1. Chapter 4. Verifications
PIH RHIIP Summit
January 2004
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 family’s 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 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 HUD’s 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 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. PIH RHIIP Summit
January 2004
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. PIH RHIIP Summit
January 2004
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 HUD’s 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 Verification: Projecting Annual Income
HUD has established criteria for what constitutes a substantial difference in cases where UIV data differs from tenant-provided and/or other verified income.
HUD defines a substantial difference as $200 or more per month.
UIV may alleviate the need for 3rd party verification if not a substantial difference.

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

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

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

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

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

33. Upfront Income Verification Projecting Annual Income
If the tenant disputes UIV SS/SSI benefit data, request the tenant to provide current, original SSA notice or benefit letter within 10 business days of PHA interview date.
Tenant may contact SSA at 1-(800) 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
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 tenant’s 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. HUD’s 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. HUD’s 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. HUD’s 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. HUD’s 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 applicant’s and tenant’s 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. HUD’s 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. HUD’s 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. HUD’s UIV System How the system will work:
The user will then search income records by household information (any of the following)
Head of household’s SSN
Head of household’s last name
Head of household’s date of birth

49. Household Search Screen
Page 4-25
Household Search Screen

50. HUD’s 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
Head of Household Screen

52. HUD’s 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. HUD’s 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. Household Income Detail Screen
Page 4-29
Household Income Detail Screen
Wage Data
Social Security
Unemployment Compensation

56. HUD’s 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 projected income data
The difference will be compared to an established threshold

57. HUD’s 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. HUD’s 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 income vs. UIV Income from wage & SSA match

60. HUD’s UIV System PHA Exceeds Threshold Report (p. 4-32)
If discrepancy between family’s reported data and UIV data equals or exceeds the established threshold, the family’s name will be listed on the report.
To obtain more information, the user will click on the SSN of the family’s head of household.

61. PHA Exceeds Threshold Report
Page 4-32
PHA Exceeds Threshold Report

62. HUD’s UIV System
Head of Household’s 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. Household level detail of threshold report
Page 4-33
Household level detail of threshold report

64. HUD’s 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. HUD’s UIV System When HUD’s 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 HUD’s IG to receive and process complaints of fraud, waste and abuse

67. HUD’s 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. HUD’s UIV System Learning Activity 4-2: UIV Case Study 1
Group Activity – Family data conflicts with UIV
Page 4-37

69. HUD’s 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 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 family’s 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 family’s 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 doesn’t 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 family’s file should contain documentation of PHA efforts

81. Documenting the Absence of Third-Party Verification
PIH RHIIP Summit
January 2004
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 family’s 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 = $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
PIH RHIIP Summit
January 2004
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
Do we want to leave the reference to 3rd party here? Because actual amounts are important to have

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