “A lot of the applications that we have closed also appear to be coming from out of state as well, with a lot of landlords from Texas, Florida, etc.”
York County Community Action Corp. has received 121 potentially fraudulent applications, the highest number of any of the regional agencies. Executive Director Barbara Crider could not be reached for an interview Thursday afternoon.
While the vast majority of suspected claims have not received funding, the state paid out nearly $21,000 on suspected fraudulent claims to four applications and is looking to recover more than $19,000 in small claims court, the audit shows. And 14 cases have been referred to law enforcement, with 10 applications seeking more than $195,000 being referred to federal authorities and four applications seeking nearly $32,000 being referred to local law enforcement.
MaineHousing said the most common type of fraud occurs in batches of similar applications that list the same reasons for assistance and contain similar grammatical and spelling errors.
RELIEF WORKING
Maine has received about $350 million in federal rental relief funding since the pandemic began.
As of June 1, more than $201.5 million in rental assistance has been approved to 26,516 households throughout the state, according to MaineHousing.
Households in Cumberland County have received the most funding ( nearly $52 million), followed by York ($35 million), Penobscot ($27 million) and Androscoggin ($21 million.) Sixty-three percent of the assistance has gone to female heads-of-households.
The rent relief program appears to be finding its way to people who need it most and preventing a flood of evictions.
Court records show that 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 it, the rent relief program is probably the single-largest reason why (the number of ) eviction filings is still lower than the historic average,” said Greg Payne, the governor’s senior housing adviser.
MaineHousing recently announced changes to the relief program in hopes of stretching the funding through next winter.
As of June 1, MaineHousing capped reimbursements for people staying in hotels, reduced the amount of time someone can receive assistance from 18 months to 12 months, reduced income eligibility from 80 percent of area median income to 50 percent and no longer allows people already living in subsidized housing to participate.
Without the changes, MaineHousing estimated that the remaining $150 million in funding would have run out this fall.
“We are hopeful recent eligibility changes will allow us to keep the program going into the spring of 2023, so those facing the greatest financial hardships will still be able to access rent relief help this fall and through the coming winter,” Thistle said.
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