Hello everyone and welcome to Navigate's Tuesday Tip. I'm Pam and this week we're gonna take a look at verifications pre-HOTMA.

So again, we wanna remember that what do we verify? Everything, we verify household composition, dates of birth, social securities, names, relationships. We verify financial information that matters to us, income assets, expenses, and we verify any other relevant eligibility factors. So need for adapted unit.

The existence or category of a disability or citizenship status are all things that we're also going to need to verify.

Verification order is still frequently confused. There are still people out there who are doing traditional third party as their first method of verification. Remember that HUD now says reliable documents submitted by the tenant are okay. Those are your first line of verifications. It allows you to get things done a lot more quickly. Obviously with things like pay stubs, you wanna look at those closely, make sure there's nothing funky there.

If they look reliable, that's your first method of verification. You can also use safe harbor verifications if you accept those and that should be detailed in your selection plan. Those are things like 5059s from their previous housing or benefit read outs from other agencies but your tenant selection plans will determine whether and when you accept those things.

Pam Kazlauskas (01:44.474)
After those types of things, documents submitted by your tenant, then you're gonna go to traditional third party documentation, which is where you mail out or fax out something and it comes back. And then your last option, generally speaking, is going to be a self-certification. If you're gonna use self-certification, you need to be documenting the file as to why you didn't use one of the other two. So it should be things like I asked the tenant for documents,

didn't have anything, I sent the verification to the bank three times, it never came back, and therefore we asked the tenant. Now that is gonna change a little bit, remember, with Hotma, but we're talking pre-Hotma verification.

Important things to remember when you're talking verifications, with Social Security information, you're using the gross amount as income before any deductions. Use the pennies when you're doing your calculations. And the only time you're gonna adjust that amount is if there has been a recapture due to an overpayment. A garnishment you do not adjust for. But if Social Security has said, we are taking $100,

due to an overpayment, then you adjust the amount. With employment, generally speaking, again, this can change for Hotma, but right now you're looking at the most recent four to six pay stubs.

Most recent is important. Don't get pay stubs from six months ago. You want the most recent four to six. How many you accept in that range is largely a matter of owner policy. HUD says four to six. Your property management company may say four is fine. Another property management company may say, nope, we want six. That's gonna be spelled out in your policies.

Pam Kazlauskas (03:39.255)
And with bank accounts, you want the most recent six statements, or sometimes you can get five statements, but it's enough for you to get six balances to calculate. You're looking at the six most recent balances for a checking, and then you only need the most recent statement for a savings. Again, remember that's gonna change with HOTMA, but we are in the pre-HOTMA world currently.

with self-certification, you want to make sure you're documenting any efforts you've made to get the other types of verification first. You want a signature and date on that form. And it's always a good idea to include a fraud statement, some acknowledgement that the resident understands that providing false information to the federal government is a bad idea and can result in penalties. You can typically get that statement off any of your

pre-printed verification forms that's usually in there. HUD has language on their sample forms regarding providing false information. It's always a good idea to kind of draw up your own self-certification form with that notification in it so that if there is an incident later on, you can point to having advised the tenant that they were facing penalties if they provided false information.

Tax returns, when you're looking at tax returns, you want a copy of what was actually submitted to the IRS. So either have the tenant sign the copy that they're providing accurate information or something else. You want the tenant to somehow acknowledge that they are willingly providing you that information.

Again, we're talking about dot in the I's and crossing the T's here. Review all information that you're provided at submission, especially the application, and at the interview. So I wanna go through my applications and make sure it's complete before I put anybody on the wait list. And when I'm gonna interview them, I wanna go through that again to make sure that I've caught anything that I wanna ask questions about or any sources of income that I need information for.

Pam Kazlauskas (06:00.023)
be sure to ask the applicant about any consistencies on their application. For instance, if there's employment listed on the application, but they're not telling you about that or giving you information at interview, you wanna be asking about what happened to that employment.

If they give you statements and there's a regular deposit of $600 that happens every week, but you don't see anything that matches that, you wanna be asking about that. It doesn't necessarily mean that there's a problem. It could be something that they legitimately didn't know was income, but it also could be something they didn't wanna disclose to you that you have now found out about and need to ask about.

document any responses in writing so that you can explain anything that's inconsistent in the application. The most important part of what we do is documenting.

Any situations that are complicated or unusual, any documentation that the applicant still needs to provide, any inconsistencies, any discussions you had on the applicant's application and what was missing from it. Document that the applicant was given the handouts they were supposed to be given out. Most owner agents do this with an acknowledgement form. Some have applicants sign the front page of a handout. That's fine.

that shows someone looking at your file, you looked at any inconsistencies, you addressed it, and you gave the tenant all the information they were supposed to have. This is gonna make it much easier for you if there is an issue going forward. Good documentation is gonna include several important parts. Date, time, contact person. Details on what was said, signature or initials of staff.

Pam Kazlauskas (07:56.183)
If you include copies, copies should clearly be showing dates that they were provided or dates on the copy, you know, as of this pay period. You want the signature of the applicant or resident where appropriate. You wanna make sure these documents are noted with the time and date they were received, more importantly, the date when you're talking recertifications. And it needs to be understandable by anybody who looks at the file.

So if I come to your site and I'm doing a review, you want to make sure that I can follow this bizarre income situation that you have that it took you three weeks to figure out because there's a narrative there that tells me I asked for this form, as of this date I gave the tenant a notice, we asked for this, we finally got this, this is what we figured out as the calculation. You want your file to tell a story that's understandable by people who don't know your

tenant don't know your property. It needs to be as easy to follow as you can make it.

So here are some resources for verification. There's 4350.3, the HUD Occupancy Handbook. Chapter three is eligibility factors. Chapter five is gonna be income, assets, expenses, and calculating rent. Appendix three of that same 4350.3 has acceptable forms of verification. You can get all of these on HUD clips. I, at one point, when I was in direct property management, used to have an appendix three kind of tacked on the

next to me because it goes through all sorts of possibilities for what you can use for verification, which is really helpful if you have a short recertification time and you're not getting exactly what you need. It gives you other options for verifying things. We'd love to hear what you would like to see on the next Tuesday Tips, so please let us know. You can email Vicki or me and we will see you on the next one.