This task will only be available when there are offsetting charges on the Receivables tab, and credits on the Subsidy tab with the same due dates. All receivables to be included in the Promissory Note must be from the same unit, preventing accounting errors and providing tracking of the pending charges.
Caution
The Promissory Note must be created prior to building the HAP that will include the certifications for the misreporting of income. If the Repayment agreement is not yet signed by the tenant, the user should unsign the certifications before building the HAP and sign them once the Repayment Agreement with the tenant is complete.
Additionally, you will not be able to add a second Promissory Note when one exists with an active schedule. If you need to create an additional Promissory Note, it is recommended that you manually bill the existing note to bring the Unbilled Balance to zero. Once completed, you can add the additional Promissory Note. If you want the old and new balances to be combined into one Promissory Note, please contact Bostonpost Client Support at myMRI, or contact a Client Support Analyst directly at (877) 579-8896.
Review the following information regarding converting Subsidy Due to a Promissory Note:
▪ This task is typically used when a tenant misreports income and a back-dated certification must be created to correctly report the income, and then create the correcting billing adjustments. Then, increase the tenant portion of Rent and decrease the Subsidy portion, resulting in an overpayment of subsidy that must be returned to HUD or other agency. This task will convert the amount due from the tenant into a Promissory Repayment Agreement that was worked out with the tenant.
▪ For HUD funding programs, this task will create an Repayment Agreement Item for the full amount of the subsidy adjustments that are being converted to a promissory note. The Note Text on the Event for the OARQ will default to “Reversal of adjustments subject to repayment - Unit Apt #, Tenant Name.” This will ensure that the description for this OARQ is sufficient on the HAP Request.
▪ On the HAP Request, the subsidy adjustments will be shown in the adjustments section, and the offsetting OARQ will be shown with the miscellaneous accounting adjustments section. When the tenant makes a payment on a billed Repayment Agreement-Net Subsidy item, an Repayment Agreement Item will be created for inclusion in the next HAP Request. When these payments are received from a tenant on the Promissory Note from the Accounting Detail > Payments tab using the Start New Payment Batch task, the note text on the event for the payment will default to “Repayment - Unit Apt # - Tenant Name”.
▪ If there is an agreement with HUD on the amount the management company/community can retain on subsidy recovered from the tenant, you can enter the amount or percentage to be retained as the Repayment Cost. As the tenant makes each payment, these amounts retained will reduce the amount that is included on the next HAP going back to HUD. A charge type for Repayment Cost Retained is available at System Administration > Accounting Setup - Charge Type Setup. The Income GL Account on the Repayment Cost Retained charge type will be credited to reflect the management company's/community’s income from retaining this money instead of passing it onto HUD.
▪ The Promissory Repayment Agreement can be reversed by using the Reverse Selected Event task on the Receivable Adjustment Event on the Subsidy tab before the OARQ from the event is included on a HAP Request. The unbilled balance of the note equals the total due on the Promissory Repayment Agreement. This will allow you to reverse the Promissory Repayment Agreement.
▪ The Funding Program Group of a Promissory Note will be set based on the selected subsidy open items converted to the Promissory Note and not the Funding Program Group the household is currently counted in.
▪ When you create a repayment agreement using this task, the status of the repayment agreement defaults to AV - Active.
To convert Subsidy Due to a Promissory Note, follow these steps:
1. Go to Household Detail > Accounting Tab.
2. Go to Subsidy Tab.
3. In the Open Items section, highlight a credit balance to transfer.
4. Go to Tasks, and then click Covert Subsidy Due to Promissory Note.
To select receivables, follow these steps:
Note
The effective date of the transfer event will default to the current date. The system automatically checks off the equal offsetting items with matching due dates. You may choose additional items, but the amounts must equal and have matching due dates.
5. To back-date the event, click Change Effective Date.
6. Enter the new effective date, and then click OK.
7. Click Next.
To add a promissory note, follow these steps:
Note
The schedule you set up will determine the rate at which this note will be repaid.
8. In the Payment Start Date field, enter the first date the amount will be billed by the system. This date must be the first of the month. You can manually bill any amount on a subsequent date from the Promissory Notes tab.
9. In the Type field, choose the note type.
Note
Depending on the funding program the household is counted in, only applicable note types will be available.
▪ Repayment Agreement - Include on HAP—This type is used when you will be paying the amount back to the agency on your HAP. When a payment is received from the tenant and applied to this note, the system creates an OARQ - Owner/Agent Adjustment credit that will appear in the Open Items section of the household's Subsidy tab. This will be included on your next HAP request. The GL entry created will debit the cash account and credit the subsidy receivable account you have setup for this charge type. This note type is only available when the household is part of a HUD funding program.
▪ Repayment Agreement - Cut Check—This type is used when you will be writing a check to pay back the agency. When a payment is received from the tenant and applied to this note, the system creates a GL entry that debits the cash account and credits the liability account you have setup for this charge type. This note type is only available when the household is not part of a HUD funding program.
10. In the Frequency field, choose a billing frequency.
Note
The billing frequency will determine the next time the system will generate a bill for the specified portion.
11. In the Payment Amount field, enter the amount agreed upon with the tenant to be received each billing period.
Note
When receiving payments against a Repayment Agreement Promissory Note (Accounting Detail > Payments) that creates an OARQ to be included on a HAP, the amount applied to the Promissory Note can only be in whole dollars. Amounts on HAP requests are rounded to whole dollars, so if the amount applied to the Repayment Agreement and the created OARQ are not in whole dollars, you will not receive the payment against the HAP.
12. In the Effective Date field, enter the day you want to remove the full amount from the Subsidy Receivable ledger and report it as a Promissory Note Receivable.
13. Click Calculate to display the number of payments, balance, and the number of payments remaining.
14. To setup the billing of any remaining balance for the tenant's move out, select Bill at Move-Out.
15. In the Repayment Cost field, complete the following fields:
▪ Repayment Agreement - Include on HAP—Enter the amount or percentage to be retained, and the amount of each tenant payment, Repayment Cost, to be retained as it is created.
Note
The repayment cost entered will reduce the amount of each Repayment Agreement Item to be included on the HAP. The Repayment Cost Retained charge type at System Administration > Accounting Setup - Charge Type Setup defines which Income GL Account will be credited when these amounts are retained.
16. Click Finished.
Note
A Passed or Failed message and any GL entries created will display. If the process failed, you may need to make a correction or contact support at myMRI or contact a Client Support Analyst directly at (877) 579-8896 for assistance.
17. When the process passes, click Close.
Note
The note will appear on the Promissory Notes Tab under the Household Accounting Tab and the open items will be removed from the Receivables tab and an OARQ will have been created on the Subsidy Tab that offsets the Subsidy Credits. As per above, these Subsidy Credits and OARQ are to be included on the next HAP and will be cleared from the household when payment on the HAP Request has been received.