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Timing of HUD Section 8 Tenant Reported Income

After spending my beginning years in technical support at an affordable housing software company I was often asked many questions in regard to the timing of tenant reported income.

I would always refer them to the HUD 4350.3 Handbook as it gives the best examples.  In my opinion, I think each revision of the 4350.3 gets clearer and clearer especially with the examples they give.

The question here is when do we perform an Interim Recertification (IR) when the tenant reports their income a couple of months after they already started their job?  If the tenant started their employment on March 15th but only reported their income on May 3rd what should be the effective date of the IR?  Since the tenant did ultimately report their income should we give them a 30 day notice?  What date would you make the certification effective… 4-1-12 or give the original 30 day notice he would have received and make it 5-1-12…what about 6/1/12?

The HUD Occupancy Handbook 4350.3 states that if the owner discovers the tenant’s failure to report changes as required in 7-10 days they should implement the IR effective for the first of the following month. The lease also states they are to report immediately. So in this case the tenant did neither.  It’s great the tenant reported the income but the tenant didn’t report it in a timely manner. If the tenant didn’t comply with your interim reporting procedures, then the IR is effective the 1st of the month following the date of the action that caused the tenant rent to increase. In this case, the IR would be effective 4/1/12. See 4350.3, Rev-1, Paragraph 7-13D.

But what if the verification process takes a while?  A tenant who reports new employment which can only be verified through pay stubs and subsequently the verification is delayed. Would you make the IR effective immediately or still give them the 30 day notice of their rent increasing?

Since it is not the tenant’s fault, we would suggest you follow the IR reporting procedures. If a tenant reported the job in 14 days (our time-frame), we would provide a 30 day notice of the rent increase once information is properly verified. If tenant did not report in a timely manner (again, within 14 days), the higher rent will be effective 1st day of the month following the date of employment.

In the case above, the tenant did not report the new job timely. Since the job started in March and it wasn’t reported until May, the tenant should theoretically already possess the last 4-6 consecutive pay stubs, or close to it depending on frequency of pay. If the tenant does not or cannot provide the last 4-6 consecutive pay stubs (to be used in conjunction with EIV), then third-party verification must be pursued and hopefully the income information can be retrieved by that method. In any event, once the income information is obtained, the certification in this case will be effective 4/1/12, since it wasn’t reported timely.

You can use multiple methods of verification. You could have taken the 6-8 consecutive pay stubs and had the resident provide a notarized self-certification of income. In this case, you can require the resident to meet with you in 30 days or so to confirm that the income projected was correct.
You Should:

1.  Attempt third party verification
2.  Document the file to explain why third party verification was not used
3.  Use a combination of pay stubs and self-certification to project income
4.  Schedule a meeting within 90 days to confirm projected income.

That way, you can get the certification done in a timely manner.  What process works best for you?  Let us know!

For more information on the timing of tenant reported income, take our Tenant Income, Asset & Expense class http://www.AHTCSonline.com/class_schedule.html