How to Report Household Changes Between Annual Certifications
To ensure that assisted households pay rents appropriate with their ability to pay, tenants must report changes of family income and composition for use in interim recertifications in accordance with HUD requirements. Before the pandemic, this recertification process was done before the household’s scheduled recertification date on an occasional basis. Since the pandemic began, you’ve probably seen more requests for recertifications for decreases in income. As a result of this trend, HUD has asked owners to expedite interim income recertifications as much as possible to trigger lower tenant rent contributions for struggling households and higher property subsidy flow to sites.
In a recent FAQ document from HUD’s Office of Public and Indian Housing on the Treasury Department’s Emergency Rental Assistance program, the office advised housing authorities to complete any pending or requested interim income reexaminations and to make the new tenant rent effective the month after the loss of income occurred. The focus on expediting the processing of interim recertification requests is a common theme among communications from HUD.
Now, as the job market begins to recover, you may find yourself processing more interim recertifications related to household income increases. To make sure you aren’t overlooking anything when it comes to interim recertifications, we’ll review tenant and owner responsibilities with regard to processing them.
Households may report interim changes by phone, written notice, or coming into the management office to report the changes. Tenants must notify the owner when:
- A family member moves out of the unit;
- The family proposes to move a new member into the unit;
- An adult member of the family who was reported as unemployed on the most recent certification or recertification obtains employment; or
- The family’s income cumulatively increases by $200 or more per month [HUD Handbook 4350.3, par. 7-10(A)].
Tenants may request an interim recertification due to any changes that may affect the tenant rent and assistance payment:
- Decreases in income, such as from loss of employment, reduction in hours, loss /reduction of welfare income;
- Increases in allowances such as medical expenses, and child care costs; and
- Other changes affecting the calculation of a family’s annual or adjusted income such as a family member turning 62 years old, becoming a full-time student or, becoming a person with a disability [HUD Handbook 4350. 3, par. 7-10(B)].
When processing an interim recertification, the owners must ask the tenant to identify all changes in income, expenses, or family composition since the last recertification. The owner needs to verify only those items that have changed. And upon receiving a tenant request for an interim recertification, the owner must process a recertification of family income and composition within a reasonable time, which is only the amount of time needed to verify the information provided by the tenant. Generally, this should not exceed four weeks [HUD Handbook 4350.3, par. 7-11(C)].
Changes in family composition. The owner must screen the proposed additional person, including live-in aides, for drug abuse and other criminal activity, including a state lifetime sex offender registration check. The owner must also obtain the new household member’s Social Security number (SSN), unless the household member doesn’t contend eligible immigration status or is an individual age 62 or older as of Jan. 31, 2010, and doesn’t have a SSN but was receiving HUD rental assistance at another location on Jan. 31, 2010 [HUD Handbook 4350.3, par. 7-11(C)(1)].
The owner must apply additional owner-established screening outlined in the property’s Tenant Selection Plan. In the case of live-in aides, the owner-established screening criteria may also be applied, except for the criteria to pay rent on time.
Increases in a family’s cumulative income of $200 or more a month. HUD requires households to report to you if their income increases by more than $200 a month [HUD Handbook 4350.3, par. 7-11(A)(2)]. Perform an interim recertification whenever this occurs. This might occur, for example, if an adult household member starts working more hours at her job.
However, if a tenant reports any other change along with an increase in income that does not increase the household’s cumulative income by $200 or more a month, the owner should not include the increase in income in processing the interim recertification.
Increases in allowances. Households may request an interim recertification due to changes in allowances [HUD Handbook 4350.3, par. 7-11 (A)(3)]. HUD allows deductions from household income through five allowances: the medical expense allowance, the disability assistance allowance, the elderly household allowance, the child care assistance allowance, and the dependent allowance.
You must perform an interim recertification when the amount of any allowance a household is entitled to increases or when a household becomes eligible for a new allowance. For example, perform an interim recertification if a household gets a medical expense allowance and those expenses increase or if a household becomes eligible for a child care expense allowance. Even though they’re not required to, households will often report expenses that will increase an allowance or make them eligible for a new one, because their rent will often be reduced as a result.
Changes in citizenship or eligible immigration status. Owners must process an interim recertification if a tenant reports a change in citizenship or eligible immigration status of any family members [HUD Handbook 4350.3, par. 7-11(A)(5)]. HUD rules say that only households comprised entirely of U.S. citizens or certain eligible noncitizens such as a permanent resident alien can get full assistance payments. Perform an interim recertification when there’s a change in citizenship or eligible immigration status of any household member.
Households are likely to report to you when a household member changes from an ineligible noncitizen to an eligible noncitizen or U.S. citizen, even though the HUD model leases don’t require them to do so. Once a household member becomes an eligible noncitizen or U.S. citizen, the member becomes eligible for assistance, which will often result in a reduction in the household’s rent.
Household income decreases. When a household’s income decreases, you should normally perform an interim recertification. However, under certain circumstances, you may refuse to process an interim recertification when the tenant reports a decrease in income.
You may refuse to perform an interim recertification when a household’s income decreases if the decrease is a deliberate attempt to avoid paying rent. If the household deliberately caused its income to decrease to avoid paying rent, you don’t have to perform an interim recertification [Handbook 4350.3, par. 7-11(D)(1].
But it’s hard to prove that a household acted deliberately to get a rent reduction. And unless you have solid proof of this, it’s best to process the interim recertification. If you refuse to process it and later must sue a household for nonpayment of rent, you could have trouble winning your case without solid proof that the household’s actions were deliberate. Consult your attorney for what courts in your area might see as solid proof.
Another justification for refusing to process an interim recertification is if the decrease will last less than a month. If the household’s decrease in income will last for less than a month, you don’t have to perform an interim recertification. But you must get “confirmation” of the length of the decrease. Also, you must have a policy of refusing to perform an interim recertification whenever any household’s income decreases for less than a month [Handbook 4350.3, par. 7-11(D)(2)].
For example, say you ask an employer to verify that the household member was laid off. The employer tells you that that the household member will be laid off for only two weeks. In this instance, you could refuse to perform an interim recertification if your site has a policy of refusing to perform one when any household’s income decreases for less than a month.
Processing Interim Recertifications
When processing an interim recertification, the owner must conduct an interview with the tenant to obtain information on the reported change and review and ask if there have been other changes to family composition, income, assets, or allowances since the most recent certification. The owner will obtain third-party verification of the income or other facts reported as changed since the last recertification and maintain documentation in the tenant file [HUD Handbook 4350.3, par. 7-12(A)].
The EIV system must be used at the time a tenant reports a change in employment or income to determine if any information has been provided by the employer or if the tenant had unreported income. Changes in the tenant’s rent and assistance payment will be documented by obtaining required signatures on the HUD-50059 and maintaining the original copy in the tenant file. The tenant information will be updated when the certification is transmitted to TRACS.
Effective Date of Interim Recertifications
The owner must provide the tenant with written notice of the effective date and the amount of the change in Total Tenant Payment (TTP) or tenant rent resulting from the interim recertification [HUD Handbook 4350.3, par. 7-13(A)]. If the tenant complies with the interim reporting requirements, rent changes must be implemented as follows:
- Rent increases. The owner must give the tenant 30 days' advance notice of the increase. The effective date of the increase will be the first of the month commencing after the end of the 30-day period.
- Rent decreases. The rent change is effective on the first day of the month after the date of action that caused the decrease. A 30-day notice is not required for rent decreases.
If the tenant does not comply with the interim reporting requirements, this will most likely result in a repayment agreement and the owner initiating an interim recertification and implementing rent changes as follows:
- Rent increases. Owner must implement the increase retroactive to the first of the month following the date that the action occurred.
- Rent decreases. Rent decrease must be implemented effective the first rent period following completion of the recertification.