How to Verify Cash Value, Income of Foreign Bank Accounts, CDs
In HUD-assisted programs there is no asset limit for participation. However, the definition of “annual income” includes net income from family assets. And net family assets include monies held in savings and checking accounts in the United States or abroad. As a site owner or manager, you must ask the resident you are renting to whether he has a bank account (such as a savings account, checking account, money market account) or a certificate of deposit (CD) in a bank located in a foreign country. If it turns out that the resident has a foreign account, you’ll need to know how to verify its cash value. If you don’t know the rules, you could end up miscalculating household income and risk renting to an over-income household.
HUD Handbook 4350.3 does not specifically tell you how to verify the cash value or actual income for bank accounts or CDs in foreign banks. But you may use the same verification methods that you use when verifying these assets in U.S. financial institutions, except that you must take some additional steps. We will explain the basics of verifying bank accounts and CDs. And we’ll give you three additional steps you must take if a household’s bank account or CD is in a foreign bank.
For each asset a household owns, including bank accounts and CDs, you must verify the asset’s:
Cash value. This is the asset’s current market value less reasonable expenses that would have to be incurred to turn the assets into cash [Handbook 4350.3, par. 5-7(C)(1)(a)]. For example, if a CD is worth $500 but the household would have to pay a $40 penalty to withdraw the balance before a certain date, the CD’s cash value would be $460.
Actual income. This is the actual income that the asset is expected to earn over the next recertification year. For example, if a $1,000 CD has a fixed interest rate of 2 percent per year, the CD’s actual income would be $20 (2% x $1,000).
You may verify the cash value and actual income of a bank account or CD by:
- Written third-party verification (such as from financial institutions, stock brokers, or attorneys);
- Oral verification (such as asking a bank manager for the bank account’s cash value and actual income, and carefully documenting the information you get in the file). For specifics on how to document oral verification, see Handbook 4350.3, par. 5-18(C);
- Reviewing documents provided by the applicant (such as examining a bank account’s passbook or a CD’s quarterly statement); or
- Getting a notarized statement or signed affidavit from the household affirming the cash value of the household’s assets and its actual income from the assets [Handbook 4350.3, app. 3].
Take Additional Verification Steps
The verification basics, above, apply to foreign bank accounts and CDs as well as to domestic ones. But when verifying foreign bank accounts and CDs, you must take three additional steps:
Step #1: Explain what HUD is. Usually, when verifying a bank account’s or CD’s cash value and income with a third party, whether with a verification form or orally, you would explain who you are, why you need the information, and in what form. When contacting foreign banks, it is especially important to give this explanation clearly and to explain what HUD is.
A foreign bank may not know what HUD or a HUD-assisted site is and may never have gotten a request for financial information from such a site before. You are much more likely to get the information if the bank understands why you are asking for it.
To give you an idea of the additional verification explanation you should offer to foreign banks on a form or orally, here are some paragraphs from HUD’s model verification forms. See Appendix 6 of Handbook 4350.3, which states:
The person referenced above has applied for housing and assistance under a program of the U.S. Dept. of Housing and Urban Development (HUD), a department of the U.S. government that provides housing assistance to low-income persons. HUD requires us, as the housing owner, to verify all information that is used in determining this person’s eligibility or level of benefits.
The household member has informed us that he or she has an account at your bank. We ask your cooperation in providing us with the information requested.
Step #2: Ask foreign bank to convert asset’s value to U.S. dollars. Whether you’re getting written or oral third-party verification, ask the foreign bank to convert both the cash value and actual income into U.S. dollars. If you’re getting a written verification, add this request to the verification form you send to the foreign bank. If you’re seeking an oral verification (that is, you’re calling the foreign bank), ask that the foreign bank convert the asset’s cash value or income into U.S. dollars.
You need the asset’s cash value and actual income in U.S. dollars so you can total the assets with any other assets the household may own, and correctly calculate household income.
Practical Pointer: You may want to tell a foreign bank that it can return the verification form and/or information by electronically. This will be easier for the bank and more prompt for you than mailing. But keep in mind that HUD views faxed information as most reliable if you and the verification source agree in advance that the source will use this delivery method and if the fax includes the source’s name and fax number [Handbook 4350.3, par. 5-13(B)(2)(a)]. Similar to faxed information, information verified by email is more reliable when preceded by a telephone conversation and/or when the email address includes the name of an appropriate individual and firm. And information verified on the Internet is considered third-party verification if the owner is able to view web-based information from a reputable source on the computer screen. Use of a printout from the Internet may also be adequate verification in many instances.
Step #3: Do conversion yourself, if necessary. If a foreign bank does not or will not convert the asset’s cash value and actual income into U.S. dollars, you’ll have to do it yourself. You can use find currency exchange rates online.
Conversion date. Handbook 4350.3 doesn’t tell you the date on which you should convert the value of the asset into U.S. dollars. It’s best to do this as of the date the asset’s cash value or projected annual income was verified.
For example, suppose a Canadian bank verified the cash value of a household member’s savings account in Canadian dollars on March 15, 2017. Ideally, you would convert the balance of the account from Canadian dollars to U.S. dollars using the conversion rate as of March 15, 2017, even if you didn’t get the verified balance amount from the Canadian bank until later.
Some websites allow you to enter a set dollar amount in one currency and will convert it into any other currency for you as of a particular date. Other websites give you an exchange rate only as of a particular date, and you have to do the math yourself.
Document how you converted the currency. For example, if you used a currency exchange website to convert the currency as of a particular date, print out the screen showing the conversion. Put a copy of that printout in the household file, along with a short memo to the file explaining what you did.