HUD HOTMA Rules Update Verification Requirements

Introduction

The U.S. Department of Housing and Urban Development (HUD) has released Notice H 2013-10, which expands upon the Final Rule for implementing the Housing Opportunity Through Modernization Act (HOTMA). This final rule makes some changes to the way managers of HUD-assisted housing will verify eligibility-related information for HUD-assisted properties.

Consent to Release Forms

The final HOTMA rule changes the requirements relating to the signing of Authorization for Release of Information (Forms HUD-9886/9887). Under the final rule, all applicants age 18 and over must sign the consent form at admission and participants must sign the consent form no later than their next interim or regularly scheduled income reexamination. After an applicant or participant has signed and submitted a consent form on or after January 1, 2024, they do not need to sign and submit subsequent consent forms at the next interim or regularly scheduled income reexamination except under the following circumstances:

• When any person 18 years or older becomes a member of the family;
• When a member of the family turns 18 years of age; and
• As required by HUD or the PHA in administrative instructions.

Executed consent forms will remain effective until the family is denied assistance, the assistance is terminated, or if the family provides written notification to the owner revoking consent. If a family leaves a HUD program, the assistance is terminated, and the signed consent forms will no longer be in effect.

HUD is updating the form HUD-9886-A and 9887 to conform to the final rule.

EIV Use

The regulation reminds owners the EIV must be used to verify tenant employment and income at annual and streamlined reexaminations of family composition and income. However, Owners are no longer required to use EIV to verify tenant employment and income information during an interim reexamination.

Owners have the discretion to use EIV reports at interim reexaminations, but such a policy must be stated in written EIV Policies & Procedures.

Determination of Income Using Other Means-Tested Public Assistance (i.e., “Safe Harbor”)

Owners may determine a family’s annual income, including income from assets, before the application of any deductions based on income determinations made within the previous 12-month period, using income determinations from the following types of means-tested federal public assistance programs:

• Temporary Assistance for Needy Families (“TANF”);
• Medicaid;
• Supplemental Nutrition Assistance Program (“SNAP”);
• The Earned Income Tax Credit;
• The Low Income Housing Tax Credit;
• Special Supplemental Nutrition Program for Women, Infants, and Children;
• Supplemental Security Income (SSI);
• Other HUD-administered programs;
• Other means-tested forms of federal public assistance for which HUD has established a memorandum of understanding; and
• Other federal benefit determinations made by other means-tested federal programs that HUD determines to have comparable reliability and announces through a Federal Register notice.

All means-tested verifications must utilize third-party verification. HUD clarifies in this notice that the verification will be considered acceptable if the documentation meets the criteria that the income determination was made within the 12 months before the receipt of the verification by the Owner.

The safe harbor documentation will be considered acceptable if any of the following dates fall into the 12 months prior to the receipt of the documentation by the Owner:

• Income determination effective date;
• Program administrator’s signature date;
• Family’s signature date;
• Report effective date; or
• Other report-specific dates that verify the income determination date.

Safe harbor verifications may only be used to determine gross annual income – not adjusted income.

Verification Hierarchy

HUD has developed a hierarchy that describes verification documentation from most acceptable to least acceptable, as follows:

1. Upfront Income Verification (UIV), using HUD’s EIV system;
2. Upfront Income Verification using a non-EIV system (e.g., The Work Number, web-based state benefits, etc.);
3. Written, third-party verification from the source, also known as “tenant-provided verification” or EIV plus Self-Certification. Owners must use written, third-party verification when the income type is not available in EIV (e.g., self-employment, GoFundMe accounts, general public assistance, VA benefits, etc.); Examples are pay stubs, payroll summary reports, employer hire letters, SSA benefit letters, bank statements, child support payment stubs, welfare benefit letters, and unemployment monetary benefit notices. When pay stubs are used, a minimum of two consecutive pay stubs are required. However, for new income sources or when two pay stubs are not available, traditional, third-party
   1. verification or the best available information should be used.
   1. When verification of assets is required, owners are required to obtain a minimum of one statement that reflects the current balance of banking/financial accounts. Note that a six-month average balance for checking accounts is no longer required
4. Written, third-party verification form directly from the income source;
5. Oral Third-Party Verification; and
6. Self-certification (not third-party verification).

Owners and property managers should note that these requirements apply only to HUD projects. The Rural Development Service (RD) and Housing Finance Agencies (HFAs) have complete discretion concerning verification requirements and the procedures outlined here may not be acceptable to those agencies.