GOOD TO KNOW: QUESTIONS FROM THE FIELD

A feature of the TDA blog where we address topics and questions we’re hearing in the field…

The 2013 HOME Rule revised the requirements in §92.303 to require that HOME income determinations be based on “at least two months of source documents… (e.g. wage statement, interest statement, unemployment compensation statement).” {Emphasis added to show inserted regulatory language.}

In the field, most PJs have traditionally relied on third-party verifications when conducting income verifications. In part this is because other federal programs (including Low Income Housing Tax Credits and most of HUD’s multifamily programs) prioritize third-party verifications. Additionally, most practitioners find third-party verifications more reliable for projecting a household’s income over the upcoming 12 months. For example, commonly used employment verification forms ask for information on upcoming raises and often provide more detailed explanations of seasonal variations in hours or overtime.

Since third-party verifications have been seen as a generally “superior” method of determining income, many HOME participants have mistakenly concluded that collecting at least two months of source documents is not necessary if they are obtaining third-party verifications.

In all cases, HUD requires that at least two months of source documents be obtained and included in the applicant’s file. PJs—or others charged with reviewing applicant eligibility—should compare the information gleaned from the source documents to make sure it is reasonably consistent with any third-party documentation and that significant differences are adequately explained. For example, if an applicant’s pay stubs suggest that recent and year-to-date wages are running significantly higher than the employer’s estimated wages for the upcoming 12 month period, a PJ may need to follow-up with the employer to explain the discrepancy. In many cases, these types of differences are the result of simple errors or misunderstandings by the person completing the form and can be easily documented.

In addition to its work directly for HUD, TDA regularly provides training and technical assistance to state and local recipients of HUD funding. Contact Henry Alvarez at Halvarez@tdainc.org to learn more about our services, including affordable remote training opportunities on the income determination process.