ComplianceClose-up

HUD ISSUES NEW NOTICE ON EIV (H2011-21)

Housing Notice 2011-21, Enterprise Income Verification (EIV) System, was issued today, August 19, 2011. This Notice supersedes Notices H 2008-03, H 2009-20, and H 2010-10. The Notice is posted on HUDCLIPS at http://portal.hud.gov/hudportal/documents/huddoc?id=11-21hsgn.pdf .



The revised Notice:



· Clarifies that IPAs may use printed EIV documents when auditing an owner’s compliance (An IPA is an Independent Public Auditor hired to audit a property’s financial statements)

· Clarifies the requirement on resolving discrepancies between TRACS and the current form HUD-50059

· Indicates the following reports must be run by selecting the “All” recertification month:

o No Income Report

o New Hires Report

o Identity Verification Report

o Deceased Tenant Report

· States the O/A must make sure that the income appearing on the EIV Income Report does not meet a regulatory income exclusion.

· Clarifies that a tenant’s monthly repayment agreement payment may exceed 40% of the family’s monthly adjusted income if the family agrees to the amount stated in the repayment agreement.

· Recommends that an O/A has the head of household and, if applicable, the family member who had the unreported income sign a repayment agreement.

· Indicates the comment field on the voucher must be completed when explaining payment and costs retained even if no costs were retained.

· Identifies an updated penalty for not using the EIV system. The O/A will now incur a penalty of a five percent decrease in the voucher payment for the month following the date the violation was found and each subsequent voucher payment until the MOR finding is cured.

· Indicates a new security training requirement. EIV users are now required to complete the online Federal ISS Awareness training program. The most recent HUD EIV webcast will no longer satisfy the security training requirement.

· Clarifies that when mailing EIV data, data must be sent to an office of the O/A and must not be mailed to Independent Auditor offices

· New Attachment 9: Assessing the Five Percent Penalty in Voucher Payment has been added

· New Attachment 10: Sample Tenant Consent to Disclose EIV Income Information has been added

HUD ISSUES LETTER ON PERFORMANCE BASED CONTRACT ADMINISTRATORS

In a letter dated August 11, 2011, Janet M. Golrick, HUD Acting Deputy Assistant Secretary for Multifamily Housing Programs, issued a letter regarding Performance Based Contract Administrators (PBCA's).

HUD had recently announced the award of PBCA contracts in 53 states and territories. However, Ms. Golrick's letter notes complaints filed with the Government Accounting Office (GAO) by unsuccessful bidders, and HUD's interest in avoiding delays caused by litigation that could negatively impact residents, as well as housing providers.

Accordingly, HUD intends to re-evaluate its selection procedures and there will be a "re-compete" for PBCA contracts in 42 states/territories. Incumbent PBCA's will be afforded an opportunity to serve as interim PBCA's for six months under an amended contract, with reduced responsibilities and a reduced administrative fee.

NCHM Compliance Close Up on Twitter

A short announcement for those of you who use Twitter.  Within the next few weeks, I'll be using Twitter to address compliance-related issues and post news items of interest.  You are welcome to "follow" me on Twitter via @NCHMMark.  Hope to see you there!

The Compliance Close Up Blog will continue, but will be used for longer posts.

HUD position on marijuana as a medical expense

With the growing number of states that have enacted laws permitting the possession and use of marijuana for prescribed medical purposes, one of the more common questions I get is: Is medical marijuana and allowable medical expense?

Since none of the existing Handbooks or guidebooks (HUD Handbook 4350.3, Rev. 1; Public Housing Occupancy Guidebook; HUD Guidebook 7420.10G) address the issue, I posed the question to a HUD attorney working in the Department's Office of General Counsel (OGC).

The answer is: No.  Even if a state has made the use of marijuana for medical reasons lawful, HUD will not allow the costs incurred in obtaining it as a medical expense.

The HUD position is contained in a Memorandum to the Assistant Secretaries of Housing, and Public Housing, written by former HUD General Counsel Gay W. Laster on February 24, 1999.

In a longer "Compliance Corner" article that will be available today, I discuss this issue as well as the question of eligibility for federal housing by individuals using medicinal marijuana in the context of the Quality Housing and Work Responsibility Act (QHWRA); as well as the current position of the U.S. Department of Justice (DOJ). 

NCHM certified professionals can contact me through the eHotline section of the NCHM website at www.nchm.org and request the HUD and Justice Department memos, which I will be happy to send as attached files.

EIV,Third Party Verification and PBCA's

During a recent training, I inadvertently stunned my audience by a comment I made about EIV compliance.  To be completely candid, I did not do the best job of phrasing my comment -- and EIV can be confusing enough without the poor explanation of a rule. 

The issue at hand is traditional third party verifications.  According to this audience, their PBCA's were requiring them to get traditional, third party verifications of income even in instances where the EIV Income Report and tenant-submitted documentation agreed, and were without dispute.

HUD Notice H2010-10 states as follows: When there is NO DISPUTE of the EIV Information: "EIV Income Report, current acceptable tenant-provided documentation, and, if necessary (as determined by the Owner/Agent) third party verification. (HUD Notice H2010-10, Section VII, Part A2b(1), page 19 (emphasis added)).

This seems clear to me.  In instances where there is no dispute of EIV Information from the Income Report, it is the decision of the Owner/Agent, not the PBCA, whether or not traditional, third party verification should also be obtained.  An extensive (not exhaustive) listing of acceptable tenant-provided documentation can be found in Appendix 3 of HUD Handbook 4350.3, Rev. 1.

For the record, PBCA's get a bad rap sometimes that's not deserved.  The majority of them do outstanding jobs, and it isn't an easy one.  And we're all human, which means we make mistakes.  The easiest way to create problems, whether you're an Owner/Agent or a PBCA, is to not consistently refer back to source documentation, or to make up rules that are not there. 

JUSTICE DEPARTMENT ISSUES NEW GUIDELINES ON SERVICE ANIMALS

There has been significant press coverage of guidelines issued by the US Department of Justice (DOJ) that limit the types of animals that can be considered to be "service animals" in connection with the Americans with Disabilities Act (ADA).  DOJ is the primary enforcement agency for the ADA, particularly Titles II and III of that law.

Do these guidelines have any impact on the housing management industry?

In a word: No.

The DOJ guidelines have no effect whatsoever on housing, or Section 504, or the Fair Housing Act.  Section 504 and the Fair Housing Act Amendments are principally enforced by HUD, not the Justice Department.

And even for Section 42 Low Income Housing Tax Credit (LIHTC) buildings with no federal funding, which are not subject to Section 504, must still comply with the Fair Housing Act if they have five or more dwelling units.

HUD has consistently said that when a conflict exists between civil rights regulations, the "more stringently protective" rule applies.  On the issue of service animals, HUD's rules are more protective.

The DOJ itself says as follows: "[H]ousing facilities may not rely on the ADA definition of service animal as a justification for reducing their obligations under the Fair Housing Act Amendments."

A HANDBOOK WE CAN BELIEVE IN...

Housing professionals who have been reading this blog know that I have been on my "soapbox" for a while now about the need for a revised HUD Handbook 4350.3, Rev. 1 as an alternative to all the HUD notices that have been issued.

Here's one more reason, if one was needed.

I've been getting a lot of questions lately from Section 202 PRAC properties who are diligently trying to implement the provisions of the consolidated notice on the use of EIV (HUD Notice H2010-10). This notice contains detailed instructions on "mixed families" and Social Security numbers.

"Mixed families" is a term that is part of the Section 214 (Non-citizen) rule. Nothing wrong with what HUD did here; the noncitizen rule applies to most HUD programs......

.....BUT.....it does NOT apply to Section 202 PRAC (Paragraph 3-12, HUD Handbook 4350.3, Rev. 1).

Does this mean that, on this issue, Section 202 PRAC properties fall back to Paragraph 3-9 of HUD Handbook 4350.3, Rev. 1? If so, that paragraph does not contain ANY penalizing provisions for anyone who NEVER had a Social Security number (Paragraph 3-9A). It states they simply certify they never had an SSN.

The only "penalizing" provisions, in Paragraph 3-9C, apply to individuals who HAVE an SSN, but cannot document it. Don't believe me? Read the first sentence of the paragraph.

I am not one to "slam" HUD. I used to work there. And I know what the agency is capable of....which is excellent rulemaking for good and valid reasons.

But putting owners/agents between the proverbial "rock and hard place" benefits no one -- particularly the extremely low-very low-low income families our industry is proud and privileged to serve with the fundamental human need of safe, decent and sanitary housing.

COMPLIANCE NEVER SLEEPS

Last evening, I got a telephone call from a colleague and friend of many years standing. The conversation included some discussion of compliance, including one point that was so interesting I had to share it here.

During an audit, it was discovered that the property was using a now outdated HUD Form 9887 and 9887A. The current version of the form is readily available via HUDCLIPS.

When given the current version of the form, the response of staff at the property was, "We only use forms sent to us by our corporate office."

There's absolutely nothing wrong with centralizing compliance functions at a high level within a property management firm or PHA. And centralization is certainly the way to go for owner/agent created forms, in my opinion.

But when it comes to HUD forms, compliance never sleeps. Someone at the corporate level responsible for compliance has to ensure that the site staff is getting these forms quickly, along with any appropriate instructions for their their use. The availability of these forms on HUDCLIPS, often announced by RHIIP emails, means corporate is deprived of any "wiggle room" on these points. This leads to negative findings on an MOR.

Is there any finding more miserable on an MOR than the one that says you are not using the current version of a HUD form?

Of course, as I have said ad nauseum, if HUD would only put all this "new stuff" (some of which is no longer that new) in a HUD Handbook change, our industry would be much better off. I am still waiting for Change 4, and if I had held my breath I would have been declared brain dead and removed from life support more than two years ago.

Service Coordinators and EIV

Should Service Coordinators have access to EIV information contained in a tenant's file?  If they do, should they sign a "Rules of Behavior" form?

I take a very strict position on this question, based on the broader issue of whether a Service Coordinator should have access to a tenant's file as a matter of course.

My answer to the broader question is: A Service Coordinator should have no access to a tenant's file without a signed (and dated) authorization from the tenant, which the tenant has the right to rescind at any time.

Consequently, a tenant can authorize a Service Coordinator to have access to their file, and to specify which items in the file they wish to be made available as part of that authorization, including EIV.  A Service Coordinator should not have the carte blanche to review EIV records, which a Rules of Behavior might confer, in the absence of tenant authorization.

Keep in mind that if the Service Coordinator is assisting Mr. John Doe, and Mr. Doe gives authorization to disclose information about him that is in his tenant file, the Service Coordinator should not be given any information (including, but not limited to, EIV) about Mrs. Doe or other members of the Doe household. 

Just when I thought I had heard it all....

.....along comes something that genuinely surprises me.

Now, I know this is not all that uncommon.  But after 36 years in or around the business, and in my 21st year at NCHM, I've seen and heard a lot.  Some good, some bad, and some that seems to come from the former-planet-now-dwarf-Pluto.

Such was the case with the first eHotline message I got this morning.  A property manager informed me that he had been instructed that if a resident had not had a checking account for six months, he was to use the six month balance on the checking account that had been closed.

It is with all the humility and dignity I can muster that I respectfully share my response:

"WHAT????!!!!"

As far as I know, HUD hasn't issued any guidance to this effect, and I checked this morning.  Further, where in Title 24 of the Code of Federal Regulations (24 CFR) does it state that we use for calculations purposes assets that no longer exist? (the exception being disposed assets, of course).

The point of this post is not to point the fickle finger of blame.  It is, however, to state that it is this kind of thing to causes chaos, frustration, and in every other way can serve as an obstacle to running a housing assistance program in a sound manner that is in compliance with existing rules.

And it is to repeat my appeal to HUD: HUD Handbook 4350.3, Rev. 1 is in need of a change/update.  HUD's "Frequently Asked Questions," one of the most helpful things the Department created, is in need of review, revision and updating. 

I don't want to see a repeat of what happened to Public Housing.  The old HUD Handbook 7465.1 Rev. 2 was not updated for years; instead, a number of PIH notices were issued. In my opinion, this had some role -- whether it is was a significant factor can be argued -- in the problems that beset public housing. Handbooks are the lifeblood of compliance management, for good or ill, and to not update them regularly is to court disaster, in my opinion.

Another source of potential disaster is to make up rules that aren't there.  And if the rule is there, make sure it is widely disseminated.  Stealth is a good name for a military aircraft, but it is not the way to ensure compliance with HUD guidelines.