Applicant to Resident 1. Initial Interview 2. Processing the
Application 3. Pre-Qualification/Estimating Gross Income 4.
Verifying Information 5.Completing the Tenant Income
Certification
Slide 6
The Initial Interview
Slide 7
Three Reasons To Have A Sit Down Interview At Application
Creates A Personal Experience Allows You To Clarify Questions The
Applicant May Have Saves You Time
Slide 8
Processing The Application
Slide 9
Look For Conflicting Information Anticipating Employment/
Claiming Zero Income Having A Checking Or Savings/No Assets
Discrepancies With Student Status
Slide 10
Common Findings 1.Qualifying a household with a minor as the
head or co-head 2.Discrepancies between the credit report and
application 3.Household members that are 18 years old not being
listed as an adult when they are still a dependent in the household
4.Not counting a qualified absent household member correctly
Slide 11
Pre-Qualification/Estimating Gross Income
Slide 12
Does Our Applicant Possibly Qualify? Is The Households Gross
Income Under The Max? Does The Household Violate The Student
Rule?
Slide 13
Time To Verify!
Slide 14
Three Forms of Verification Third Party (Attempt Required)
Second PartySelf Certification
Slide 15
Third Party Verification Form Must Go From Management, To
Source, Then Back To Management All Questions On The Form Need To
Be Answered If A Question Is Left Unanswered, It Must Be Completed
With A Clarification Form EIV is not a valid form of third party
verification for tax credit
Slide 16
Whats Missing? How many items are missing from the employment
verification? What are they?
Slide 17
Second Party Documentation Pay StubsAward LettersBank
StatementsLegal Documents
Slide 18
When To Use Second Party Documentation 1.After attempting 3 rd
party verification for a minimum of 2 weeks 2.When verifying Social
Security 3.When a third party refuses to complete the form
Slide 19
Self Certification IHFA does not accept Self Certifications of
income or assets with 2 exceptions: Self Employed Persons Under
$5000 in assets
Slide 20
When To Use A Self Certification Here are some examples:
1.Pregnancy 2.Non-Receipt of Child Support 3.Zero Income 4.Zero
Assets
Slide 21
Break Time!
Slide 22
Calculating Income
Slide 23
Employment Verification Which is greater, the standard
calculation or year to date earnings?
Slide 24
Employment Verification for Merrill Lynch $7.20*30hrs*37wks =
$7992 $7.30*30hrs&15wks = $3285 $ 11,277 OR YTD Earnings from
1/1/2008 thru 2/8/2008 is $1,586 So $1,586 / 6wks = $264.33 per
week $264.33 * 52wks = $13,745.33
Slide 25
Social Security & Recurring Income What is the annual
income of each source?
Slide 26
Social Security for Goldman Sachs $443.30 X 12 months =
$5319.60 Recurring Cash Contribution $3000 Annually
Slide 27
Total Household Income Employment - $13,745.33 Social Security
- $5,319.60 Recurring Income - $3,000 Student Income - $0 Total
Income $22,064.93
Slide 28
Common Findings 1.Clarifications do not accompany third party
verifications that have missing information 2.Social Security COLA
is added to current year award letters 3.Second party documentation
does not contain enough information 4.Year-to-date earnings not
being calculated 5.Lack of zero income/anticipated income
affidavits 6.Child support calculations 7.WHITE OUT
Slide 29
Questions On Income Calculations
Slide 30
Calculating Assets
Slide 31
Income From Assets (Bank Accts.) What is the income from both
the checking and savings accounts?
Slide 32
Morgan Stanley & Merrill Lynchs Assets Checking Account6
month Average = $12,932.40 $12,932.40 X 0.0% = $0.00 Savings
Account-Current Balance = $5001.50 $5,001.50 X 2.5% = $125.04
Slide 33
Cash Value of Real Property What is the Cash Value of the
House?
Slide 34
Calculating The House House current market value per tax
assessment: $531,500 Is there a mortgage on this property? No To
find cash value of house multiply FMV by 10% $531.500 X 10% =
$53,150 Subtract the cost to convert to cash (10%) by the houses
FMV $531,500 - $53,150 = $478,350
Slide 35
Total Income From Assets Asset Income from Asset Checking =
$12,932.40 $0 Savings = $5001.50 $125.04 Real Estate = $478,350 $0
Total = $496,283.90 $125.04 Multiply by total assets by the
passbook rate of 2%. $496,283.90 X 2% = $9925.68 The HIGHER of the
two calculations is used for the households qualification
Slide 36
Common Findings 1.Using current value on a checking account
2.Filling out the Under $5000 Asset form incorrectly 3.Using
previous year information on IRAs, stocks, etc. 4.Disposing of
assets for less than fair market value 5.Not following up on the
interest rate for each account when over $5000 6.WHITE OUT
Slide 37
Questions About Assets
Slide 38
Tenant Income Certification
Slide 39
Slide 40
Slide 41
Dates, Dates, Dates The move in TIC should be signed the day
the applicant takes possession of the unit. The TIC can not be
completed prior to receiving all verifications. The move in lease
date should match the move in TIC date.
Slide 42
Common Findings 1.Missing/incorrect BINs 2.Missing/incorrect
income and rent limits 3.Rental assistance line not completed 4.Tax
credit & HOME boxes not marked appropriately 5.Full time
student status incorrect per household member (K-12) 6.Assets not
listed on TIC correctly 7.Income listed under wrong
column/combining income 8.Effective dates and signature dates
incorrect
Slide 43
Adding A Household Member Post M/I
Slide 44
The Sister Joins The Household Shortly after your new residents
move in, you notice someone coming and going from the unit on a
constant basis that was not on the Certification and did not sign
the lease. You inquire with the resident who this new person is and
find out a relative has joined the household. It has only been a
few weeks after they certified for affordable housing. What do you
do?
Slide 45
Re-qualify The Household 1.Have new household member complete
an application. 2.Verify income and assets. 3.Add income of new
resident to original move in income. 4.Does this household still
qualify for affordable housing?
Slide 46
Income Breakdown 1.Unemployment Compensation $150 X 52 weeks =
$7800 2. Student Income - $16,000 $14,080 = $1,920 3. Bank
Verification Checking $855.43 X 0% = $0 Savings - $603.38 X 2% =
$12.07 CD - $11,000 X 4% = $440 CD - $10,000 X 4% = $400 Income
from Assets= $852.07
Slide 47
Does The Household Still Qualify? Initial Households Qualifying
Gross Income $31,990.61 New Household Members Income $ 10,572.07
New Total = $42,562.68 Max Income For 5 People = $39,480 The
household no longer qualifies as low income.
Slide 48
Questions????????
Slide 49
LUNCH BREAK
Slide 50
Welcome Back
Slide 51
Re-Certification 1.IHFA is still requiring re-certifications on
all households, but is currently researching the 100% waiver.
2.Re-certifications must be completed annually based on the
residents move in date. 3.The effective date of a timely re-
certification is the anniversary of the move in date.
Slide 52
What To Do With A Re-certification The first year
re-certification is the best time to look for tenant fraud by
comparing the re- certification paperwork to the original move in
documents. Example: Resident certifies that they will not be
seeking employment and less than two months later they obtain
employment. At re- certification you find this on the employment
verification. You would need to go back and see if this income
source would have disqualified them for affordable housing.
Slide 53
Due Diligence and Tenant Fraud IHFA can not emphasize enough
the importance of having an in-depth, all- inclusive application to
cover owners and management from non- compliance. The IRS has
stated that as long as O/As ask the appropriate questions at move
in, then any findings are considered tenant fraud if those
questions were answered untruthfully by the resident. Refer to Ch.
25 of the 8823 Guidebook
Slide 54
Questions
Slide 55
Student Status Vs. Student Income
Slide 56
Student Status 1. The IRS defines a full time student as anyone
that attends a educational institution for 5 or more months in a
CALENDAR year. (K-12 included) 2. Full-time student status is
defined by the educational institution being attended. 3.All adult
full-time students must have their status verified by a third
party. (It is highly suggested to verify PT also)
Slide 57
Household Of ALL Full-Time Students Households that consist of
all full-time students do not qualify for Affordable Housing UNLESS
they meet ONE of the four exemptions: 1.They are receiving
assistance under Title IV of the Social Security Act 2. They are in
a job training program receiving assistance under JTPA or a similar
program 3. They are a single parent with children all of whom are
students and such parents and children are not dependents of
another individual. New Revenue Ruling 4. Married and able to file
a joint tax return
Slide 58
Student Income What Income Counts? Grants & Scholarships
What Income Is Excluded? Loans When Dont You Count A Students
Income? When They Are Over 23 WITH Dependents
Slide 59
NAUR & Miscellaneous
Slide 60
NAUR or the140% Rule 1.The 140% rule is a building or BIN rule.
2.The rule states that once a households income exceeds 140% of the
max income limit, the next available unit must be rented to a low
income household. 3.A 100% affordable property should not be
affected by this rule as the next unit is always to be rented to a
low income household.
Slide 61
Example Low Income 2 Bedroom Low Income 2 Bedroom Market 2
Bedroom Low Income 2 Bedroom Market 1 Bedroom Low Income 1 Bedroom
Market 1 Bedroom Low Income 1 Bedroom
Slide 62
Swapping Unit Percentages 1. Swapping unit percentages is a
good way of keeping households under 140%. 2. Swapping percentages
can be done throughout the property, but must match unit size per
the propertys regulatory agreement. 3. The only time a Market unit
can be swapped for a low income unit is when it is in the same
building/BIN and the market unit is the same size or smaller.
Slide 63
Vacant Unit Rule The vacant unit rule states that affordable
units can be vacant and still credit eligible as long as the units
are rent ready and reasonably being marketed. Any unit not turned
in 30 days will be considered a violation of the VUR by IHFA.
Slide 64
Extended Use Agreement After the propertys initial 15 year
compliance period, the extended use agreement begins. This
agreement is between the owner and IHFA. A couple changes that
start during the 16 th year are: - Reviews are done every three
years and only 10% of units and files will be looked at. - Annual
monitoring fees are reduced to 2/3 their original amount.
Slide 65
Common Findings 1.Full-time employee units not being utilized
properly. 2.A full-time employee unit is considered common space
and an owner can not charge for its use. 3.Transferring a resident
that has exceeded 140%.
Slide 66
Break Time
Slide 67
Tax Credit With HOME When layering the HOME program with tax
credit, some additional rules apply. Here are three major
differences between HOME & Tax Credit: 1.HOME requires a 1 year
initial lease term and specific HOME lease verbiage. 2.HOME
requires 3 rd party verification of all household assets. 3. HOME
requires all household members be legal residents of the United
States and provide a copy of their Social Security card or resident
alien card.
Slide 68
HOME Properties HOME properties must use the same income and
asset procedures as tax credit. HOME income limits are not always
the same as tax credit income limits and must be referenced
separately. HOME rents are calculated based on their designation as
either High HOME or Low HOME.
Slide 69
High and Low HOME Rent Calculations High HOME: Maximum HOME
rents are the lesser of: the Section 8 Fair Market Rent OR 65% rent
amount per bedroom size. Low HOME: Maximum HOME rents are the
lesser of: 30% of the tenants monthly income OR 50% rent amount per
bedroom size. CFR 24 Section 92.252(f)
Slide 70
Low HOME Rent Calculation A households income is verified to be
$12,000 annually. $12,000 / 12 months = $1000 $1000 X 30% = $300
The 50% rent limit for this county is $525 What rent amount do you
use?