1. Establishing Eligibility Training for Property Owners/Contract Administrators Presented by:

2. 2-2 Revised 07/22/2004 Establishing Household Eligibility Key Discussion Items uCompleting applications uEvaluating eligibility of a household uDocumenting household income uAnnualizing household income uCompleting a Dept approved Income Certification u Determining adjustments to income (HOME Program) u Calculating rents (HOME Program)

3. 2-3 Revised 07/22/2004 Gathering Income Information uNo required form uConventional rental applications WILL NOT gather sufficient information u If your property/program uses a conventional application, must use a supplement to gather more accurateinformation about income and assets Reminder Gather income information during recertifications, as well as initial certification Establishing Household Eligibility Applications

4. 2-4 Revised 07/22/2004 Application Tips: Must be completed by household Completed in entirety NO white-out All household members must be listed Establishing Household Eligibility Applications

5. 2-5 Revised 07/22/2004 uYear-round occupants uMembers temporarily away Children temporarily absent due to placement in a foster home Children away at school but live with the family during school recesses Family members in the hospital or a rehabilitation facility for period of limited or fixed duration Who Counts as a household member? (income limit purposes) Establishing Household Eligibility Application

6. 2-6 Revised 07/22/2004 Establishing Household Eligibility Application Who Counts as a household member? (continued) uUnborn children uChildren under joint custody living in the unit more than 1/2 the year uChildren who are in the process of being adopted Note: For persons permanently confined to a hospital or nursing home the family decides if such person is to be included as a household member. If the family decides to include the confined household member, they cannot be the head, co-head or spouse. Include the income of the person only if included as a household member.

7. 2-7 Revised 07/22/2004 Establishing Household Eligibility Application Who Counts as a household member uTemporarily absent Persons in the military Do Count as a household member if they are the head, co- head or spouse (or) if they have a spouse or a dependent residing in the unit Do not count if they are not the head, co-head or spouse and do not have a spouse or dependent in the unit i.e. Phil and Pam Cooper are applying for residency with Justin their 19 year old son. Justin is temporarily away on active military duty. Should the 2 person or 3 person limit be used?

8. 2-8 Revised 07/22/2004 Establishing Household Eligibility Application Who Does Not count as a household member? (income limit purposes) uLive-in aides uAbsent Children uFoster children or foster adults uChildren under joint custody living in the unit less than 1/2 the year

9. 2-9 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility TBRA Is the households disclosed income less than the current maximum limit required to meet the set aside? If no: Household DOES NOT qualify for assistance!! Note: When determining the eligibility of potential households a review of the assistance to date must be conducted. A contract requiring assistance to 5 households at 30 of area median income (ami) and 8 households at 80% of ami must be adhered to. If 8 households at 80% ami have already been assisted, then only 30% households would qualify.

10. 2-10 Revised 07/22/2004 Does the Household Look Eligible? If YES: Obtain tenant authorization for release of information (required for ALL HOME ) Owners/managers/contract administrators will need written authorization to verify a households income and assets Keep copies in applicant/household file Establishing Household Eligibility Evaluate Eligibility

11. 2-11 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Income Inclusions uWhat counts as Income? uKeep in mind: Gross Income does not equal Taxable Income Annual income includes all amounts not specifically excluded Include the GROSS amount of income Must include income from all household members

12. 2-12 Revised 07/22/2004 uWhat counts as Income? Employment Income Gross Income from earnings, including shift differentials, tips, bonuses, commissions, and overtime pay. The employment income of all adults, including those under the age of 18 who are considered emancipated Establishing Household Eligibility Evaluate Eligibility – Income Inclusions

13. 2-13 Revised 07/22/2004 uWhat counts as income (continued)? Lump Sum Payments Counted as Income Lump sum payment caused by delays in processing periodic payments for unemployment or welfare assistance. Generally, all other types of lump sum payments are considered assets. Establishing Household Eligibility Evaluate Eligibility – Income Inclusions

14. 2-14 Revised 07/22/2004 uWhat counts as income (continued)? Payments in Lieu of Earnings Includes unemployment, workers compensation, disability, compensation and severance pay Income that may not last for a full 12 months should be calculated assuming current circumstances will last a full 12 months. Military Pay Include all regular and special pay and allowance for a member of the Military (Hostile fire is the only exclusion) –Leave and Earnings Statement Establishing Household Eligibility Evaluate Eligibility – Income Inclusions

15. 2-15 Revised 07/22/2004 uWhat counts as income (continued)? Regular Cash Contributions and Gifts Benefits or other unearned income of minors Alimony or Child Support Court ordered alimony or child support is counted unless: –The applicant can certify the payments are not being received AND that he or she has taken all reasonable legal actions to collect the amount due, including filing with appropriate courts or agencies responsible for enforcing payments Establishing Household Eligibility Evaluate Eligibility – Income Inclusions

16. 2-16 Revised 07/22/2004 uWhat counts as income (continued)? Income from a Business (including self-employment) Include Net Income –Net income is gross income less business expenses, interest on loans, and depreciation computed on a straight-line basis. Count any salaries or any other amounts distributed to any of the household members from the business Resident Service Stipends In excess of $200 per month count FULL amount Establishing Household Eligibility Evaluate Eligibility – Income Inclusions

17. 2-17 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Income Inclusions uWhat counts as income (continued)? The Full Amount of Periodic Payments Such as those received from social security, annuities, pensions and disability or death benefits (entire amount included for all HH members, regardless of age) –For HH members receiving long-term care insurance payments, count only the amount received in excess of $180 per day. NOTE: If an Agency is reducing the familys benefit to adjust for a prior overpayment count only the amount that is distributed after the adjustment.

18. 2-18 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Income Inclusions uWhat counts as income (continued)? Withdrawal of Cash or Assets from an Investment Handle withdrawals from annuities, IRAs, 401(k) plans and other investment accounts as income in the following manner: –Count it as income if it meets these conditions It is a period payment received on a regular basis and The total amount withdrawn to date exceeds the amount invested Welfare Assistance Temporary Assistance for Needy Families (TANF)

19. 2-19 Revised 07/22/2004 uWhat is Excluded from income? Earned income of minors, including foster children (family members under 18 and not the head, co-head or spouse) Payments received for the care of foster children/adults Lump sum payments received from inheritances, insurance payments (including health and accident insurance and workers compensation), capital gains & settlement for personal or property losses Amounts that are specifically for, or in reimbursement of, the cost of medical expenses for any family member Establishing Household Eligibility Evaluate Eligibility – Income Exclusions

20. 2-20 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Income Exclusions uWhat is excluded from income (continued)? Income of a live-in aide Educational Scholarships or Grants All forms of student financial assistance are excluded whether the assistance is paid directly to the student or educational institution Includes amounts received under the work-study program A resident service stipend (not to exceed $200 a month) Temporary, nonrecurring, or sporadic income Special pay to a family member serving in the Armed Forces who is exposed to hostile fire

21. 2-21 Revised 07/22/2004 uWhat is excluded from income (continued)? Amounts received from HUD-funded training programs Includes: –Earnings and benefits for participation in a qualifying state or local employment training programs (including programs not affiliated with a local government) The employment training program must have clearly defined goals and objectives and run for a specific, limited time period Are excluded only for the period of the training program Adoption assistance payments in excess of $480 per adopted child Establishing Household Eligibility Evaluate Eligibility – Income Exclusions

22. 2-22 Revised 07/22/2004 uWhat is excluded from income (continued)? Earnings in excess of $480 for each full-time student 18 years or older (excluding the head, co-head and spouse) Deferred periodic amounts from supplemental security income and social security benefits (regardless of how disbursed) Value of food Food Stamps Groceries and/or contributions paid directly to the child care provider by persons not living in the unit Establishing Household Eligibility Evaluate Eligibility – Income Exclusions

23. 2-23 Revised 07/22/2004 uWhat is excluded from income (continued)? Earned income tax credit (EITC) refund payments Including advanced earned income credit payments Payments under Section 8 of the United States Housing Act of 1937 or any comparable rental assistance program Establishing Household Eligibility Evaluate Eligibility – Income Exclusions

24. 2-24 Revised 07/22/2004 REFER TO HUD 4350.5 and HOME Income Guide FOR A COMPLETE LIST OF INCOME INCLUSIONS AND EXCLUSIONS Establishing Household Eligibility Evaluate Eligibility - Income

25. 2-25 Revised 07/22/2004 uIts exercise time Establishing Household Eligibility Evaluate Eligibility – Income Exercises EXERCISE #1 Income Inclusions & Exclusions

26. 2-26 Revised 07/22/2004 1. Alimony or Child Support Heather indicates on her application that she has court ordered child support in the amount of $375 a month. However, after making reasonable attempts to collect she actually gets $100 a month. What amount of child support should be counted, if any? Answer: Establishing Household Eligibility Evaluate Eligibility – Income Exercises

27. 2-27 Revised 07/22/2004 1. Answer: $1,200 (100x12). Since Heather has made reasonable efforts to collect the unpaid child support include only the amount actually received. Establishing Household Eligibility Evaluate Eligibility – Income Exercises

28. 2-28 Revised 07/22/2004 2. Regular Cash Contributions and Gifts/ Scholarships & Grants William Smith and Buddy Light apply for a unit. William reports that his parents give him $350 a month to help pay for bills and that he works part- time at Star Coffee making $7,600 a year. Bud reports that he is an unemployed full time student and receives a $12,400 scholarship a year. What is the household's annual income. Answer: Establishing Household Eligibility Evaluate Eligibility – Income Exercises

29. 2-29 Revised 07/22/2004 2. Answer: $11,800 ((350 x 12) + 7,600). Include the assistance from Williams parents and his employment earnings. Scholarships and grants are excluded from income so Buddy has no income. Establishing Household Eligibility Evaluate Eligibility – Income Exercises

30. 2-30 Revised 07/22/2004 3. Withdrawal of Cash or Assets from an Investment Maria and Juan Gomez have received $275 a month from an annuity for 97 months. The Gomezs paid $29,500 for the annuity when they initially purchased it. Is the $275 considered Income? If so, what amount, if any, would you include? Answer: Establishing Household Eligibility Evaluate Eligibility – Income Exercises

31. 2-31 Revised 07/22/2004 3. Answer: YES. $475 is included as income. The Gomezs have been receiving payments for 97 months for a total of $26,675 (275 x 97). The amount that they will receive during the certification period will be $3,300 (275 x 12). When added together the total is $29,975 (26,675 + 3,300). Since the amount received during this certification period will exceed their initial investment only the amount in excess should be counted as income (29,975 – 29,500). Keep in mind, if it was not possible to document that the amounts withdrawn are reimbursements of amounts invested, then the full $3,300 would be included as income. Establishing Household Eligibility Evaluate Eligibility – Income Exercises Note: Generally, when the holder of an annuity has begun receiving payments, the asset can no longer be converted to cash. Therefore, no calculation of income from assets will be made.

32. 2-32 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility u Special Considerations: If only including $480 of employment income because of special student rule; full time student status must be verified If employment status changes between application and move in: Require the household to complete a new application and do not throw away old application. Verify the employment status change by gathering third party or first hand documentation. Example: Mary and John Smith apply on 3/1/04. Mary lists a job at the bookstore, John lists a job at the grocery store. On 3/15/04 Mary returns with Johns check stubs and verbally informs you that she no longer works at the bookstore. A new application must be completed and gather third party verification of the date employment ended. If she is now receiving other income (unemployment?) first hand or third party verify the new income.

33. 2-33 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility u Special Consideration: The revised HUD 4350.5 states Owner may not verify further than self certification, in regard to unborn children. TDHCA Policy: If the eligibility of the household depends upon the existence of an unborn child documentation must be gathered. A self certification is acceptable, but third party or first hand documentation is preferred. Example: Mark and Jane Doe apply for assistance or residency. On their application the indicate that they are expecting a child in 5 months. The income limit for two people is $22,000; the income limit for 3 people is $24,000. Their total income is $22,500. Explain to the household that your property/program can only process applications if the household is income eligible and that they appear eligible, based on a 3 person household. Your job is to clearly document their eligibility. Inquire if they can provide a note from their health care provider indicating the expected due date. If so, get a copy. If not, require a self certification.

34. 2-34 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Income Review u True or False Barbara Hugh has applied for residency/assistance with her adult daughter, Lisa and Lisas 6 year old daughter Sara. Lisa is overseas in the military. The Hugh household has the option of including Lisa as a household member and including her income. TRUE or FALSE Ryan Lee receives social security payments in the amount of $525 a month. The payment is being reduced by $25 to make up for a prior overpayment. The gross amount of $525 must be used to determine eligibility. TRUE or FALSE Sally Pry applies for residency/assistance with her 3 children. Sally indicates that she receives AFDC assistance in the amount of $75 a month and $125 in food stamps. The households total annual income is $900. TRUE or FALSE Albert Culver has an IRA account but is not receiving periodic payments from it at this time. However, he has withdrawn $2,500 for a Disneyworld trip with his children. The withdrawal is counted as income. TRUE or FALSE

35. 2-35 Revised 07/22/2004 uKeep in mind Assets are items of value that may be turned into cash. Households are not required to convert the assets into cash. Not all items of value are considered an asset. For assets owned jointly, prorate according to the percentage of ownership, if no percentage prorate the asset evenly. Asset income must be determined when looking at assets. Keep in mind, that not all assets earn interest. Establishing Household Eligibility Evaluate Eligibility - Assets

36. 2-36 Revised 07/22/2004 uWhat is considered an asset? Cash held in savings and checking accounts, safe deposit boxes, homes, etc. Revocable Trusts Any member of the household has the right to withdraw the funds in the account Establishing Household Eligibility Evaluate Eligibility – Assets Inclusions

37. 2-37 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets Inclusions uWhat is considered an asset? (continued) Stocks, bonds, Treasury bills, CDs, mutual funds, money market accounts and other investment accounts Interest or dividends earned are counted as income from assets even if the earnings are reinvested Individual retirement, 401K, Keogh accounts and other similar retirement savings accounts Included when holder has access to the funds, even though withdrawal could result in penalty If the holder is making occasional withdrawals, determine value by using previous 6 month average

38. 2-38 Revised 07/22/2004 uWhat is considered an asset? (continued) Cash value of life insurance policies available to the holder before death Personal Property held as an investment i.e. Sports cards, movie posters, comic books Equity in real property and other capital investments Equity is current market value less the unpaid balance on all loans secured by the asset and reasonable costs that would be incurred in selling the asset Establishing Household Eligibility Evaluate Eligibility – Assets Inclusions

39. 2-39 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets Inclusions uWhat is considered an asset? (continued) Retirement and pension funds While employed, include only amounts the holder can withdraw without retiring or terminating employment At retirement, termination of employment, or withdrawal, periodic receipts are counted as income and lump-sum receipts are counted as assets –Note: If the holder receives a lump-sum payment followed by period receipts, count the lump-sum as an asset and periodic payments as income. At recertification the owner/contract administrator would only include the periodic payments as income.

40. 2-40 Revised 07/22/2004 uWhat is considered an asset? (continued) Lump-sum receipts or one-time receipts Can include inheritances, one-time lottery winnings, victims restitution, settlements on insurance claims (i.e. workers compensation, personal or property losses) Mortgage or deed of trust held by an applicant Also referred to as a contract sale Value is determined by calculating the principal amount; interest is considered actual income Establishing Household Eligibility Evaluate Eligibility – Assets Inclusions

41. 2-41 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets Inclusions uWhat is considered an asset? (continued) Assets disposed of for less than fair market value An owner/contract administrator must include for two years from the date the asset was disposed of Count the difference between the cash value and the amount actually received Rule applies when the disposed amount exceeds $1,000 Do not count assets disposed of as a result of foreclosure, bankruptcy, divorce/separation

42. 2-42 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets Exclusions uWhat is NOT considered an asset? Personal property Items NOT held as an investment, regardless of monetary value Interests in Indian Land Term life insurance policies Equity in a cooperative unit in which the family lives Assets that are not accessible to the applicant and provide no income to the applicant

43. 2-43 Revised 07/22/2004 uWhat is NOT considered an asset? (continued) Assets that are part of an active business Business does NOT include rental properties that are held as an investment unless the applicant is holding such properties as their main occupation Assets that are NOT effectively owned by the applicant The assets are held in the individuals name but benefit someone outside of the HH who is responsible for the income taxes on the asset A non-revocable trust (only the income and none of the principal is available to the household) is not considered an asset; however, income is counted in annual income Establishing Household Eligibility Evaluate Eligibility – Assets Exclusions

44. 2-44 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Asset Review u True or False Max Yoshino purchased a term life insurance policy and named his dependent as the beneficiary. The life insurance policy was for $250,000. The life insurance policy is an asset. TRUE or FALSE John Grissom is 32 years old and has a retirement savings account with a balance of $35,600. John only has access to the account at retirement or termination of employment. The full amount of the retirement savings account is considered an asset. TRUE or FALSE Peter Piper indicates on his application that he owned a home. He reports that his home was worth $137,000 and was sold at foreclosure 2 month ago for only $97,000. $40,000 should be included in assets for the next 22 months. TRUE or FALSE

45. 2-45 Revised 07/22/2004 u Income from assets is always counted u Calculation depends on amount of assets Use actual income (e.g. interest dividends) 0 - $5,000$5,000 & Use actual income or imputed income (whichever is greater) Establishing Household Eligibility Evaluate Eligibility - Assets

46. 2-46 Revised 07/22/2004 uDetermining ACTUAL Income from Assets uActual income from assets is calculated based on the market value of the asset. Example: -$500 in checking acct at 2% interest$10.00 –$3000 in a CD at 3% interest$90.00 –Coin collection worth $500$ 0 Total Assets$4,000 Total Actual Income$100 Establishing Household Eligibility Evaluate Eligibility – Assets Add $100 to other sources of household income when determining income eligibility

47. 2-47 Revised 07/22/2004 Determining Imputed Income from Assets uImputed means attributed or assigned. Imputing income from assets is assigning an amount of income solely for the sake of the annual income calculation. It is NOT real income. uTo calculate imputed income, multiply the cash value of the asset by 2% (the passbook savings rate) uCash Value is how much the family would receive if the asset was converted to cash. uCash Value= Market Value less reasonable expenses to convert the asset to cash. Establishing Household Eligibility Evaluate Eligibility – Assets

48. 2-48 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets uDetermining Imputed Income from Assets Example: –$4,000 in Savings Acct –$1,960 in Checking Acct –Comic Book collection valued at $272 Total cash value = $6,232 Imputed Income = ($6,232 x 2%) $124.64 $124.64 is the imputed income from the cash value of the assets.

49. 2-49 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets uReview Determining Income from Assets If the total cash value of all household assets is more than $5,000, include in annual income, the greater of Imputed income or actual income If the total cash value of all household assets is less than $5,000, include in annual income the actual income generated by assets.

50. 2-50 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Assets Add $110 to other sources of household income when determining eligibility. uDetermining Income from Assets Determine what income from the asset to include Jan has $2,000 in a savings account earning 3% interest. Gregs six month average in his checking account is $3,000 and earns 1.2% interest. Greg also has a stamp collection valued at $500. –$2000 in Svgs Acct (3% interest) $60 –$3000 in Checking Acct (1.2% interest) $36 –Stamp collection valued at $500 earns no income$0 Actual income from assets $96.00 Imputed income from assets ($5,500 x 2%) $110

51. 2-51 Revised 07/22/2004 uIts exercise time EXERCISE #2 Asset Inclusion & Exclusions Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

52. 2-52 Revised 07/22/2004 1. Retirement and pension funds Wendy Hearn has a retirement account with Dell, where she is no longer employed. The retirement account is valued at $10,258 with the current interest earned at 4.25%. The penalty for early withdrawal is 10%. What is the cash value of the asset? What is the actual income earned from the asset? Answer: Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

53. 2-53 Revised 07/22/2004 1. Answer: $9,232.20 would be the cash value of the asset ((10,258x10%) -10,258). The income earned from the asset would be $435.97 (10,258 x 4.25%). Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

54. 2-54 Revised 07/22/2004 2. Equity in rental property Mrs. Jones owns a home. The home is valued at $100,000. You have phone verified that realtors fees are 10% of the sales price. Mrs. Jones brings you a statement from the mortgage company that the balance due on her mortgage is $92,000. What is the value of this asset? Answer: 3. Cash held in Checking & Savings account/Joint assets Cindy Muny applied for residency and indicated that she is separated. She has a non interest bearing checking account with a 6 month average balance of $1,260 and a joint savings account (with her spouse) with a balance of $17,800, earning 2.6% interest. What is the cash value of her assets? What is the income earned from the assets? What amount would be included in annual income? Answer: Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

55. 2-55 Revised 07/22/2004 2. Answer: Zero! There would be no cash left over after paying the realtor and mortgage. –Note that you do not offset other household assets by the negative $2,000 from this house. 3. Answer: $10,160 (1,260 + (17,800 / 2)) is the cash value. $231.40 is income earned from the assets ((17,800 / 2) x 2.6%). You would include $231.40 in annual income, it is greater than $203.20 (10,160 x 2%) the imputed income. Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

56. 2-56 Revised 07/22/2004 4.Assets disposed of for less than fair market value Example: Ms. McMillan indicates in her application that she owned a home valued at $100,000. She owed $38,000 on the mortgage. In exchange for paying off the mortgage, she deeded the property over to her son on 7/01/04. How should this be handled when determining eligibility? Answer: Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

57. 2-57 Revised 07/22/2004 4. Answer: For 2 years from the day she deeded the property to her son, $62,000 must be included as an asset when determining her eligibility Establishing Household Eligibility Evaluate Eligibility – Assets Exercises

58. 2-58 Revised 07/22/2004 Verifying Asset Income HOME Program only All assets must be documented Regardless of value A Sworn Statement of Assets Form is NOT sufficient Asset income is always counted when determining eligibility Establishing Household Eligibility Evaluate Eligibility - Assets

59. 2-59 Revised 07/22/2004 Establishing Household Eligibility Documenting Income - Verifications uTypes of Verifications: Third party written Sent directly to a third party source –A fax must include the company name and fax number of the verification source The applicant or tenant cannot hand carry the verification to or from the third party source First hand Oral (telephone)

60. 2-60 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Verification Review u Common Sources of Income – Acceptable Documentation Employment Income – Third Party Verification from employer-mailed or faxed (or) Paycheck stubs (or) information gathered from The Work Number (800-996-7566)

61. 2-61 Revised 07/22/2004 Employment Verification Forms Sent directly to the third-party source. Residents CANNOT handle the verification form. White-out CANNOT be used All questions must be answered Must be completed by a person with the authority to verify income. When employment verification forms are completed by family members or roommates, management should attach back-up documentation (i.e. check-stubs) Employers typically cannot accurately verify tips Establishing Household Eligibility Documenting Income - Verifications

62. 2-62 Revised 07/22/2004 First Hand Documentation Check Stubs provide info. concerning overtime, shift differential, bonuses, etc. May expedite certification process Check stub must list identifying info (i.e household name, date, pay period) Paychecks should NOT be used to document income because deductions are not shown on the paycheck In many cases, recent check stubs should be used to verify income from employment Establishing Household Eligibility Documenting Income - Verifications

63. 2-63 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Verification Review u Common Sources of Income – Acceptable Documentation Reoccurring Gifts and Contributions – Written statement from person providing assistance giving the purpose, dates and amount of assistance (or) telephone verification with source Net Income from a Business – Form 1040 with Schedule C, E or F (or) financial statement(s) of the business (audited or unaudited) including an accountants calculation of straight-line depreciation. Case of last resort; Use detailed written statement from applicant 0 Income – Owner/administrators are not required to obtain a 0 income form. It will not be accepted in lieu of a properly completed application.

64. 2-64 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Verification Review u Common Sources of Income – Acceptable Documentation Social Security – Obtain a copy of the award letter or TPQY. Award letter valid for one year. Do not use deposit shown on bank statement. Child Support – If court ordered, obtain a copy of the court order or divorce decree. If ordered, but not received, obtain a written statement that reasonable efforts to collect have been made and that it is not received. Unemployment– Obtain a copy of the award letter. Remember it must be annualized even if letter states it will not be received entire certification period. Military Pay– Obtain a copy of recent Leave and Earnings Statements. Include all pay and all allowances

65. 2-65 Revised 07/22/2004 Establishing Household Eligibility Evaluate Eligibility – Verification Review u Common Assets – Acceptable Documentation Checking and Savings Accounts – Copies of bank statements or asset verification form Equity in Real Estate– Obtain a copy of the tax appraisal to establish the value of the home or land. Obtain a statement from the mortgage lender of the outstanding loan balance. Obtain a phone verification from a realtor to establish reasonable settlement costs. Mortgage or deed of Trust-Obtain a copy of the promissory note to establish original amount loaned. Use an amortization schedule to determine amount that will be due at end of certification period and interest payments over the next 12 months

66. 2-66 Revised 07/22/2004 Annualize Income and compare annual income to applicable income limits for that HH size uHourly x 2080 uWeekly x 52 uEvery other week x 26 uTwice a month x 24 uMonthly x 12 Establishing Household Eligibility Annualizing Income NOTE: Annualize income based on current circumstances, unless there is documentation of a change. Example: A residents check stubs shows that they work an average of 10 hours a week in overtime. Unless there is documentation that this will change, annualize income assuming 10 hours a week of overtime.

67. 2-67 Revised 07/22/2004 Establishing Household Eligibility Annualizing Income - Exercises uIts exercise time EXERCISE #3 Annualizing Income

68. 2-68 Revised 07/22/2004 Completing the Household Income Certification uDepartment approved form uOwner/manager/contract administrator completes the Income Certification uIncome verification(s) must be within 90 days of the effective date of the Income Certification uCompleted Income Certification signed by: Head of household Owner/Manager/Contract Administrator Establishing Household Eligibility Income Certification HIC

69. 2-69 Revised 07/22/2004 Re-Certifications: Start 60 to 90 days prior to expiration of most recent Income Certification Follow same steps as initial certification Must be completed within one year from the effective date of the last Income Certification If the household size or income changes during the 12- month certification period, it is not a program requirement to conduct interim certifications Good Practice! Compare the new information with the last certification completed. Be sure to address any discrepancies. Establishing Household Eligibility Income Certification

70. 2-70 Revised 07/22/2004 Discussion Questions Jack and Jill applied for residency/assistance. At initial certification Jack reports employment at a car wash. A third-party employment verification form is gathered and reports no tips. At recertification the employment verification reports tips. What needs to be done? At initial certification, an employment verification form was used to document income. At recertification check stubs are gathered and indicate a significant increase in income, even though the person has the exact same job. What needs to be done? At initial certification the wife indicates she is unemployed. At recertification, she is employed. The employment verification form indicates she started working prior to move in/ receiving assistance. What needs to be done? Establishing Household Eligibility Income Certification - Review

71. 2-71 Revised 07/22/2004 Example: The Harper household moved in on July 1, 2003 and signed a year lease. The effective date of their initial Income Certification was 7/01/03. At recertification the manager/contract administrator obtained all necessary verifications to re-certify the household and completed their new income certification on May 23, 2004. The Harper's sign their income certification on 5/23/04. The new income certification should have an effective date of 7/1/04. Note: The verifications of income cannot be dated prior to 4/01/04 (90 days from the effective date of the certification). Re-Certifications Effective Dates Establishing Household Eligibility Income Certification

72. 2-72 Revised 07/22/2004 HOME Only Re-certification Procedures uIf annual income exceeds 80% of median, the Household is Over-Income. uRent adjustments must be made if over-income. High HOME Limit Over Income 80% 60% HOME Project Median Income 50% Low HOME Limit Establishing Household Eligibility Income Certification

73. 2-73 Revised 07/22/2004 u Before a new household is approved, conduct a peer review of the file to confirm eligibility u State in the Management Plan/Standard Operating Procedures the methods used to calculate income u Spot check the information provided on employment verification forms u If there is a discrepancy with the income verification, it may be prudent to obtain more than one form of verification Establishing Household Eligibility Recommended Practices

74. 2-74 Revised 07/22/2004 Establishing Household Eligibility Adjusting Income uGross income is used for determining if a household is eligible for participation in affordable housing programs.

75. 2-75 Revised 07/22/2004 Establishing Household Eligibility Adjusting Income uThe HOME Tenant Based Rental Assistance (TBRA) program uses adjusted income to determine tenant paid rent uAdjusted income is Gross Income minus allowances

76. 2-76 Revised 07/22/2004 Establishing Household Eligibility Adjusting Income u5 kinds of allowances, but not all families are eligible for all allowances Type of allowance Elderly or disabled household Non-elderly or non-disabled household Elderly or disabled household YesNo DependentYes Child CareYes Medical expenses YesNo Disability assistance expenses Yes

77. 2-77 Revised 07/22/2004 Establishing Household Eligibility Adjusting Income Types of households Elderly household: Head, spouse or co-head (or sole occupant) is at least 62 or older; 2 or more people live together and are 62 or older; One or more persons who are 62 or older and live with a live in aide Examples: Mary and Barry Smith (both 32) apply for assistance. They are taking in Barrys 70 year old mother. Cindy Carlino, 78 years old and co-head of household is 50 years old

78. 2-78 Revised 07/22/2004 Establishing Household Eligibility Adjusting Income Types of Households Disabled household: Head, Spouse or Co-head (or sole member) is disabled; 2 or more persons with disabilities live together; 1 or more persons with disabilities living with one or more live in aides. Examples: Carlos Blanco ( 25 and disabled) Fred Jones (42) and his wife Suzanne (41 and disabled) Ted and Alexis (both 35) and their disabled son (age 14)

79. 2-79 Revised 07/22/2004 uAdjusted income is annual gross income less deductions or allowances under 5 categories. Three of the allowances are potentially available to all families: $480 per dependent Child Care expenses; and Disability Assistance expenses Two allowances are only available to families where the head, spouse or co-head is Elderly (62 or older) or disabled $400 per Elderly Household Medical Expenses Establishing Household Eligibility Adjusting Income

80. 2-80 Revised 07/22/2004 Dependent Allowance: $480 per dependent u Dependents are defined as family members: 1.Under 18 years of age; 2.A person with disabilities; or 3.A full-time student of any age uSome family members will never qualify for the deduction regardless of age, disability, or student status. 1. Head, spouse or co-head 2. A foster child, an unborn child, a child who has not yet joined the family, or a live-in aide uTo qualify for the dependent deduction under category 2 or 3, the disability or full-time student status must be verified uA family member may not receive a double dependent deduction, as in the case of a 19 year old, disabled, full-time student Establishing Household Eligibility Adjusting Income – Dependent Deduction

81. 2-81 Revised 07/22/2004 Dependent Allowance: ($480 per dependent) Examples uThe Cochran's are a five person household. Bo and Ellen reside in the unit with their 3 dependent children, Josh age 13, Summer age 9 and Sky age 2. The Cochran household is eligible for a total dependent deduction of $1,440. uThe Smiley household is composed of Max who is disabled, his wife Lana and their 19-year old son Kam. The Smiley household is not eligible for any dependent deduction because Kam is not a full time student and Max is the head of household. uJane and Will Roper have a 17 year old son, John that will turn 18 in 5 months. The Roper household qualifies for the $480 deduction. It is not necessary to certify the household again when John turns 18. Establishing Household Eligibility Adjusting Income – Dependent Deduction

82. 2-82 Revised 07/22/2004 Child Care Expenses Allowance: u This allowance is made available to any household paying for the care of children under age 13 (including foster children) if all the following are true: 1. The care is enabling a family member to: a. Work or seek employment; or b. Further his/ her education (academic or vocational) 2. The family has determined there is NO adult household member capable of providing care during the hours care is needed 3. The expenses are NOT paid to a family member living in the unit 4. The amounts paid are reasonable charges for child care 5. Amount are NOT reimbursed by an Agency or Individual outside the family 6. Amount claimed must not exceed the employment income earned during the hours for which care was paid. Establishing Household Eligibility Adjusting Income – Child Care Deduction

83. 2-83 Revised 07/22/2004 Child Care Expenses Allowance Examples uPatty Smith works at the book store Monday through Friday from 8 to 5 and earns $8.50 per hour. A neighbor cares for Pattys 8 year old daughter each day from 3 to 5. Patty pays the neighbor $5 per hour for babysitting. To determine Pattys tenant paid rent, $2,600 will be deducted from her gross income. Establishing Household Eligibility Adjusting Income – Child Care Deduction

84. 2-84 Revised 07/22/2004 Disability Assistance Expenses Allowance: u Made available only to families with disabled member if the expense enables an adult family member (including the disabled person) to work. The amount claimed will be the lesser of: Total expenses for the disability assistance plus the amount of medical expenses that exceed 3% of annual income; or Employment income of adult family members made possible by the assistance expense Establishing Household Eligibility Adjusting Income – Disability Assistance

85. 2-85 Revised 07/22/2004 Establishing Household Eligibility Adjusting Income – Disability Assistance Examples of Disability Assistance Expenses Cost of wheelchairs, ramps, adaptations to vehicles; Veterinarian costs and food costs of a service animal; Reasonable expenses for home medical care, nursing services, housekeeping and errand services, interpreters of hearing impaired persons and readers for persons with visual disabilities; and Payments to a care attendant to stay with a disabled household member over 13 years of age that allow someone to work

86. 2-86 Revised 07/22/2004 Disability Assistance Expenses Allowance: (continued) u Any amounts claimed must anticipate to be paid by the family 12 months following the certification uAny amounts paid for or reimbursed by outside agencies or individuals are not eligible expenses uAmounts paid to family members residing in the household are not eligible Establishing Household Eligibility Adjusting Income – Disability Assistance Expenses

87. 2-87 Revised 07/22/2004 Elderly Household Allowance: $400 deduction uGranted one time per Elderly Household, not per elderly person residing in the household uFor the purposes of determining adjusted income, an Elderly Household is one in which the head, spouse, co-tenant (or sole member) are 62 or older, disabled or handicapped Example, Rhonda Dean is 63 and her husband Joe is 65 and disabled. Under the Elderly Family deduction, their gross income will be adjusted by $400. Establishing Household Eligibility Adjusting Income – Elderly Family Deduction

88. 2-88 Revised 07/22/2004 uMedical Expenses Allowance is made available only to Elderly or disabled Households If no disability assistance expenses are claimed, the medical expenses calculation will operate as follows: Medical Allowance = Total un-reimbursed medical expenses which exceed 3% of Annual Income If both medical and disability assistance expenses are claimed: Allowable Expenses = (allowable Medical Expenses + allowable Disability Assistance Expenses) less 3% of Annual Income u Reimbursed or pre-paid medical expenses may not be claimed Establishing Household Eligibility Adjusting Income – Medical Expense Deduction

89. 2-89 Revised 07/22/2004 uA household has $1000 in medical expenses and $500 in expenses for disability assistance. $4000 of annual income is derived because the disability care is available. Annual Income is $20,000. 3% of Annual Income is $600 Total Handicap/ Disability Assistance Expense:$500 Minus 3% of Annual Income:-$600 = ($100) Handicap Disability Allowance:$0 Total Medical Expense:$1000 Minus: Balance of 3% of Annual Income-$100 Allowable Medical Expense:$900 Establishing Household Eligibility Adjusting Income

90. 2-90 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents Use adjusted income to determine tenant paid rent. The maximum subsidy that will be paid on behalf of a household is determined by the following formula: Payment Standard Less monthly adjusted income = Maximum Subsidy NOTE: A minimum tenant payment of 10% of gross monthly income is required.

91. 2-91 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents Example: The Langes have been issued a two-bedroom voucher/coupon. Their gross annual and adjusted incomes are $22,500 and $18,300. Their gross monthly income and adjusted monthly incomes are $188 and $458.The Payment Standard is $775.00.

92. 2-92 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents Example continued: Payment Standard $775.00 Less (monthly adjusted) $458.00 Maximum Rent Subsidy $317.00

93. 2-93 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents Example continued: The Langes share is as follows: Approved rent $800.00 Less Max. subsidy $317.00 Lange Payment $483.00 The Langes are paying more than 30% of monthly Adjusted income because the unit selected rents for more than the standard.

94. 2-94 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents Example continued: If the Langes had selected a unit below the standard, the requirement that the family pay at least 10% of monthly gross income might apply.

95. 2-95 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents Example continued: Approved rent $500.00 Less Max subsidy $317.00 Lange Payment $183.00 - $188.00 NOTE: The Langes must pay at least 10% of gross monthly income. Therefore, the subsidy must be reduced by $5.00.

96. 2-96 Revised 07/22/2004 Establishing Household Eligibility Calculating Rents The Payment Standards may be obtained on the TDHCA website at www.tdhca.state.tx.us any time. www.tdhca.state.tx.us