Making the wrong choice can be costly - at HUD sites, the property may lose funds. At a USDA/RD site, financial errors regarding certifications very often result in a financial loss to the Management Company.
In this post, I'm going to try and clarify when to use each of these options. There's also a quiz at the end to help you gauge your knowledge.
HUD Sites - Interims (HUD 4350.3, REV-1, CHG-4, Paragraphs 7-9 through 7-13):
The Basics:
An Interim Recertification (IR) is performed because there has been a change for the family. The family is required to report certain changes; others are optional. A family must report the following (HUD 4350.3, REV-1, CHG-4, Paragraph 7-10, page 7-22):
1. A family member moves out of the unit;
2. A family proposes to move a new member in;
3. An adult family member, previously reported as unemployed, gets a job; or
4. Any other change in income of $200 or more per month.
One of the most frequent areas of confusion surrounds the employment issue and the $200 per month threshhold. The two are separate requirements - the requirement to report employment has NO dollar threshhold. Even if a family member, previously listed as unemployed, gets a job that only pays $20 a month, they must report for an Interim. Other, non-employment changes are only required to be reported if they are $200 or more a month.
Why? The main reason is EIV. Remember, EIV will report any income differences of $200 a month or more. Many of the other types of changes will not show in EIV. Requiring that any employment be reported helps to limit false discrepancy reports.
The Process:
When Residents report changes as required, the process is fairly straightforward
1. Ask the tenant if there have been any other changes
2. Verify the item(s) reported as changed
3. Pull the EIV Summary Report, Income Report, and Discrepancy Report
4. Screen new additions to household / perform EIV Existing Tenant Search
5. Enter the information in OneSite / Print new 50059 and Lease Amendment
6. Sign the new paperwork, with the certification effective after a 30-day notice.
7. Submit through TRACS
8. Send paperwork to Financial Office
When Tenants do not Report as Required:
You're doing your holiday shopping in December, and are surprised to discover that the individual who comes to help you at the perfume counter is your unemployed Resident. When you say hello, and note your suprise at seeing her there, she tells you that she has been employed since August. What do you do?
The reality is that the current setting is not the appropriate one in which to discuss the reporting issue. You make your purchase, wish her Happy Holidays, and go on your way. When you are next in the office, however, you will need to send a notice to the Resident advising of the need to report to your office.
If she reports as required, you will follow the steps above, with one major difference. By failing to report, the resident forfeits the right to a 30-day notice of an increase. This means that the effective date will now be the first of the month after the Date of Action (the day things changed).
So, if your Resident started her new job on August 3rd, the increase in rent will be effective on September 1st, and you will be asking her to sign a payment agreement for back-due rent.
If she does not report as required, what happens depends on what type of site she lives in. At all HUD-subsidized sites other than PRACs, failure to report on time leads to termination of assistance. This means that they now owe Market Rent.
Example:Jenny gets a new job on May 1. EIV notes the discrepancy in October. Management sends a notice, and Jenny complies by coming into the office and completing an Interim. The new certification is signed on November 14th. The Interim is effective June 1st, and Jenny signs a payment agreement for the money owed.In a 202PRAC, there is no such thing as a Market Rent, so the consequence of failing to report is eviction.
Example:Lawrence starts a new business completing tax returns, for which he receives income. He fails to report it on time, but one of his neighbors reports it to Management on March 14th after Lawrence completes her tax return. Management sends a notice to Lawrence on March 16th asking him to report to the office within 10 days to complete an Interim certification, or his rent will be raised to Market as of April 1. Lawrence does not comply, so as of April 1, he now owes Market Rent. As of April 10th, Lawrence realizes he does not want to pay Market Rent, so he reports to the office. Management completes a recertification, and Lawrence is put back on subsidy with an Initial Certification (NOT an Interim) which starts on May 1. Lawrence still owes Market Rent for April 1.Because his subsidy was terminated as of April 1, he can only be placed back on subsidy as of May 1. Annual Recertifications are effective the first of the month during which the Resident began receiving subsidy; therefore, his next recertification date will be May 1 next year. It is almost as if he moved out and moved back in.
HUD Sites - Corrections:
Interims are performed because the family's financial situation has changed. Corrections, on the other hand, are performed because there was an error on the original certification, either due to tenant misreporting or Management error.
Corrections always have an effective date identical to the certification they are correcting. You will perform a certification with the same effective date, and the software will ask you to designate the reason for the correction.
When the correction is due to a tenant's failure to report accurate info, they will bear the financial cost of the error. They will not be eligible for anything other than their own direct actions. For instance, if you use documents submitted by the Resident, to sign a certification, and a verification form comes in after that with a different number, this is not the Resident's fault. The Resident's obligation is to report on time and to provide accurate and complete information to the best of their knowledge. Anything else that results in an error is not likely to be considered their responsibility.
Example:Management completes an Annual Recertification effective 12/01. On 1/15, a verification arrives that indicates that the resident will be paying twice the amount as last year for a medical expense. The Annual will be corrected with the new expense amount, noted as due to Management or Third Party error, and the Resident will likely have a rent credit.
Example:Management completes an Annual Recertification effective 7/01. On 9/01, the Resident pays her rent with a check from an account that Management didn't know about. The Resident says that she simply forgot about the new account, so Management cannot prove that the oversight was intentional. The resulting correction raises the Resident's rent by $3 a month. The new Annual Recertification is performed, noted as a Correction due to tenant misreporting, and the Resident will owe the back rent.
USDA/ RD Sites - Modifying a Recertification:
USDA/RD Sites do not have a "Correction" option - when a Recertification must be corrected, it is necessary to Modify the existing Certification. This must be done within 90 days of the original certification, and it is likely that a charge to the Management Company will result. If the correction is due to a situation beyond Management's control, the charge may be appealed.
In any case where a modification is to be performed, you must inform your Regional Manager so that they may assist. Modifying a certification requires RD notification and approval (which the RM will take care of for you). We will also want to discuss the situation with USDA/RD if we will be requesting that the charge be waived.
When we will be modifying, only the changed information will be verified. This makes the process fairly straightforward and simple.
1. Ask if any other information has changed.
2. Document the reason that the original information was inaccurate.
3. Verify the changed information
4. Contact your Regional Manager to advise
5. Complete the new paperwork
6. Submit through MINC.
7. Send the corrected paperwork to the Financial Office
USDA Sites - Full Recertification:
USDA/RD sites do not have the option of an Interim Recertification. Therefore, if information changes beyond 90 days of the Annual, a full Recertification must be performed, including verification of all Income, Assets, and Expenses.
Once the new certification is performed, it is important to note that the next Annual Recertification date will be one year from this certification's effective date, rather than the original anniversary date.
Example:
A Resident is recertified, as usual, on May 1st. On November 1st, the Resident advises that her medical expenses have changed significantly. A complete recertification is performed, and is effective January 1st. The Resident will now have an Annual Recertification date of January 1.
Think you've got this down? Test your knowledge:
Take the Interim vs. Correction Quiz!
Take the "Recertification vs. Modify" Quiz!
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