Answer: There are some steps you need to follow under the law. First, you have to put in writing why you believe the family did not meet the definition of homelessness, and information about how the parent can dispute the decision if she wishes. If anything was lost in translation – for example, if she started out doubled-up and then bought a house – she’ll have the opportunity to share any supporting information.
If she chooses not to dispute your decision, or if the dispute process results in a determination that the family was never eligible, then yes, you would remove McKinney-Vento status and tell the parent that she can apply for free lunch through the usual application process. For educational stability purposes, it likely would be best for the student to continue at your school for the rest of the year. It would be a best practice to offer that stability to the student, if his mother can provide/arrange transportation. However, that is not required if her McKinney-Vento status was fraudulent.