HOUSING VOUCHER PROGRAMS - POLICY AND PROCEDURES MANUAL

CHAPTER IX ANNUAL RE-EXAMINATIONS

Effective March 2009

Introduction

The Annual Re-examination (AR) procedures apply to Housing Choice Vouchers (HCV), the Moderate Rehabilitation Program (MRP), Single Room Occupancy (SRO) Program and project-based vouchers that were converted from HCV by MSHDA to its HCV project-based voucher allocation.

Housing Agents (HA) must complete Annual Re-examinations (ARs) promptly, regardless of the completion of other annual activities (e.g. income verifications, HQS inspection, and/or rent negotiations).

The income re-examination must be processed on the AR date regardless of whether the family stays in place, moves, or intends to move.  A review of the family's income must take place at least annually.

The U.S. Department of Housing and Urban Development (HUD) presents the following issues and parameters for AR:

• Income limits do not apply.
• Affordability (i.e. 40% test) does not apply for in-place AR.
• The prohibition on leasing from relatives does not apply for in-place AR unless the property’s ownership changes.

The AR procedures comply with HUD/SEMAP mandates.  Procedures emphasize timely completion/transmission of ARs regardless of whether other annual activities have been completed.

When the landlord requests a contract rent increase, the HA must research and submit rent reasonableness data (i.e. comparables). See Chapter VII. Rent Reasonableness

Any AR that does not intend to renew would be considered either an End of Participation (EOP) or AR “Searching” which will address those participants who intend to move.

Refer to Exhibit 1 for the suggested AR Process Timeline chart. Compliance with deadlines identified on the chart ensures an on-time AR.

Section A. Upcoming Annual Re-examinations and Cut-Off Dates

Following each monthly payroll (the first business day of the month), the Housing Agent (HA) must print the Upcoming Annual Re-examinations in Elite for the next 120 days. Refer to Elite User Guide. This report identifies all participants and landlords who must be contacted for AR. Print updated reports periodically to eliminate the possibility of missing a required re-exam (due to initial lease terms of less than one year or late processing of initials/moves). For example, after the May 1, 2005 payroll, print the report for the August 31, 2005 expirations.

MSHDA determines a reasonable submission date (cut-off) schedule to ensure timely MTCS transmissions and landlord/tenant payments.

Commence the AR income process 120 days in advance of the AR date to ensure the ability to meet HUD's 100% on-time AR requirement. Refer to the Elite Cut-Off Schedule. Submit AR material to the Lansing or Detroit MSHDA office by the established cut-off date. A Department Tech (DT) reviews the material and approves accurate cases in Elite on or before the ‘Last Day to Cancel or Enter Abatement to Stop Payment' date noted on the cut-off schedule. Even if abating, the AR must still be processed on time. The HA must enter abatement in the Elite by the ‘Last Day to Cancel or Enter Abatement to Stop Payment’ date on the cut-off schedule.

Any AR paperwork received after the cut-off date is considered late and cannot be guaranteed approval.  If time permits, the DT will authorize; however, HA submissions will be monitored for DT cut-off date compliance. Late transactions adversely affect MSHDA's on-time AR rate with HUD and timely payments to landlords.

Section B. Tenant Issues

1. Annual Re-examination Notice (MSHDA 52)

Unless ending participation, the tenant must RECEIVE their copy of the MSHDA 52 (versus the mail date), regardless of rent increase or not, no later than 60 DAYS prior to the AR effective date. To ensure timely receipt, it is recommended the MSHDA 52 be mailed by the 25^th of the second month of the re-exam cycle.

The HA:

1. Completes the 'Date forwarded to Tenant' in the MSHDA Use Only box;
2. Forwards a copy of the form to the tenant; and
3. Forwards a copy to the landlord (if the HA completes the MSHDA 52).

If a copy was completed via a phone call, complete the information on the form, make copies, and distribute as described above.

2. Request for Required Documents

No later than 14 days after printing the 120-day Upcoming Annual Re-examincation Report (in Elite), the HA requests the head of household and each adult household member to complete and return the following documents:

1. Household Income, Asset Expenses Declaration (MSHDA 1890)
2. Authorization for Release of Information (HUD 9886)
3. ORIGINAL letterhead statements/benefit letters/computer printouts/pay stubs/verifications of current income, assets, expenses, and allowances from the verification source.
4. Household Living Expense Questionnaire (MSHDA 488) if the household is paying a Total Tenant Payment (TTP) of less than $100.
5. If a Live-In Aide is required, the need must be verified by a health care professional on a Verification of Disability and/or Special Medical Need (MSHDA 16) and a Certification of Live-In Aide Status (MSHDA 15) must be completed by the Live-In Aide.
6. The HA also forwards the FSS/MSHDA Key to Own Homeownership brochure for information purposes. If the tenant is not participating in FSS, send a copy of a listing of the FSS Resource Coordinators (RC) with their AR paperwork. If the tenant is interested in participating in the FSS program, the tenant will need to contact the FSS directly.

The “Return By” date on the requests for documents must be 14 days. If documents are not received promptly, HA must send a follow-up request if there is no response.

NOTE: A meeting with the tenant may be scheduled to initiate the process rather than commencing the process by mail.

3. Verification Request by Housing Agent

Follow processes outlined in Chapter IV, Income, Income Verification Section.

If the income information received during the AR is substantially different from previously reported income and/or tenant has unreported income, continue the re-examination process while the discrepancy is being resolved. Depending on the outcome of the investigation, a Repayment Agreement (MSHDA 103) may need to be executed or the tenant cancelled from the program.

4. Adding Family Members/Upgrading Voucher Size

The family must obtain written approval from both the landlord and MSHDA to add new resident(s), except for adding a child by birth, adoption, or court-awarded custody.  A new spouse, children, other relatives, friends, significant others, chore providers, etc. require approval.

Acceptable written approval would be a letter from the tenant requesting to add members with a landlord approval statement

A Live-In Aide must be shown on the lease and  HAP Contract.  No names should be listed, only "live-in aide".  Refer to Chapter III, section on Full-Time Live-in Aides for more information.

If the unit size can accommodate the additional members, the following steps must be taken:

1. Criminal and Sex Offender Screening - The HA must perform criminal and sex offender screening for all adult members (18 years or older) added to the family or househould members who have turned 18 since the last re-examination. MSHDA cannot approve adult members who do not pass the screening.
2. Issue New Voucher (HUD 52646) - If approved members added to the household increase the voucher eligibility size, execute a new voucher of the appropriate size effective at the current AR. See Chapter III, Issuance. Update the voucher eligibility bedroom size in Elite if applicable. See Elite User Guide.
3. Adjustment Notification (MSHDA 34) - Identify the new household members in the Additional Changes Section of the form, which signifies MSHDA approval of additional members.

5. Losing Family Members/Downgrading Voucher Size

1. Family Size Subsidy Decrease (MSHDA 147) - If the family size decreases, causing a reduction in voucher eligibility size, the family must be immediately notified in writing via a Family Size Subsidy Decrease form (MSHDA 147).  The MSHDA 147 includes an explanation of the decision, informal hearing rights, and circumstances when a waiver may be obtained.
2. Issue New Voucher (HUD 52646) - If a waiver is not requested or approved, decrease voucher eligibility size to the new eligibility size Payment Standard (PS) effective with the current AR date or move date, whichever occurs first.  For example, a change occurs on December 1, 2004, the change would be effective at the AR on June 1, 2005 unless the tenant moves prior to that date.  - Update the voucher eligibility bedroom size in Elite.  See Elite User Guide.
3. Adjustment Notification (MSHDA 34) - Identify the members no longer residing in the household using the Additional Provisions Section of the form (“Removing ………. from Lease/Contract”) or list current members.

6. Delinquency Review

HA determines if the tenant is delinquent (over 60 days in arrears with their tenant repayment agreement), by checking Elite to see if there is a current balance.

• If the tenant is current with their executed Repayment Agreements, the tenant may be renewed.    If unable to determine the status in Elite, contact the appropriate MSHDA staff member via E-mail for assistance.
• If the tenant is delinquent, see Chapter XXV, Processing Repayment Agreements.

Section C. Landlord Information

1. Annual Re-examination Notice (MSHDA 52)

The Annual Re-examination Notice (MSHDA 52) notifies the landlord that MSHDA will perform an Adjustment Notification re-examination.  By completing the form, the landlord identifies:

• Intent to continue the leasing arrangement or not;
• Acceptance of MSHDA’s adjustment notification renewal unless the landlord provides MSHDA with written notification of a new lease 60 days in advance;
• Proposed renewal rent amount;
• Certifies that the requested rent is reasonable; and
• Identifies changes in mailing address or utilities.

The HA completes the following on the MSHDA 52:

• Landlord/tenant names and addresses (labels may be used);
• Date mailed; and,
• Tenant anniversary date (re-examination effective date).

The HA also:

• Retains a copy of the form in the file and forwards a copy to the landlord;
• Completes and forwards the MSHDA 52 to the landlord no later than the 15th day of the first month of the re-examination process. For example: For September 1 renewals, the MSHDA 52 must be completed/forwarded by May 15.
• Ticklers the MSHDA 52 to follow up if the landlord does not return the form within 21 days (original 14 day deadline plus an additional seven days). On the 21st day, the HA must make one attempt to resend the document (with a seven-day deadline). In lieu of resending the document, the HA may make telephone contact with the landlord and obtain the information necessary to complete the form. Indicate in the 'other' box that the information was retrieved 'per phone call with landlord on X date' and include the HA initials.

Between the 30th and 45th day, if the landlord still does not respond, the HA will:

• Check the 'No Landlord Response' box in the MSHDA Use Only Section;
• Initial and date the form; and
• Complete the Proposed Monthly Rental Rate box with the current Contract Rent amount. Note: Can indicate “same” or a dollar amount.

For tenant notification requirements, refer to Section E, item 6.

As indicated by the language in the MSHDA 52, MSHDA will proceed with the re-examination at the current rental rate.

Note: In counties where there has been a 5% decrease in the Fair Market Rent (FMR) (and subsequent decrease in the Payment Standards [PS]), a Contract Rent decrease may be required. If this occurs, instructions will be provided.

Upon receipt of the MSHDA 52 requesting a rent increase (or completion of the MSHDA 52 by the HA), the HA confirms that the requested rent is reasonable and supported by comparables. (For more information, see Chapter VII, Rent Reasonableness.)

Review the MSHDA 52 and new lease and investigate any discrepancies. Compare this to the most recent file data regarding utilities, appliances, landlord changes, etc. If there are any changes in lease requirements governing tenant or owner responsibilities, then a new lease and HAP contract must be executed.

If the landlord returns the MSHDA 52 at a later date (i.e. after the anniversary date or after the re-exam has been processed), implement the increased Contract Rent (subject to rent reasonableness requirements) via an Interim Re-examination.

Do not implement the revised increased Contract Rent until the landlord provides 60 days notice (no pro-rating) to the tenant and MSHDA.

2. Changing Utilities/Appliances

If the owner changes who provides utility or appliances, then a new contract and lease is required as outlined in the Tenancy Addendum (HUD 52641A).

3. Ownership Changes and Landlord Address Changes

If the ownership or management company has changed, see Chapter XII, Landlord Issues for detailed procedures.

Landlords should be encouraged to register on-line at http://www.michigan.gov/budget/0,1607,7-157-13404_37161-179392--,00.html and follow the step-by-step instructions or request a Payee Registration Packet (MSHDA 219 and W9) if the landlord name or Social Security/FEI number has changed.

If the landlord address has changed, see Chapter XII, Landlord Issues for detailed procedures.

MSHDA HVP Operations staff must enter the address change and mail code update in Elite.

4. Renewal Provision in Owner’s Lease

After the initial lease term (usually one year), the landlord may increase the Contract Rent (subject to the renewal provisions in the lease and rent reasonableness requirements) as long as the landlord has provided 60 days written notice (per Section 15.d. of HUD Tenancy Addendum) to the tenant and MSHDA. The MSHDA 52 process addresses the increase notice requirement for AR.

5. Delinquencies

If the landlord is delinquent, see Accounts Receivable section of Chapter XIX, Operations and contact your DT.

Section D. Housing Quality Standards (HQS) Inspection

At AR, the HQS inspection must be performed within 365 days of the last Annual HQS Inspection date entered in Elite (versus last passed inspection date).  The HA must review the last inspected date and schedule the AR inspection date accordingly. NOTE: It is suggested that the inspection be performed earlier than the deadline (week five or earlier).  Verbally confirm the appointment to avoid an unexpected cancellation or discover the inspector cannot obtain access to the unit to perform the inspection within the 365 day required period.

Notify tenant and landlord of inspection via a Notice of Inspection (MSHDA 104). Notify the tenant and landlord of deficiencies found using an Inspection Deficiencies Notice (MSHDA 105).  At AR, all units must satisfy the HQS requirements regardless of whether or not the tenant expects to remain in the unit for the entire year.

Do not hold or delay an AR in Elite pending an inspection and/or repairs because the on-time AR requirement and the annual HQS requirements are adversely affected. Enter the last inspected date in Elite and complete the AR.

Abatements – If an abatement exists on the unit as of the anniversary date, process the AR. If applicable, process a cancellation later. NOTE: if the abatement begin date has been entered in Elite, the Elite system will not issue future payments.

Refer to MSHDA’s HQS Manual for inspection procedures.

Section E. Rent Negotiation/Rent Reasonableness

The affordability (i.e. 40%) test does NOT apply for in-place ARs even if the gross rent exceeds the PS.

Contract Rent increases must meet 'rent reasonableness' standards as evidenced by comparables. If comparables cannot be found, renegotiate the rent (or utility/appliance provider) within allowable limits or the tenant must relocate to an eligible unit to retain their subsidy.

The subsidy amount (MSHDA payment) may not increase.  The Gross Rent (Contract Rent plus Utility Allowance) can exceed the PS if the family agrees to pay the difference (assuming the Contract Rent is reasonable).

If no contract rent increase or utility change, no further action is needed. (per the MSHDA 52), print and submit a copy of the Rent Reasonable Certificate with the file.  Indicate in writing on the Rent Reasonable Certificate that comparables are not required. The Rent Reasonable Certificate would be located in Part 4 (Landlord Section).

NOTE: Counties where there has been a decrease in the FMR (and subsequently PS), require a rent reasonableness review, which may necessitate a Contract Rent decrease. If this occurs, MSHDA will provide instructions.

See Chapter VII, Rent Reasonableness, for further information.

Section F. Adjustment Notification to Tenant

Utilize the Adjustment Notification (MSHDA 34) to note any changes including the revised rent amount and new effective date.

• Identify changes in family composition under the 'Additional Changes' section of the form.
• Identify abatement begin date and end dates (if known).

Section G. Zero HAP

If the family's income results in no HAP payment by MSHDA (i.e. TTP equals or exceeds the Gross Rent or PS, whichever is applicable) the family remains eligible for assistance provided they remain in the same unit and have an active HAP Contract (HUD 52641).

NOTE: The family may move during the grace period (6 months) if the move results in a HAP payment at the new unit.  Under no circumstances can a new contract (e.g. in-place or move) be negotiated which results in a zero HAP.

Upon identification of the zero HAP payment, proceed as follows:

• Verify the income in accordance with normal procedures and begin the AR in Elite.
• Rent reasonableness requirements apply to gross rent increases or decreases due to contract rent or utility changes.
• The unit must pass HQS and the owner must make all repairs within the prescribed time frame.  If the owner refuses to make the repairs, the tenant may choose to make the repairs, or the contract must be terminated.
• Re-certify the case reflecting the zero HAP for the entire renewal period of one year.  The HA must prepare an Adjustment Notification reflecting the zero HAP for the upcoming one-year period. Note: If the zero HAP commenced prior to the AR date, honor the previous tickler date.
• The HA must maintain a tickler list of all clients who have an active Contract reflecting zero HAP. (Refer to the Elite Manual for further information.) The list must include the tenant name, increment number and Zero HAP end date.

Complete the following actions for Zero HAP notification:

• Notify the tenant and landlord of the zero HAP via the Zero Housing Assistance Payment Notification (MSHDA 25).
• Utilize the Adjustment Notification (MSHDA 34) to reflect the changes for the entire upcoming one-year period.
• Identify the HAP grace period as 6 months (or remaining period from the original commencement date) in the 'Additional Changes' Section of the Adjustment Notification (i.e. the six-month eligibility period expires on XX/XX/XX - date).
• Forward the Zero HAP Notification and Adjustment Notification at least 30 days prior to the effective date of the zero HAP payment.
• If the family's income subsequently decreases during the allowable time frame (6 months), process an Interim Re-examination in accordance with Chapter X.
• If the family's income does not decrease and no HAP payment has occurred for six months (180 days depending on the Contract revision date) or the remainder of the original commencement period, the Contract terminates. Process an End of Participation (EOP) in Elite.
• Notify the tenant and landlord via the Contract Termination Notice (MSHDA 95). Forward the MSHDA 95 and 1634b at least 30 days in advance of the termination date. Check the appropriate 'Reason for Termination' (i.e. 180 days) in the box at the center of the MSHDA 95 form.
• HA completes and forwards a MSHDA 1344 to the appropriate Lansing or Detroit office and a DT will cancel the case from Elite (EOP).

Section H. Family Self Sufficiency (FSS)

If the tenant is not participating in FSS, they should receive a copy of the FSS/MSHDA Key to Own brochure along with a listing of the FSS Resource Coordinators (RC). If the tenant is interested in participating in the FSS Program, they will need to contact the FSS RC directly. Note: FSS does not apply to MRP and SRO Programs nor our vouchers designated as PBV.

Section I. Enhanced Vouchers (Housing Conversion Actions)

See Chapter XXI, Special Programs, Housing Conversion Actions for additional information. Note: Enhanced vouchers do not apply to the MRP and SRO programs; nor our vouchers designated as Project Based Vouchers.

Section J. Moves at Annual Re-examination (Anniversary) Date

If MSHDA does not receive proper notice, the tenant cannot receive rental assistance upon relocation to a new unit. For more information, see Chapter XI. Moves.

If the HA believes termination should occur, the HA can terminate the assistance.  Documentation showing good reasons and proper paperwork must be in the file. End of Participation procedures should be followed. For more information regarding these actions, see Chapter XV, Terminations and End of Participations.

Section K. Annual Re-examination - Searching (ARS)

The policy on ARS does not apply to those participants with enhanced vouchers, or participants on the MRP or SRO Programs.

The ARS certification code will apply to any "continuously assisted" family who has submitted a request to move at the time of their AR, e.g. a family that is between units. The ARS certification must be used if a family wishes to port out at the time of their AR. A payment hold must be placed for the tenant until the next certification is completed. Another certification must be submitted within 60 days of the ARS certification date. The next certification will be one of the following: AR in the same unit, AR in different unit, or EOP.

The collection and submission of income/asset/expense verifications is not required for the completion of an ARS certification. Complete the ARS certification with the previous year's AR information. Submit the 1344 for the ARS certification to the appropriate MSHDA office for case approval.

Note: Rental and utility payments will not be made because a payment hold has been placed on the tenant.

Complete the move per policy, see Chapter XI. Moves.

Section L. Non-Renewing Annual Re-examination

Failure to process a proper EOP in Elite adversely affects MSHDA's on-time AR rate with HUD.

Note: If the tenant is not leaving the program and not renewing the lease, refer to Section K, Annual Re-examination Searching.

Section M. Required Notice Of Tenant Rent Increases/Effective Dates

State law requires a 30-day advance written notice to the tenant of all Tenant Rent increases.

• The only exception occurs when the tenant directly causes the delay in notice (discussed below).

Since the AR process begins 120 days in advance, even with tenant delays, in most instances 30-day advance written notice should be achievable.

• Provide the notice via the Adjustment Notification. All MSHDA 34’s identifying an increase in Tenant Rent must provide at least a 30-day notice prior to the AR (anniversary) date.

Changes (increases or decreases) in Tenant Rent almost always become effective at the AR (anniversary) date.

• Rent decreases do not require a 30-day notice.  Therefore, decreases in tenant tent usually take effect no later than the AR (anniversary) date.

1. For Tenant-Caused Delays

Note: Tenant-caused delays apply to late receipt of initial documents (1890, 9886, 51a). A tenant delay for income/asset/expense verifications only occurs if the source has not returned the verifications directly to MSHDA and the tenant does not comply with MSHDA’s request for tenant-provided original documents (i.e. statements, receipts, etc.).

If the cause of the delay has been documented, which has been documented by timely requests for documents and timely Final Notices (which includes the waiver language):