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Chapter 4. Verifications

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Title: Chapter 4. Verifications


1
Chapter 4. Verifications
2
Chapter 4. Section 1.Overview
  • Learning Objective
  • Apply HUD requirements and standards for
    effective verification techniques

3
Overview
  • The issue of verification cuts across all
    occupancy areas.
  • All information in tenant familys file must be
    verified and properly documented
  • PHAs need to establish detailed verification
    procedures within the Admin Plan (or separately)
    for management control purposes

4
Overview
  • Each PHA should ensure that staff interviewers
    are trained to explain the following points
    during face-to-face interviews or over the phone
    if necessary
  • The types of information that the PHA will verify
  • The methods of verification, including computer
    matching, that the PHA will use

5
Overview
  • PHAs share the responsibility for documentation
    and verification of income information with
    families
  • To fulfill their responsibilities, families must
  • Complete all necessary paperwork
  • Sign all required release forms
  • Be responsive to PHA requests
  • Provide requested items and documents in a timely
    manner
  • PHAs must follow-up with third party sources

6
Overview
  • Verifications are essential to high quality
    administration
  • Verifications ensure that the income information
    provided by families and used by PHAs to
    determine eligibility and rent subsidy amounts is
    correct
  • PHAs must take measures to ensure that each
    regulatory and policy item that needs to be
    verified is, in fact, verified consistently by
    all staff members

7
Overview
  • Learning Activity 4-1
  • Minimum Rent Verification
  • Page 4-3
  • Instructions review the shaded area from the
    policy on page 4-4 and answer questions 1a-c
    about that item on page 4-5. Take the others
    home for yourself or staff to complete.

8
Chapter 4. Section 2.Verification Policies
9
Regulatory Verification Requirement
  • The regulatory requirement is stated below.
  • 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
  • Reported family annual income
  • The value of assets
  • Expenses related to deductions from annual income
  • Other factors that affect the determination of
    adjusted income

10
Hierarchy of Verification Methods
  • HUD has established a hierarchy of five
    verification levels.
  • Using this hierarchy, PHAs should develop and
    adopt verification policies to guide staff in
    determining what qualifies as adequate
    verification for specific items that affect the
    determination of income and rent.
  • Policies must be consistent with the regulatory
    requirements.

11
Hierarchy of Verification Methods
  • On following pages, you will find two samples
  • General verification policy that follows HUDs
    hierarchy (page 4-9)
  • Policy that applies specifically to the
    verification of assets (page 4-11)

12
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
  • 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

13
Authorization for Release of Information/ Privacy
Act Statement (form HUD-9886)
  • Form 9886 must be signed by
  • All adult family members (18 years of age )
  • Head spouse, regardless of age
  • Form can be used between regular reexams to
    verify unreported income
  • Valid for 15 months from date of signature

14
Authorization for Release of Information/ Privacy
Act Statement (form HUD-9886)
  • HUD-9886 may be used only for
  • Wage unemployment compensation from SWICAs
  • Salary and wages from current/former employers
  • Unearned income from financial institutions
  • Form 9886 (page 4-15)

15
Chapter 4. Section 3.Recommended Levels of
Verification
16
Recommended Levels of Verification
  • Highest
  • Up-front income verification (UIV) to become
    mandatory when HUDs UIV system is available
  • High
  • Written 3rd party mandatory when UIV is not
    available or sufficient
  • Medium
  • Third party oral mandatory if written 3rd party
    is not available
  • Medium-low
  • Document review - to be used on provisional basis
    or in situations where UIV and third-party
    verification are unavailable
  • Low
  • Tenant declaration to be used only as a last
    resort

17
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.

18
Recommended Levels of Verification
  • Because UIV is particularly useful in identifying
    undisclosed income, HUD believes that it offers
    the best opportunity for making the biggest
    impact on reducing the excess rental assistance
    subsidies in the QC Study.

19
Recommended Levels of Verification
  • UIV opportunities to reduce errors
  • 900 million per year (over 2 million dollars
    per day) and UIV is particularly useful in
    identifying this income
  • HUD estimates that 50 of the errors associated
    with earned income could be reduced by using UIV
    techniques.
  • Reducing that number is a major challenge and
    opportunity for the housing industry, including
    HUD.

20
Recommended Levels of Verification
  • HUD maintains a website devoted to UIV, and links
    to many current UIV resources are posted on this
    website.
  • See Appendix A, page A-1, for address.

21
Recommended Levels of Verification
  • Current UIV resources include the following
  • Social Security (SS) and Supplemental Security
    Income (SSI) information accessed via a secure
    Internet facility (TASS)
  • State Wage Information Collection Agencies
    (SWICAs)
  • State TANF systems
  • Credit Bureau Association (CBA) credit reports
  • Internal Revenue Service (IRS) letter 1722
  • Private sector databases (e.g. The Work Number)
  • See Useful Website Addresses in References

22
Recommended Levels of Verification
  • PHAs may execute UIV agreements, such as SWICA
    agreements and agreements with TANF agencies,
    independent of HUD.
  • PHAs may execute UIV agreements with SWICAs only
    in states where HUD has not already executed such
    agreements.

23
Use of UIV for Verification
  • When UIV does not differ substantially from
    participant-provided documents, PHAs may use UIV
    to satisfy their regulatory obligation to obtain
    third-party verification.
  • PHAs are not required to obtain additional
    third-party verification from employers.
  • PHA will need to define differ substantially.
  • HUD suggests 200 or more per month as reasonable
    guideline

24
Use of UIV for Verification
  • When UIV differs substantially from
    participant-provided documents, third-party
    verification is still required. For example
  • Participant discloses an employer that is not
    represented in the UIV system.
  • UIV reveals employer or other income source that
    participant did not disclose.
  • The income amounts on UIV and participant-provided
    documents differ substantially.

25
Use of UIV to Project Income
  • PHAs can also use UIV to project income.
    However, since UIV information is not
    up-to-date, PHAs may need to use it along with
    participant-provided documents, such as pay stubs
    or SS/SSI award letters when making their income
    projections.

26
Use of UIV to Project Income
  • UIV and pay stubs are complementary sources of
    information.
  • UIV satisfies the third-party obligation pay
    stubs do not.
  • UIV reveals undisclosed income pay stubs do not.
  • Pay stubs provide hours worked and rate of pay
    UIV does not.
  • Pay stubs are current UIV is dated (usually 3-5
    months old.)

27
Upfront Income VerificationProjecting Annual
Income
  • HUD has established criteria for what
    constitutes a substantial difference in cases
    where UIV data differs from tenant-provided
    and/or other verified income.
  • HUD defines a substantial difference as 200 or
    more per month.
  • UIV may alleviate the need for 3rd party
    verification if not a substantial difference.

28
UIV Income Data is Not Substantially Different
  • If UIV income data is less than current
    tenant-provided documentation, use
    tenant-provided documents to calculate
    anticipated annual income.

29
UIV Income Data is Not Substantially Different
  • If UIV income data is more than current
    tenant-provided documentation, use UIV to
    calculate anticipated annual income unless the
    tenant provides documentation of a change in
    circumstances.
  • Upon receipt of acceptable tenant-provided
    documentation of a change in circumstances, use
    tenant-provided documents to calculate
    anticipated annual income.

30
UIV Income Data is Substantially Different
  • Request written 3rd party verification from the
    discrepant income source.
  • Review historical income data for patterns of
    employment, paid benefits, and/or receipts of
    other income, if you can not readily anticipate
    income, i.e. seasonal employment, etc.

31
UIV Income Data is Substantially Different
  • Analyze all data (UIV data, 3rd party
    verification and other documents/information
    provided by the family) and attempt to resolve
    the income discrepancy.
  • Use the most current verified income data (and
    historical income data if appropriate) to
    calculate anticipated annual income.

32
Upfront Income Verification Projecting Annual
Income
  • HUD recommends that tenant-provided documents
    should be dated within the last 60 days of the
    PHA interview date.
  • PHA may average amounts received/earned, if
    unable to anticipate annual income using current
    information due to historical fluctuations in
    income.

33
Upfront Income Verification Projecting Annual
Income
  • If the tenant disputes UIV SS/SSI benefit data,
    request the tenant to provide current, original
    SSA notice or benefit letter within 10 business
    days of PHA interview date.
  • Tenant may contact SSA at 1-(800) 772-1213 or
    visit their local SSA office.

34
Upfront Income Verification Resources for
Historical Income Data
  • Social Security Earnings Statement, request via
    mail or online at www.ssa.gov
  • Two years of earnings may be obtained from UIV
    System or Local State Wage Information Collection
    Agency (SWICA)
  • Last eight (8) amounts of SS benefits paid to a
    participant may be obtained from the TASS or UIV
    system

35
Use of TASS
  • PHAs should use UIV routinely to verify SS and
    SSI income information.
  • In its initial round of RIM reviews, HUD did not
    make failure to use TASS to obtain UIV of SS and
    SSI income a finding.
  • Field offices were instructed to note on their
    RIM reports that such failure will be a finding
    next time if there is no other third-party
    verification of SS and SSI income (from a local
    SSA office) in a participants file.
  • UIV from TASS is far superior to third party
    verification because PHAs often fail to ask for
    information on all family members, including
    children.

36
HUDs UIV System
  • Background and Rationale PIH is developing UIV
    to provide PHAs with a single source for
    obtaining verification of wages, unemployment and
    social security benefits
  • HUD has invested millions of dollars in this
    system to assist in the reduction of subsidy
    payments for unreported income
  • Goal is to achieve reduction of subsidy errors
  • 30 percent by FY 2004
  • 50 percent by FY 2005

37
HUDs UIV System
  • Background and Rationale HUD has been
    negotiating cooperative agreements with SWICAs
    nationwide
  • Computer matching enables HUD to receive wages
    and unemployment compensation on ongoing basis
    through a computer matching operation for
    disclosure to PHAs
  • PIH anticipates having more than 40 cooperative
    agreements executed by midyear 2004

38
HUDs UIV System
  • The UIV system will contain
  • Wage and unemployment information from SWICAs
    across the nation
  • Social security benefits from the Social Security
    Administration (SSA)

39
HUDs UIV System
  • All housing program participants whose SSNs are
    transmitted to PIC will be matched on a quarterly
    basis with UIV data
  • Will allow HUD to provide most recent income
    information from SWICAs and SSA
  • Wages and social security benefits are largest
    unreported income components
  • Therefore, UIV is best tool for PHAs to identify
    potential wage and benefit underreporting

40
PHA Responsibilities
  • While UIV will be excellent tool, PHAs will be
    responsible to
  • Compare UIV information with tenant-provided
    information
  • Resolve income discrepancies promptly to
    determine accurate tenant rents

41
PHA Responsibilities
  • In addition, PHAs will be responsible for
  • Maintaining a current form HUD-9886 in each
    applicants and participants file
  • Restricting access to UIV data to employees have
    a recognized need to know for valid
    administration reasons
  • Ensuring UIV data is stored in secure places

42
PHA Responsibilities
  • HUD plans to provide guidance to PHAs to ensure
    they implement appropriate physical, technical
    and administrative safeguards in their business
    operations.

43
PHA Responsibilities
  • Safeguards will include
  • ED certification re security plan
  • Appointment of a security coordinator
  • User agreements signed by all PHA users
  • Physical security of tenant information (files,
    offices, etc.)
  • UIV system security
  • Updating of user IDs quarterly
  • Monitoring of system usage
  • Training for staff

44
HUDs UIV System
  • How the system will work
  • To log onto UIV system, an authorized user will
    enter PIC ID and password (p. 4-23)
  • PHAs may request additional PIC IDs and passwords

45
System Preview (Screens subject to modification)
Page 4-23
Log in screen UIV uses PIC User ID and Password
46
HUDs UIV System
  • How the system will work
  • The starting point for the user will be the
    welcome page (p. 4-24)

47
Page 4-24
Welcome Page
48
HUDs UIV System
  • How the system will work
  • The user will then search income records by
    household information (any of the following)
  • Head of households SSN
  • Head of households last name
  • Head of households date of birth

49
Household Search Screen
Page 4-25
50
HUDs UIV System
  • How the system will work
  • The search may bring up more than one name the
    user will pick the correct person

51
Head of Household Screen
Page 4-26
52
HUDs UIV System
  • How the system will work
  • The next screen will display the household
    summary and income record status for the family
    (p. 4-27)

53
Household Income Summary Screen
Page 4-27
54
HUDs UIV System
  • How the system will work
  • The user will then arrive at the household income
    details screen (p. 4-29)
  • Household summary table
  • Head of household identifier
  • Member selection list
  • Wage and benefits table
  • Access to income data for 4 most recent quarters

55
Page 4-29
  • Household Income Detail Screen
  • Wage Data
  • Social Security
  • Unemployment Compensation

56
HUDs UIV System
  • UIV system will also contain an exceeds
    threshold reports
  • Based on 2 mathematical comparisons
  • Third party (SWICA and SSA) tenant household
    quarterly income data will be compared with PIC
    50058 projected income data
  • The difference will be compared to an established
    threshold

57
HUDs UIV System
  • The results of the report may be used to
  • Identify individual households with suspect
    income reporting
  • Generate metrics that may be used in measuring
    the effectiveness of income error reduction
    efforts achieved with the UIV system
  • The report will be a critical tool in pursuing
    undisclosed income.

58
HUDs UIV System
  • Generating an exceeds threshold report
  • Click on Get Report (p. 4-31)

59
Threshold Report Critical Tool for Pursuing
Undisclosed Income
Page 4-31
Set Threshold of discrepancy between Household
50058 income vs. UIV Income from wage SSA match
60
HUDs UIV System
  • PHA Exceeds Threshold Report (p. 4-32)
  • If discrepancy between familys reported data and
    UIV data equals or exceeds the established
    threshold, the familys name will be listed on
    the report.
  • To obtain more information, the user will click
    on the SSN of the familys head of household.

61
HUDs UIV System
  • Head of Households Information Screen will
    display detailed information (p. 4-33)
  • Using Exceeds Threshold reports, PHAs will be
    able to follow up with families to ensure that
    income has been correctly reported and
    calculated.
  • Where underreporting has occurred, PHAs will need
    to take appropriate action (entering into
    repayment agreements)

62
Page 4-33
Household level detail of threshold report
63
HUDs UIV System
  • Field offices will also be able to view exceeds
    threshold reports.
  • HUD will be using these reports to monitor and
    follow up with PHAs to ensure that discrepancies
    are being addressed. (p. 4-34)

64
Field Office Level Report of PHA Threshold
Statistics
HUD will be following up regularly, using this
report
65
HUDs UIV System
  • When HUDs UIV system is fully operational
  • PHAs will be required to use it.
  • HUD will intensely monitor whether PHAs are using
    it.
  • Monthly usage rates will be reviewed at all
    levels of HUD
  • Discrepancy rates will be reviewed closely to
    determine whether PHAs with rates higher than the
    norm are using UIV to reduce undisclosed income
  • The system will be linked to a hotline set up by
    HUDs IG to receive and process complaints of
    fraud, waste and abuse

66
HUDs UIV System
  • One caveat A federal statute governing computer
    matching requires that before an adverse action
    can be taken by a PHA using UIV, a participant
    must be given notice and opportunity to address
    the discrepancy
  • See Up-Front Verification Orientation on page
    4-67

67
HUDs UIV System
  • Learning Activity 4-2
  • UIV Case Study 1
  • Group Activity Family data conflicts with UIV
  • Page 4-37

68
HUDs UIV System
  • Learning Activity 4-3
  • UIV Case Study 2
  • Page 4-40

69
Third Party Verification
  • Third-party verification is obtained
    independently from information sources identified
    by families
  • The sources may have income information or
    expense information

70
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)
  • 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 written
    verification

71
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

72
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

73
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

74
Document Review
  • To be acceptable for this method of verification,
    documents must be original and authentic
  • 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 familys interview)

75
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

76
Levels of Verification of Income
  • See Levels of Verification Chart
  • (page 4-45)

77
Chapter 4. Section 4.Verification Standards
78
Verification Standards
  • PHAs should establish time frames for receipt of
    third-party verification before accepting
    documents provided by families
  • Following up after a specified number of days or
    weeks and then waiting for another specified
    number of days or weeks before accepting
    documents
  • See Sample Verification Monitoring Form (page
    4-50)

79
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 familys file
  • Staff has made efforts to obtain 3rd party in
    accordance with their policy and independent
    source has not responded or
  • Independent source that has been asked to provide
    written third-party verification doesnt have the
    capability of sending such verification directly
    to PHA or of facilitating oral third party
    verification or
  • When third-party verification is requested and
    not received (1 and 2 above), a familys file
    should contain documentation of PHA efforts

80
Documenting the Absence of Third-Party
Verification
  • Documentation should include the following
    information
  • Dates/time of the 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

81
Documenting the Absence of Third-Party
Verification
  • It is not cost-effective or reasonable to obtain
    third party verification
  • 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
  • When third-party verification is not attempted
    (3 and 4 above), a familys file should contain
    documentation of the reasoning used to justify
    the decision

82
Documenting the Absence of Third-Party
Verification
  • All file notations made by staff should be
  • Complete Limited to facts
  • Dated Signed or initialed

83
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?

84
Third-Party Verification Not Cost-Effective
  • Reasoning
  • 3rd party costs Document review
  • 10 bank fee 0
  • 9 admin time
  • Interest 1000 x .0125 12.50
  • Answer No but document your reasoning!
  • And - PHA must verify with review of
    family-supplied documents

85
Documenting the Absence of Third-Party
Verification
  • See Exception to Third Party Verification Chart
    (page 4-53)

86
What Must Be Verified
  • Income, assets and asset income
  • Divested assets
  • Income exclusions
  • Allowances and deductions
  • Family composition
  • Social security numbers
  • Citizenship or eligible immigration status

87
Verifying Annual Income
  • PHAs need a thorough understanding of what
    constitutes income
  • PHAs should not make assumptions about whether
    someone may or may not have a particular type of
    income
  • For example, family without children may be
    receiving back child support payments

88
Verifying Annual Income
  • To properly verify annual income, PHA staff must
    first
  • Have a thorough data-gathering form
  • Forms that gather data about annual income should
    ask the right questions
  • Know how to conduct a thorough interview
  • The initial interview is critical it lays the
    groundwork for future interviews for interim and
    annual reexaminations

89
Verifying Income Exclusions
  • All exclusions and excluded amounts associated
    with family members should be
  • Declared by the family, and
  • Reported by the PHA in field 7e of the 50058

90
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)

91
Verifying Income Exclusions
  • The type of verification needed for exclusions
    may differ
  • Example 1 Payments received under a Federal Work
    Study Program
  • The PHA would have to, at minimum, verify the
    source of that income
  • Example 2 Wages of a child under 18
  • Verify age - verification of amount is not
    necessary for wages

92
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. For example
  • Mandatory earned income disallowance
  • The exclusion of incremental earnings and
    benefits resulting from participation in a
    qualifying state or local training program

93
Summary
  • The PHA is the final judge of what constitutes
    adequate and credible verification and
    documentation
  • If there is doubt about the reliability of the
    information received, staff should pursue
    additional information
  • PHA staff are not required to accept information
    simply because it is offered.

94
Verification
  • Go over the remainder of the chapter with the
    staff in your office to be sure they understand
    verifying deductions.

95
Learning Objective
  • Apply HUD requirements and standards for
    effective verification techniques
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