Improving the integrity of income verification is vital for HUD and MSHDA. A recent analysis by HUD determined that only 29% of assisted households were paying the correct rent amount. Incorrect rents being charged to the participants result in inaccurate Housing Assistance Payments (HAP) being paid by MSHDA.
To prevent fraud and abuse in HUD programs, the United States Code (USC) and Code of Federal Regulations (CFR) allow HUD and PHA’s to obtain information about applicants and participants to determine their eligibility or level of benefits. Most importantly, the USC authorizes computer-matching agreements of income information known as Up-front Income Verification (UIV).
Below is a summary of laws and regulations that govern the use of UIV:
UIV replaces, to a large extent, the more time consuming and less accurate TPV process of contacting individual employers identified by the family or reviewing outdated income verification documents. If a UIV method is not available, an attempt to obtain written TPV must be made.
Compliance with the third party verification (TPV)process and calculating correct participant rent amounts directly affect MSHDA’s SEMAP performance on Indicators 3 (Determination of Adjusted Income) and 10 (Correct Tenant Rent Calculations). Refer to Chapter XVI (SEMAP) for specific information.
When the income verification process is initiated at the time of initial contract or annual re-examination, the following forms are required to be completed by the Head of Household and every other household member age 18 and over:
MSHDA HA’smust obtain TPV or document in the file why TPV was not available for the following factors:
Federal Regulations require disclosure of income information and verification from all family members age 18 and over for all earned and unearned income for the household. HAs will verify the accuracy of the information and adjust the family’s household income, which affects the participant’s rent payment.
Each item marked “yes” on the MSHDA 1890 involving income, assets, or deductions must be verified using the TPV process.
HUD requires that income, assets, and deductions be verified through a third party such as an employer, financial institution, DHS caseworker, etc. A participant cannot hand carry documents to or from the verification source.
Verification documents for income, assets, and deductions must be dated within:
Note: TPV process and time limits do not apply to information that does not require re-verification (proof of age, Social Security cards, etc.) or information regarding the disposal of assets.
Third-Party Verification Hierarchy
HUD has identified a hierarchy of TPV verification. The five levels of verification, in order of acceptance to HUD, are identified below:
See Appendix H, Third Party Verification Resources.
Up-Front income verification (UIV) is the verification of income through an independent source that systematically and uniformly maintains income information in computerized form for a large number of individuals. It is the preferred method of income verification to be used.
Current UIV resources include the following:
The EIV System is intended to provide a single-source of income related data to a PHA for use in verifying the income reported by participants who are being assisted under the various housing programs administered by HUD. The EIV System assists in the verification of income by comparing participant income data obtained from the HUD 50058 form, from data captured in the Public Housing Information Center (PIC), wage and unemployment information from State Wage Information Collection Agencies (SWICA) and Social Security and Supplemental Security Income from the Social Security Administration. The System is only to be used to verify a participant’s eligibility for participation in a HUD rental assistance program and/or determine the level of assistance the participant is entitled to receive. As a condition of receiving the EIV data, safeguards will be required to prevent unauthorized use of the information and to protect the confidentiality of that information.
Two different reports are generated through the HUD EIV system for use by MSHDA staff and housing agents which can be used for the comparison of data:
The HUD EIV system is accessed via the Internet. It is a secure system and requires the use of a PIC ID and password to gain access. The PIC ID and password information is assigned to designated staff and HA’s by MSHDA’s WASS Coordinator.
NOTE: When utilizing the EIV system avoid using the search and print functions “By Reexamination Month.” This function will generate verifications for all MSHDA’s residents, which is unnecessary for a HA to generate and will waste resources due to the excessive amount of data produced.
Federal SSI: Use EIV as primary TPV. If no EIV, then follow the steps outlined in the TPV hierarchy beginning with the written step of TPV. Note the reason for no EIV on the Third Party Verification (TPV) Monitoring Form (MSHDA 78).
You may use the website http://www.theworknumber.com/ to obtain UIV employment verification. See Appendix H for instructions on accessing the website.
The Data Share is now available for receiving UIV information. This information is provided by using the Third Party Verification via Michigan Department of Human Services Database (MSHDA 1795) form. Information available on the MSHDA 1795 includes amounts for State SSI, Federal TANF and Federal TANF Sanction amounts, State Assistance Program, Refugee Assistance Program, Child Support Rebates, Childcare paid to the provider; and Childcare paid to the DHS client. It also provides only a yes/no answer for wages reported to DHS, unearned income reported to DHS, Food Assistance Program, and Medicaid Program. NOTE: The DHS data share link is through the secure Citrix Log-in account.
Follow these guidelines for using the Data Share:
Guidelines for Projecting Annual Income When UIV Data is Available
When using a UIV system for verifying income, tenant supplied income documents are compared to the information received through the UIV system.
HUD has established the criteria for what constitutes a substantial difference in cases where UIV income data differs from tenant-provided and/or other verified income information.
In cases where UIV Income Data is Not Substantially Different than Tenant-Provided Income Information follow the guidelines below:
In cases where UIV Income Data is Substantially Different than Tenant-Provided Income Information follow the guidelines below:
NOTE: If the tenant disagrees with the UIV information, it is incumbent upon the tenant to disprove the UIV information.
See Appendix H for examples of EIV verification and calculation.
Historical Data on EIV
In addition to projecting tenant income, the HA must review the historical data on the EIV form for unreported and under-reported income.
HA must pursue the verification of all unreported income that is discovered through UIV methods, taking into consideration the date of the change in the Interim Re-exam policy (July 1, 2005). Participants will be held harmless for not reporting income prior to the July 1, 2005 Interim Re-exam policy effective date as long as the participant did not withhold information at their last annual re-examination. If participant did withhold information at their last annual re-examination or failed to report additional income after July 1, 2005, the participant will be required to enter into a Repayment Agreement. Refer to Chapter XXV Processing Tenant Repayment Agreements.
If UIV shows a previously undisclosed income source or underreported income, HA will request documentation from the tenant (MSHDA 53) as well as obtain TPV.
If $10,000 or more of unreported household income in a one-year period is discovered and subsequently verified, the HA must contact the MSHDA EIV Coordinator to determine an appropriate course of action.
If less than $10,000 of unreported household income in a one-year period is discovered and subsequently verified, the HA will pursue a Repayment Agreement. Failure to execute a Repayment Agreement by the family will result in termination. See Chapter XXV. Processing Tenant Repayment Agreements and/or Chapter XXIII. Mediations and Informal Hearings as needed.
If a UIV method is not available, or if there is an income discrepancy involving UIV, an attempt to obtain written TPV must be made.
If a UIV is not available, or if there is an income discrepancy involving UIV, TPV must be used to verify information directly from the source. Written TPV can be requested from the source by first class mail, E-mail, FAX, or drop off at source, etc. Submit the first request for written TPV directly to each source. If the first request for written TPV is not received from the source within 14 days, a second request for written TPV directly to the source is made. Allow the source 7 days to respond to the second request for written TPV, for a total of 21 days.
Obtain applicant/participant release signatures at the top of the applicable verification forms, OR attach a copy of the Authorization, Certification, and Consent form (MSHDA 158) OR Authorization for Release of Information/Privacy Act Statement (HUD-9886) with the words “see attached authorization form” written on the signature line of the applicable verification form prior to sending to the source. Multiple forms may be needed to accommodate several sources, such as the need for a separate Verification of Resources (MSHDA 48) if the applicant/participant has three savings accounts at three different financial institutions. The signed verification forms (or a blank form with a copy of signed MSHDA 158 or HUD-9886) are submitted directly to the verification source who then returns the document(s) directly back to the HA.
Requests for written TPV for income/assets/deductions must be made whether or not a MSHDA verification form exists.
If written TPV cannot be obtained (i.e. employer is out of business) then the HA will make the decision as to how best to obtain the required information. However, the TPV hierarchy must be followed, and written documentation must be recorded on the MSHDA 77 or 78 which “tells the story” of attempts at verification and answers received.
The applicant/participant CANNOT hand carry any verification documents to or from the source.
In order to be considered written TPV, the verification must come directly from the source, all required data is present, and the following:
If the TPV received has an appearance that revisions have been made or has been tampered with in some way, then the verification is not acceptable. (Tampering of documents could be white outs, cross outs, different inks, different handwriting, suspicious letterhead or forms, suspicious information, etc.) If applicant/participant fraud is believed to have occurred, please discuss possible termination with your RS.
The TPV 21 day process clock begins on the day that the first attempt for written TPV is made to each source. NOTE: The TPV clock does not start with the MSHDA 53 request to the applicant/participant.
Medical/Pharmacy Release of Information Exceptions: Due to HIPAA confidentiality reporting laws, it may be necessary to use verification/release of information forms provided by the source (i.e. Wal-Mart and K-Mart) instead of MSHDA forms, which the applicant/participant must sign requesting that the information be sent to MSHDA from the source. A Verification of Medical Expenses (MSHDA 100) should be sent to the source along with their forms.
Refer to the Exceptions noted in Section H. Exceptions below for acceptable reasons for skipping either the first and/or second written attempts.
If UIV is not available and attempts to obtain written TPV were unsuccessful; the HA must originate oral TPV.
If UIV and written TPV is not obtained, HA must initiate contact with the source identified on the MSHDA 1890, (i.e. supervisor, personnel department, etc.) to obtain the necessary verification. The individual source’s name, the date/time contacted,HA signature, and all required data must be noted on the following verification document:
Refer to Section H. Exceptions noted below for acceptable reasons for skipping TPV oral attempt. In the event that attempts for oral TPV from the independent source have failed, the HA must pursue original documents provided by the family.
If UIV is not available and attempts to obtain written and oral TPV were unsuccessful; the HA must utilize documents provided by the family if the documents contain complete information.
If UIV, written, and oral TPV is not obtained, theHA reviews the original documents provided by thefamily as verification of income/assets/deductions. If original documents have not been provided for review, a Request for Required Documents (MSHDA 53) must be sent requesting that the applicant/participant submit necessary original documents dated within the previous 60 days.
To be acceptable for this method of verification, documents must be original and authentic, (e.g. not FAXes or photocopies). HA must photocopy the original document. Notate “viewed original document” and sign and date the copy of the tenant-provided document.
Refer to Appendix H, HUD Verification Requirements Chart (obtained from HUD Guidebook) for acceptable tenant-provided documents.
Internal Revenue Service (IRS) Letter 1722: An IRS letter 1722, also known as a tax account listing, shows the applicant/participant’s filing status, exemptions claimed, adjusted gross income, taxable income, taxes paid, etc. This is an acceptable form of TPV provided by a family. Individuals can obtain an IRS Letter 1722 by calling 1-800-829-1040.
NOTE: Financial institution statements that reflect direct deposit amounts are not acceptable verification until 28 days have passed and the third party did not respond. Since direct deposit financial documents do not identify gross amounts or deductions, specific information must still be obtained from the source for Medicare deductions, gross wages, etc.
Under no circumstances can a copy of a U.S. Treasury issued check be in a tenant file as documentation. See Appendix H Exhibit 5-5 Verification Requirements.
In the event information cannot be verified by a review of documents, families will be required to submit family certification.
If UIV is not available and attempts to obtain written and oral TPV were unsuccessful, and the family cannot provide original documents, then family certification is required. Family certification is a notarized statement signed under penalty of perjury in the presence of a witness. HA may accept a notarized statement or affidavit from the family that declares the family’s total monthly or annual income/assets/deduction verification. A completed and signed Household Living Expenses Questionnaire (MSHDA 488) would satisfy the certification requirement if the family has zero income.
This method should be used as a last resort when no other verification method is possible.
TPV Written: There are occasions when the HA may not be able to attempt written TPV. In those instances, the HAmust explain on the MSHDA 78 (and/or MSHDA 77 if necessary) why they skipped this step in the hierarchy. For example, if an applicant/participant is unable to provide and the HA cannot obtain a mailing address for the source that can be used for written attempts for TPV, this step may be skipped and the HA would immediately go to the TPV oral step. The reason this was skipped must be thoroughly explained on the MSHDA 78 or 77.
TPV Oral: There are occasions when the HA may not be able to attempt oral TPV. In those instances, theHA must explain on the MSHDA 78 (and/or MSHDA 77 if necessary) why they skipped this step in the hierarchy. For example, if the applicant/participant is unable to provide and the HA cannot obtain a phone number for the source that can be used for oral TPV, the reason this was skipped must be thoroughly explained on the MSHDA 78 or 77.
Original Documents Provided by Family in Lieu of TPV: There are occasions when an applicant/participant may not be able to provide original documents. In those instances, the HA must explain on the MSHDA 78 (and/or MSHDA 77 if necessary) why they skipped this step in the hierarchy. For example, an applicant/participant is unable to provide documents to verify income/assets/ deductions. The reason that this was skipped must be thoroughly explained on the MSHDA 78 or 77. NOTE: skipping this step is rare.
Fee Requests from TPV Source:
Letters of Refusal to Provide Verification from TPV Source:
When a TPV source refuses to provide requested information and states the reason for refusal on a permanent basis, the letter of refusal must be forwarded to the Policy Specialist within the Office of Existing Housing for consideration of an acceptable exception letter. The Policy Specialist will determine if the refusal letter is sufficient to discontinue written or oral TPV for the cited applicant/participant (one time transaction) or for all applicant/participants in that area. All approved exception letters will be provided to the affected HA and must be retained for future use.
When skipping written and/or oral TPV, the approved exception letter must be included with each affected applicant/participant file. Document on the MSHDA 78 under written and oral TPV Remarks column “refer to attached approved exception letter.”
In order to monitor the TPV process and improve our TPV quality, the MSHDA 78 is required for all TPV. A well-documented MSHDA 78 verifies the TPV process. It does not excuse inadequate verification(s).
Zero Income households with no assets and no deductions do not require the completion of the MSHDA 78.
Calculations should be notated on the applicable verification form and not in the remarks column on the MSHDA 78.
Method 1: UIV
UIV Date/Method column:
If UIV is received, write the date it is received and appropriate UIV method used by selecting a code from the appropriate key to complete the box.
UIV – UIV Codes column:
Method 2: Written TPV
Written TPV – Written Request Sent column:
Written TPV – Follow–up Sent column:
Written TPV – Received column:
Written TPV – Remarks column:
Method 3: Oral TPV
Oral TPV column:
Remarks column:
Method 4: Document Review
Document Review column:
Method 5: Tenant Declaration
Tenant Declaration column:
NOTE: Once verification is received, no further notations are needed for that item. Notations must be present for each method taken. Example: If the verification came from the review of a Applicant/participant-supplied document (Column #4, Document Review) each column up to and including #4 would have notations, and column #5 would be blank.
Examples of acceptable notations to be written in the remarks column:
Annual income is determined by calculating a household’s anticipated total or gross income minus allowable deductions.
Use the family’s current income and expenses to predict the family’s expected annual income for the next year. Sporadically received income, or income where the amount received is not consistent must be treated as irregular income, and the procedures described below for annualizing irregular income must be used to anticipate annual income for the next year.
Use averages and estimated amounts when necessary.
Use gross income: include holiday pay in determining gross income. Do not deduct taxes or other payroll deductions from gross income.
Include all tips, bonuses, scheduled pay increases or other additional amounts. If TPV, indicate an expected change in income (i.e. pay increase), include the change in calculations to obtain the closest possible estimate. Multiple entries inElite may be required. Example: a participant starts a new job and the employer indicates an anticipated increase after six months. Calculate and enter six months at one wage and six months at the increased wage to get the best estimate of the next twelve month’s earnings.
If verifications provided are not clear, the HA must obtain additional information before determining the tenant rent portion. HUD stresses the importance of avoiding errors made in calculating the tenant’s portion of the rent. Consistent errors of this type may cause problems in future audits by HUD.
Convert all income (and allowable expenses) to an annual figure by multiplying the pay rate by the frequency of payment.
NOTE: Federal and State wage laws require employers to pay time and a half in excess of 40 hours for most occupations. If earnings verification shows more than 40 hours worked but does not indicate overtime paid, verify with the employer if overtime is paid or not. Document this on MSHDA 77.
1. Student Income
High School Students: Follow HCV income guidelines when verifying income for a family that includes a high school (or college) student 18-years of age or younger that lives with his/her parent/guardian(s) and is claimed as a dependent by the parent/guardian(s) and eligibility for the HCV program is based on the income of the parent/guardian(s) and all other members of the family. See also Chapter IV. Income Allowances, Dependent Allowances.
College Students: Follow HCV income guidelines when verifying income for a family that includes a college student who lives with the parent/guardian(s) and is claimed as a dependent by the parent/guardian(s) and eligibility for the HCV program is based on the income of the parent/guardian(s) and all other members of the family.
Head of Household Students: The HA must carefully screen/interview prospective college students and postsecondary college students who are the single, head of household to verify they meet required eligibility criteria (Chapter II. Waiting List), and by using a detailed interview that asks all of the “right” questions about sources of income. Students who are not eligible must be terminated from the program.
In addition to verifying student eligibility criteria, the HA should ask the questions listed below:
The Household Living Expenses Questionnaire (MSHDA 488) generally used for gathering information on income sources for zero income households, should also be used.
HA must verify the college student:
Full-Time College Students with an Athletic Scholarship: In accordance with the FY 2005 Appropriations Act, it is required that the portion of any athletic scholarship assistance available for housing costs be verified with the third party income source by MSHDA and included in the determination of family adjusted income. MSHDA will deny housing assistance to those full-time college students receiving athletic scholarship assistance with $5,000 or more annually available for housing costs. Scholarship amounts must be verified.
The full amount of financial assistance from federal and state grants and/or loans, academic scholarships, and work study program wages paid directly to the student or the educational institution is not included in the determination of annual or adjusted income (24 CFR 5.609(c)(6)).
2. Irregular Income
Irregular income is defined as income received in an unpredictable or sporadic manner, such as income from seasonal employment, temporary work agencies, child support, or alimony. If the family has a history of irregular income, you may use the family’s past income history to determine how to project such income forward.
When determining such income, use the most recent verification providing the required information available. Divide the year-to-date (YTD) total provided on the verification by the amount of actual weeks the total covers to receive an average weekly income. Multiply the weekly income amount by 52 (weeks).
Types of TPV vary, and it is often difficult to determine annual income based on the information provided. When such cases occur, it is necessary to contact the source of the income (i.e. employer for wages) to clarify information provided, then document the information received on a MSHDA 78 or MSHDA 77 as appropriate.
Convert the following irregular income to an annual figure to complete rent calculations as follows:
Example:
Child Support check stub dated June 1, 2001 (22 weeks)
Total received (YTD total):$814.00
YTD divided by 22 weeks equals weekly average: 814/22 = $37.00
Weekly average x 52 weeks equals Annual average: 37 X 52 = $ 1924.00
(Round off to whole dollar amount)
3. Zero HAP
If initial calculations result in a Zero HAP (TTP equals or exceeds the Gross Rent or PS, whichever is applicable), a HAP Contract cannot be executed.
When Annual Re-examination calculations result in a Zero HAP, the family remains eligible for the program for six months. The HA must maintain a tickler file to contact the family to re-verify status and cancel the contract at the end of the six-month grace period if the family is still at Zero HAP. NOTE: This cancellation could occur before the end of the HAP Contract. Refer to Chapter IX: Annual Re-Examinations regarding Zero HAP procedures.
If the family's income subsequently decreases during the allowable time frame (six months), process an interim re-examination in accordance with Chapter X of the PPM.
4. Zero Income
A Zero Income household is one in which an entire household claims no earned nor unearned income. A household with benefits or non-earned income (i.e. Social Security, child support, DHS, etc.) to minors (family members age 17 and under) is not considered a Zero Income household.
Upon completion of the Household Income, Asset, and Expense Declaration (MSHDA 1890) by all adult family members and it is noted that the entire household claims no income, the HA must then conduct a personal interview (either face-to-face or by telephone) with the head of household and complete a Household Living Expenses Questionnaire (MSHDA 488).
If it becomes apparent after review of the MSHDA 488 or during the interview that income exists, and/or if the family’s expenses exceed their known income, the HA must inquire as to the nature of the family’s accessible resources, contributions, and gifts. HA must have the family complete the Verification of Income from Contributions (MSHDA 486) to verify regular contributions to household income. The amount of regular contributions must then be converted to an annual income amount. Refer to Chapter IV. Income Includes.
If after completion of the MSHDA 488 it is determined there is no income, the head of household must sign the MSHDA 488 certifying lack of household income and a Verification of No Household Income (MSHDA 148) Form. A date for re-examination (three-month check-back date) must be inserted on the MSHDA 148 for check-back purposes. The MSHDA 1890 will suffice as verification of no income for all other adults in a Zero Income household.
Zero Income households with no assets and no deductions do not require the completion of the Third Party Verification Monitoring (MSHDA 78) form.
Any reported changes must be processed as an interim re-examination. Process all increases in income for Zero Income households, regardless of the amount.
If unreported income is discovered for a Zero Income household at any time the participant is receiving HAP, the participant must sign a Repayment Agreement (MSHDA 103) to pay back the inaccurate rent subsidy paid due to unreported income.
Check-Back Period
The household must check back with their HA three months from the effective date of the new/move/interim/annual re-examination, which resulted in zero-income for the entire household. (Example: for a 10/1/04 Initial, the check-back date is 01/01/05.) Although the participant is responsible to report back on the specified date, the HA must develop a tickler (i.e. follow-up) system to ensure compliance and to contact the participant by the fifth day of the check-back month if the participant has not contacted them.
Check-Back Procedures
The MSHDA 148 requires the household to contact the HA on the applicable date. If the HA has not been contacted by the participant by the fifth day of the check back month, the HA should send a MSHDA 1890 and request completion within 14 days. For example, if the check-back month is August 2004 (and the participant has not initiated the contact), the forms must be forwarded by August 5, 2005.
The minimum TTP for each household in the HCV Program administered by MSHDA is $0. A TTP is defined as the highest of the following amounts:
A family's TTP will only become $0 when both 30% and 10% amounts are zero. If all the amounts are not zero, then the minimum TTP will become the highest of the 30% or 10% items listed above.
Example A
Example B
Example C
1. Notification to applicants and/or participants
Applicants for the HCV program should be notified of the minimum monthly TTP requirement during their initial briefing session.
Participants in the HCV program must be notified of the change to their minimum monthly TTP requirement when 30% of the family’s monthly adjusted income or 10% of the family’s monthly gross income falls to $0 using an Adjustment Notification (MSHDA 34).
May 1, 2009