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 ACOP (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
  tenant-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
  tenant-provided documents, third-party
  verification is still required. For example
• Tenant discloses an employer that is not
  represented in the UIV system.
• UIV reveals employer or other income source that
  tenant did not disclose.
• The income amounts on UIV and tenant-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
  tenant-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-[phone] 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 tenants 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 an 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 tenants file
• Restricting access to UIV data to employees who
  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 report
• 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
PHA Exceeds Threshold Report
Page 4-32
62
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)

63
Page 4-33
Household level detail of threshold report
64
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)

65
Field Office Level Report of PHA Threshold
Statistics
HUD will be following up regularly, using this
report
66
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

67
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 tenant must be
  given notice and opportunity to address the
  discrepancy
• See Up-Front Verification Orientation on page
  4-67

68
HUDs UIV System

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

69
HUDs UIV System

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

70
Third Party Verification

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

71
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

72
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

73
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

74
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

75
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)

76
Tenant Declaration

• An applicant or tenant 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

77
Levels of Verification of Income

• See Level of Verifications Chart
• (page 4-45)

78
Chapter 4. Section 4.Verification Standards
79
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)

80
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

81
Documenting the Absence of Third-Party
Verification

• Documentation should include the following
  information
• Date/time of the initial request and all
  follow-ups
• Name of the company and the person to whom the
  request was sent
• Notation that no response was received

82
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 the
  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

83
Documenting the Absence of Third-Party
Verification

• All file notations made by staff should be
• Complete Limited to facts
• Dated Signed or initialed

84
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?

85
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

86
Documenting the Absence of Third-Party
Verification

• See Exception to Third Party Verification Chart
  (page 4-53)

87
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

88
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

89
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

90
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

91
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

92
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

93
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

94
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.

95
Verification

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

96
Learning Objective

• Apply HUD requirements and standards for
  effective verification techniques