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Verification Techniques. Annie Stevenson. Welcome to Lunch N Learn!. Upcoming topics for the occupancy series: 6/12/08: Public housing rent calculation 9/1/06: HCV rent calculation. Welcome to Lunch N Learn!. Today’s topics: Verification techniques Introduction: error-reduction strategies

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welcome to lunch n learn
Welcome to Lunch N Learn!
  • Upcoming topics for the occupancy series:
    • 6/12/08: Public housing rent calculation
    • 9/1/06: HCV rent calculation
welcome to lunch n learn1
Welcome to Lunch N Learn!
  • Today’s topics:
    • Verification techniques
      • Introduction: error-reduction strategies
      • HUD’s verification guidance
      • Frequently asked questions (FAQs)
introduction

Introduction

HUD’s Error Reduction Strategies

2001 quality control report
2001 Quality Control Report
  • Published by HUD Policy Development & Research (PD&R)
  • Available online at http://www.huduser.org/publications/pubasst/qualitycontrol.html
  • 60% error rate for rent and subsidy calculations in assisted housing programs
2001 quality control report1
2001 Quality Control Report
  • Estimated annual subsidy overpayments:
    • $2.6 billion
  • Approximately 70% of subsidy payment errors are attributable to tenant under-reporting and/or non-disclosure of income
    • Intentional or unintentional
2001 quality control report2
2001 Quality Control Report
  • Families statistically most likely to conceal income
    • Families with 2 or more sources of earned income
    • Families with TANF and at least 1 source of earned income
2001 quality control report3
2001 Quality Control Report
  • Most error-prone components of rent calculation (PHA and tenant error)
    • Earned income
    • Social Security benefits
    • Allowances and deductions
2001 quality control report4
2001 Quality Control Report
  • Most common sources of errors:
    • Calculation errors
    • Failure to verify income/expenses
    • Failure to use UIV tools & techniques
    • Incorrect income and deduction amounts
2001 quality control report5
2001 Quality Control Report
  • The President's Management Agenda mandated HUD to reduce the number and dollar amount of errors by 50 percent, from 60 percent to 30 percent, by 2005
hud s rhiip initiative
HUD’s RHIIP Initiative
  • RHIIP: Rental Housing Integrity Improvement Project
  • Comprehensive strategy designed to reduce income and rent errors and improper payments in the administration of both public housing and Section 8 programs
rhiip components
RHIIP Components
  • Upfront Income Verification (UIV)
  • Training and technical assistance
    • RHIIP Summits
  • Program guidance
    • HCV Guidebook
    • PH Guidebook
    • Verification Guidance
rhiip components1
RHIIP Components
  • RIM reviews
  • Incentives and sanctions
    • Notice PIH 2003-34
    • Notice PIH 2005-7
  • Program simplification
hud s verification guidance
HUD’s Verification Guidance
  • Notice PIH 2004-1
  • Introduces a new 5-level hierarchy of verification methods
  • Provides guidance on forms of acceptable verification at each level of the hierarchy
    • By income source
regulatory verification requirement
Regulatory Verification Requirement
  • The PHA must obtain and document in the family file third party verification of the following factors, or must document in the file why third party verification was not available:
    • 24 CFR 982.516 (HCV)
    • 24 CFR 960.259 (PH)
regulatory verification requirement1
Regulatory Verification Requirement
  • Factors requiring verification:
    • Reported family annual income
    • The value of assets
    • Expenses related to deductions from annual income
    • Other factors that affect the determination of adjusted income
release forms
Release Forms
  • Before requesting any verifications, PHAs must obtain signed consent forms from family members authorizing release of information.
    • One such consent form must be consistent with 24 CFR 5.230 regulations
release forms1
Release Forms
  • PHAs must also use other consent forms to request verification of information not covered by this form
      • Because of privacy act issues, PHAs are advised to use specific, rather than generic, consent forms
release forms2
Release Forms
  • Resource for verification & consent forms:
    • HUD’s Public Housing Occupancy Guidebook, Appendix VIII
    • http://www.hud.gov/offices/pih/programs/ph/rhiip/phguidebook.cfm
      • Sample forms useful for HCV & PH
authorization for release of information
Authorization for Release of Information
  • Privacy Act Statement, Form HUD 9886, must be signed by:
    • All adult family members (18 years or older)
    • Head, spouse or co-head regardless of age
  • Form can be used between regular reexams to verify unreported income
    • Valid for 15 months from date of signature
authorization for release of information1
Authorization for Release of Information
  • HUD-9886 may be used only for:
    • Wage & unemployment compensation from SWICAs
    • Salary and wages from current/former employers
    • Unearned income from financial institutions
authorization for release of information2
Authorization for Release of Information
  • PHAs cannot view information available in HUD’s Enterprise Income Verification System (EIV) until they obtain a signed form HUD-9886 in file for each adult household member
    • Head, spouse or co-head, regardless of age
hierarchy of verification methods
Hierarchy of Verification Methods
  • HUD has established a hierarchy of five verification levels
  • Using this hierarchy, PHAs should develop and adopt verification policies as to what qualifies as adequate verification
    • Policies must be consistent with the regulatory requirements
recommended levels of verification
Recommended Levels of Verification
  • Highest - Up-front income verification (UIV)
  • High - Written third- party
  • Medium - Third party oral
  • Medium-low - Document review
  • Low - Tenant declaration
upfront income verification
Upfront Income Verification
  • What is it?
    • The verification of income, before or during a reexamination, through an independent source that systematically and uniformly maintains income information in computerized form for a large number of individuals.
uiv resources
UIV Resources
  • Current UIV resources include:
    • HUD’s EIV system
    • State Wage Information Collection Agencies (SWICAs)
    • State TANF systems
uiv resources1
UIV Resources
  • Credit Bureau Association (CBA) credit reports
  • Internal Revenue Service (IRS) – Tax transcript
    • Request with IRS form 4506-T
  • Private sector databases (e.g. The Work Number)
use of uiv for verification
Use of UIV for Verification
  • UIV is third-party verification
    • Most preferred form
    • Meets regulatory requirements
  • UIV is intended to streamline the verification process
    • Eliminates the need for written third-party verification in many cases
new hud guidance on eiv
NEW! HUD Guidance on EIV
  • HUD webcast 1/16/08 contained revised guidance on use of EIV
    • Previous guidance is obsolete and has been removed from EIV website
    • Webcast available at http://www.hud.gov/webcasts/archives/ph.cfm
      • 4 hours
hud guidance on eiv
HUD Guidance on EIV
  • EIV is sufficient as third-party verification when:
    • The family does not dispute the data, and
    • Current tenant-provided documents (i.e. paystubs) are available
hud guidance on eiv1
HUD Guidance on EIV
  • The PHA MUST obtain additional third-party verification when the family disputes EIV employer data
hud guidance on eiv2
HUD Guidance on EIV
  • The PHA MAY obtain additional third-party verification when the PHA determines that additional information is necessary, such as:
    • Effective dates of employment
    • Pay rate, hours worked for new jobs
    • Confirmation of a change in circumstances (reduced hours, reduced rate of pay)
hud guidance on eiv3
HUD Guidance on EIV
  • Use tenant-provided documents to project annual income, unless:
    • The family disputes EIV employer data, OR
    • The PHA determines that additional information is necessary
hud guidance on eiv4
HUD Guidance on EIV
  • HUD recommends that tenant-provided documents should be dated within 60 days of interview date
    • Current and consecutive
hud guidance on eiv5
HUD Guidance on EIV
  • Quote from webcast:
    • “The PHA will use tenant-provided documents or most current information to calculate anticipated annual income.”
  • EIV quarterly wages are NOT used to project annual income
hud guidance on eiv file documentation
HUD Guidance on EIV:File Documentation
  • If the family does not dispute EIV employer data, and the PHA determines that additional information is not necessary:
    • EIV income details report
      • ICN in FL
    • Tenant-provided documents
hud guidance on eiv file documentation1
HUD Guidance on EIV:File Documentation
  • If the family disputes, or PHA requires additional information:
    • EIV printout (except in FL)
    • Tenant-provided documents
    • Third-party written verification
zero income families
Zero Income Families
  • A family budget or statement of financial responsibility may be required
  • Use up-front verification, for example:
    • EIV
    • Credit report
zero income families1
Zero Income Families
  • PHAs must attempt to determine the source of income when the family’s regular expenditures conflict with their claim of zero income
  • Useful tool:
    • Zero Income Checklist
    • PH Occupancy Guidebook, Appendix VIII
third party verification
Third Party Verification
  • Third-party verification is obtained independently from information sources identified by families
    • The sources may have income information or expense information
third party verification1
Third Party Verification
  • Written
    • Documents must be supplied directly to independent sources by PHAs and returned directly to PHAs from the independent sources (not hand carried by family)
third party verification2
Third Party Verification
  • Written
    • PHAs may mail, fax, or email verification requests to independent sources
    • HUD strongly encourages PHAs to make at least two attempts to obtain third-party verification
third party verification3
Third Party Verification
  • Oral
    • PHAs contact the independent sources by telephone or in-person
    • Third-party oral verification may be used when requests for written verification have not been returned within a reasonable time – e.g. 10 business days
document review
Document Review
  • PHA reviews original documents provided by family as verification of a given income or expense item
  • Document viewed may be used when third party verification cannot be obtained
document review1
Document Review
  • Acceptable documents:
    • Consecutive and original pay stubs
    • SSA award letters
    • Bank statements
    • TANF award letters
    • Other official and authentic documents from federal, state or local agencies
document review2
Document Review
  • To be acceptable for this method of verification, documents must be original and authentic
document review3
Document Review
  • PHA must:
    • Make and retain copy of document in file
    • Note in the file that the original has been received, reviewed and copied
  • Documents should be as current as possible (e.g. dated within 60 days of the family’s interview)
provisional verification
Provisional Verification
  • When third party verification is not received in time to establish eligibility or complete the reexam
    • PHA should establish annual income on a provisional basis and recalculate when third party verification has been completed
tenant declaration
Tenant Declaration
  • An applicant or participant submits an affidavit or notarized statement to certify income or expenses that s/he has reported
  • This method should be used as a last resort when no other verification method is possible
documenting the absence of third party verification
Documenting the Absence of Third-Party Verification
  • There are 4 acceptable reasons for not having third-party verification of an income or expense item in a family’s file:

1. Staff has made efforts to obtain third-party in accordance with their policy and independent source has not responded; or

documenting the absence of third party verification1
Documenting the Absence of Third-Party Verification

2. Independent source that has been asked to provide written third-party verification doesn’t have the capability of sending such verification directly to PHA or of facilitating oral third party verification

documenting the absence of third party verification2
Documenting the Absence ofThird-Party Verification
  • When requested third-party verification is not received, a family’s file should contain documentation of PHA efforts:
    • Dates/time of initial request and all follow-ups
    • Names of the company and the person to whom the request was sent
    • Notation that no response was received
documenting the absence of third party verification3
Documenting the Absence of Third-Party Verification
  • Assets and Expenses:

3. It is not cost-effective or reasonable to obtain third party verification

4. The income or expense item to be verified is an insignificant amount that would have minimal impact on TTP AND the PHA is able to verify through original documents provided by family

documenting the absence of third party verification4
Documenting the Absence of Third-Party Verification
  • When third-party verification is not attempted (3 and 4), a family’s file should contain documentation of the reasoning used to justify the decision.
  • All file notations made by staff should be:
    • Complete Limited to facts
    • Dated Signed or initialed
third party verification not cost effective
Third-Party Verification Not Cost-Effective
  • Example:
    • Ms. Lee reports a savings account with a balance of $1,000 earning 1.25% interest. Bank statements provided to PHA. Bank charges $10 fee for third-party verification. Staff time for processing a third-party verification is estimated at $9.
  • Is this cost effective?
third party verification not cost effective1
Third-Party Verification Not Cost-Effective
  • Reasoning:
  • 3rd party costsDocument review $
    • $10 bank fee $0
    • $9 admin time
  • Interest: $1000 x .0125 = $12.50
third party verification not cost effective2
Third-Party Verification Not Cost-Effective
  • Answer: No – but document reasoning!
  • And - PHA must verify with review of family-supplied documents
verifying income exclusions
Verifying Income Exclusions
  • PHAs need to obtain verification for an income exclusion, if, without that verification, they would not be able to determine whether or not the income is to be excluded (982.516)
verifying income exclusions1
Verifying Income Exclusions
  • The type of verification needed for exclusions may differ:
    • Example 1: Food Stamp benefits
      • The PHA would have to, at minimum, verify the source of that income
verifying income exclusions2
Verifying Income Exclusions
  • Example 2: Wages of a child under 18
    • Verify age - verification of amount is not necessary for wages
verifying income exclusions3
Verifying Income Exclusions
  • There are also situations where it would be necessary to obtain third-party verification of both the source and the amount of the income in order to calculate properly
verifying income exclusions4
Verifying Income Exclusions
  • For example…
    • Mandatory earned income disallowance
    • The exclusion of incremental earnings and benefits resulting from participation in a qualifying state or local training program
verifying income deductions
Verifying Income Deductions
  • The 2001 QC report found that 22% of assisted families paid too much rent
  • Generally, these families did not receive allowances & deductions to which they were entitled
verifying income deductions1
Verifying Income Deductions
  • HUD’s verification guidebook addresses verification of deductions & allowances
    • Q & As on verification requirements for each deduction
verifying income deductions2
Verifying Income Deductions
  • Generally, PHAs should review tenant-provided documents when 3rd-party verification is not available
    • Review “with scrutiny” so that expenses are not counted twice and to ensure that ineligible expenses are not counted
verification time limits
Verification Time Limits
  • HCV only:
    • PHA must receive information verifying that applicant is eligible within 60 days of voucher issuance
  • There are no other regulatory time limits for verifications

*

verification time limits1
Verification Time Limits
  • PHA policy should address verification time limits
    • 120 days is the time limit most often used
    • Do not include time limits for information not requiring reverification, such as age
why are faqs important
Why Are FAQs Important?
  • Guidance from HUD HQ
    • Noted in PD&R’s latest QC report
    • Valuable tool for quickly obtaining official answers to common questions
    • Some PHAs have received conflicting info from HUD staff, or neighboring PHAs get conflicting guidance
3 websites for faqs
3 Websites for FAQs
  • Admissions & Occupancy FAQs:
    • http://www.hud.gov/offices/pih/phr/about/ao_faq.cfm
  • RHiiP FAQs:
    • http://www.hud.gov/offices/pih/programs/ph/rhiip/faq_gird.cfm
  • Rental Integrity Summit FAQs:
    • http://www.hud.gov/offices/pih/programs/ph/rhiip/faq_ris.cfm
3 websites for faqs1
3 Websites for FAQs
  • Verification FAQs
    • http://www.hud.gov/offices/pih/programs/ph/rhiip/faq_verif.cfm
    • Verification issues are also addressed in the RHIIP and Rental Integrity Summit FAQs referenced in last slide
verification faq 1
Verification FAQ #1
  • Question: A number of financial institutions charge tenants a fee (debit the tenant’s account) to pay for third-party verification requested by the PHA. Can a PHA pass on the cost for third-party verification to an applicant or tenant?
verification faq 11
Verification FAQ #1
  • Answer: NO
    • The PHA cannot pass on the cost of bank fees to an applicant or tenant for payment of third-party verification requests made by the PHA
      • See also: Verification Guidebook
verification faq 2
Verification FAQ #2
  • Question: Is a PHA required to pay for a formal appraisal in order to determine the net cash value of real estate?
verification faq 21
Verification FAQ #2
  • Answer: No, but the PHA must use a “reasonable basis” for assigning value
    • Online resources (REALTOR.com)
    • Tenant-provided documents
    • Policy must be in admin plan
      • Could apply to other assets
verification faq 3
Verification FAQ #3
  • Question: What if third-party verification is returned after the effective date of the annual reexam? Does the PHA have to recalculate rent? Is this an interim reexam?
verification faq 31
Verification FAQ #3
  • Answer: If the data is different than what was used for the annual reexam, the PHA must consider the data and recalculate the tenant’s rent
    • This would be recorded as an interim reexam
verification faq 4
Verification FAQ #4
  • Question: Are there any benefits to having families provide notarized statements?
  • Answer: The only benefit that a notarized statement has is that the identity of the signer is verified
verification faq 5
Verification FAQ #5
  • Question: Does HUD require a PHA to obtain copies of government-issued photo IDs, for applicants, to establish legal identity/citizenship?
verification faq 51
Verification FAQ #5
  • Answer: No.
    • No regulatory requirement
    • PHA may require ID by policy
    • Must review/photocopy original INS docs for eligible immigrants
verification faq 6
Verification FAQ #6
  • Question: If a family member claims he or she is seeking employment, what types of verification should a PHA require to determine if a family qualifies for the child care deduction?
verification faq 61
Verification FAQ #6
  • Answer:
    • Written or oral 3rd-party from government agency
      • Example: unemployment compensation
    • If no 3rd-party, tenant-provided documentation of job search
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Upcoming Lunch ‘n’ Learns
  • May 9th – Managing PHAS
  • May 16th – Managing SEMAP
  • June 12th – PH Rent Calculation
  • June 13th – HCV Rent Calculation
  • June 20th – Ethics in Your Housing Authority
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