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Title: Annie Stevenson


1
Verification Techniques
Annie Stevenson
2
Welcome to Lunch N Learn!
  • Upcoming topics for the occupancy series
  • 6/12/08 Public housing rent calculation
  • 9/1/06 HCV rent calculation

3
Welcome to Lunch N Learn!
  • Todays topics
  • Verification techniques
  • Introduction error-reduction strategies
  • HUDs verification guidance
  • Frequently asked questions (FAQs)

4
Introduction
  • HUDs Error Reduction Strategies

5
2001 Quality Control Report
  • Published by HUD Policy Development Research
    (PDR)
  • Available online at http//www.huduser.org/publica
    tions/pubasst/qualitycontrol.html
  • 60 error rate for rent and subsidy calculations
    in assisted housing programs

6
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

7
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

8
2001 Quality Control Report
  • Most error-prone components of rent calculation
    (PHA and tenant error)
  • Earned income
  • Social Security benefits
  • Allowances and deductions

9
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

10
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

11
HUDs 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

12
RHIIP Components
  • Upfront Income Verification (UIV)
  • Training and technical assistance
  • RHIIP Summits
  • Program guidance
  • HCV Guidebook
  • PH Guidebook
  • Verification Guidance

13
RHIIP Components
  • RIM reviews
  • Incentives and sanctions
  • Notice PIH 2003-34
  • Notice PIH 2005-7
  • Program simplification

14
Verification Guidebook
15
HUDs 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

16
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)

17
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

18
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

19
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

20
Release Forms
  • Resource for verification consent forms
  • HUDs Public Housing Occupancy Guidebook,
    Appendix VIII
  • http//www.hud.gov/offices/pih/programs/ph/rhiip/p
    hguidebook.cfm
  • Sample forms useful for HCV PH

21
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

22
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

23
Authorization for Release of Information
  • PHAs cannot view information available in HUDs
    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

24
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

25
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

26
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.

27
UIV Resources
  • Current UIV resources include
  • HUDs EIV system
  • State Wage Information Collection Agencies
    (SWICAs)
  • State TANF systems

28
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)

29
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

30
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/a
    rchives/ph.cfm
  • 4 hours

31
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

32
HUD Guidance on EIV
  • The PHA MUST obtain additional third-party
    verification when the family disputes EIV
    employer data

33
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)

34
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

35
HUD Guidance on EIV
  • HUD recommends that tenant-provided documents
    should be dated within 60 days of interview date
  • Current and consecutive

36
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

37
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

38
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

39
Zero Income Families
  • A family budget or statement of financial
    responsibility may be required
  • Use up-front verification, for example
  • EIV
  • Credit report

40
Zero Income Families
  • PHAs must attempt to determine the source of
    income when the familys regular expenditures
    conflict with their claim of zero income
  • Useful tool
  • Zero Income Checklist
  • PH Occupancy Guidebook, Appendix VIII

41
Third Party Verification
  • Third-party verification is obtained
    independently from information sources identified
    by families
  • The sources may have income information or
    expense information

42
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)

43
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

44
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

45
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

46
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

47
Document Review
  • To be acceptable for this method of verification,
    documents must be original and authentic

48
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 familys interview)

49
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

50
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

51
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
  • 1. Staff has made efforts to obtain third-party
    in accordance with their policy and independent
    source has not responded or

52
Documenting the Absence of Third-Party
Verification
  • 2. 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

53
Documenting the Absence of Third-Party
Verification
  • When requested third-party verification is not
    received, a familys 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

54
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

55
Documenting the Absence of Third-Party
Verification
  • When third-party verification is not attempted (3
    and 4), a familys 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

56
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?

57
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

58
Third-Party Verification Not Cost-Effective
  • Answer No but document reasoning!
  • And - PHA must verify with review of
    family-supplied documents

59
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)

60
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

61
Verifying Income Exclusions
  • Example 2 Wages of a child under 18
  • Verify age - verification of amount is not
    necessary for wages

62
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

63
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

64
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

65
Verifying Income Deductions
  • HUDs verification guidebook addresses
    verification of deductions allowances
  • Q As on verification requirements for each
    deduction

66
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

67
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


68
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

69
Verification FAQs
70
Why Are FAQs Important?
  • Guidance from HUD HQ
  • Noted in PDRs 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

71
3 Websites for FAQs
  • Admissions Occupancy FAQs
  • http//www.hud.gov/offices/pih/phr/about/ ao_faq.c
    fm
  • 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

72
3 Websites for FAQs
  • Verification FAQs
  • http//www.hud.gov/offices/pih/programs/ph/rhiip/f
    aq_verif.cfm
  • Verification issues are also addressed in the
    RHIIP and Rental Integrity Summit FAQs referenced
    in last slide

73
Verification FAQ 1
  • Question A number of financial institutions
    charge tenants a fee (debit the tenants 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?

74
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

75
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?

76
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

77
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?

78
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 tenants rent
  • This would be recorded as an interim reexam

79
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

80
Verification FAQ 5
  • Question Does HUD require a PHA to obtain copies
    of government-issued photo IDs, for applicants,
    to establish legal identity/citizenship?

81
Verification FAQ 5
  • Answer No.
  • No regulatory requirement
  • PHA may require ID by policy
  • Must review/photocopy original INS docs for
    eligible immigrants

82
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?

83
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

84
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85
NMA Lunch n Learn Seminar
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86
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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