Landlords and tenants have tried to steal at least $6 million from Maine’s massive COVID-19 rent relief program since it started distributing the rental assistance more than a year ago, according to reports from the agency that runs the program.
The Maine State Housing Authority has detected 408 fraudulent applications that would have cost just under $6.4 million since the state’s $350 million Emergency Rental Assistance program started in March 2021.
The $6.4 million represents more than 3 percent of the $197.3 million in rent relief MaineHousing has issued, and the 408 fraudulent applications make up less than 1 percent of the more than 49,000 applications the agency has received for rental assistance.
But the amounts show that the rent relief program, like other federal COVID-19 relief programs, has been a target of fraudsters who have tried to benefit from billions of dollars in government aid. The Pandemic Paycheck Protection program aimed at propping up businesses at the start of the pandemic has been a particular target for fraud, with billions of dollars potentially being paid to ineligible recipients.
The state’s Emergency Rental Assistance funds came from two federal COVID-19 relief packages passed by Congress in December 2020 and March 2021. The program was designed to provide a more generous level of assistance as people struggled to keep roofs over their heads at the height of the COVID-19 pandemic. Until recently, recipients could qualify for up to 18 months of rental assistance.
In Maine, while the state housing authority oversees distribution of the federal rent relief money, community action agencies, like the Bangor-based social services agency Penquis, distribute the funds locally.
Those agencies have been responsible for identifying 91 percent of fraudulent applications the state saw in the first quarter of 2022, according to a MaineHousing report.
There are no limits on the amount of rent the program will pay for a particular unit, meaning it will cover whatever amount is specified in a lease signed by a tenant who meets the income thresholds for the program, according to MaineHousing spokesperson Scott Thistle.
But the community agencies working with tenants have to look for the warning signs for fraudulent activity, Thistle said.
“There are red flags that we ask the community action agencies that are processing the applications to look for, including rent that is beyond what would be expected for an area,” he said.
The housing authority has found that, locally, tenants are largely perpetrating the fraud, Thistle said.
However, applications that request large amounts of back rent and/or come from out-of-state landlords have often come from tenants and landlords who aren’t real, he said.
In the first quarter of this year, the Maine State Housing Authority found 170 applications for more than $2.8 million to be fraudulent, according to an authority report.
The largest number of those fraudulent applications, 54, were filed with the Kennebec Valley Community Action Program, which serves Kennebec and Somerset counties, according to the report.
Part of the hope behind having the community action agencies administer the Emergency Rental Assistance program was that these agencies would know the landlords in the communities they serve and be in a better position to detect fraud because of their familiarity with those communities.
MaineHousing so far has disbursed more than 56 percent of the $350 million the state was allotted for COVID-19 rental assistance, with the money helping more than 26,000 households, according to the housing authority’s most recent report.
That has made Maine faster than a number of other states in distributing large amounts of rental assistance, and prompted the housing authority to tighten eligibility requirements and limit benefits for the program starting Wednesday in an effort to make the funding last longer.
Those changes weren’t due to fraudulent activity, Thistle said.