Keep Household Files Complete and Current

Not only is it a smart management practice to keep your household files up-to-date and complete, but it's also something that HUD expects you to do. And not just in time for an occupancy review or audit, but all of the time.

Sloppy files will certainly raise a red flag during a formal review, signaling that you may not know what is needed to be in compliance. On top of that, messy or incomplete files can create headaches for you and your staff in the day-to-day operations of your site.

Not only is it a smart management practice to keep your household files up-to-date and complete, but it's also something that HUD expects you to do. And not just in time for an occupancy review or audit, but all of the time.

Sloppy files will certainly raise a red flag during a formal review, signaling that you may not know what is needed to be in compliance. On top of that, messy or incomplete files can create headaches for you and your staff in the day-to-day operations of your site.

Who Reviews and Why

As part of your annual occupancy review, your contract administrator or HUD takes a sampling of your household files and examines them. You also could be asked to provide access to files if your site is part of an audit by HUD's Office of Inspector General.

The reviewer usually pulls a variety of files—such as those for applicant households, new households, households with dependents, households on your waiting list, etc.—and checks for required documents and information. Are items missing? Does the file contain information that should not be there? Are documents in the right chronological order?

Whenever your household files are reviewed, if significant problems are identified, it's very likely that the reviewer will want to dig into files for other years and/or more files from the same year. The contract administrator or HUD reviewer will be searching for a pattern of mistakes or missing documents. Such a pattern is sure to hurt your site's rating in your occupancy review. As a result, you could face a total review of all files as well as another review before your next annual review—both of which mean extra work and hassle for you and your staff.

Use Checklist to Ensure Completeness

HUD's Management Review Questionnaire, Part C—Leasing and Occupancy, Question 28, asks the reviewer: “Are tenant files organized, properly maintained, and secured in a confidential manner? Do tenant files contain all the necessary forms and documents? Are these signed by the tenant and the owners, as required?” [Handbook 4350.5, Appendix 15]. The Questionnaire also notes for the reviewer the typical documents found in files: signed application, income verifications, signed lease, lease addenda, security deposit receipt, recertification forms, unit inspection forms, and household correspondence, including complaints and requests for service.

To make sure your files contain all the necessary documents and information, you can use our Model Form_Use Checklist to Ensure Household Files Are Complete. Items are grouped by categories, and include Handbook references as appropriate.

10 Tips for Avoiding the Most Common Mistakes in Household Files

Neat and complete household files demonstrate professionalism, says Amanda Atkins, who provides site management and compliance consulting services. “Mistakes can give the impression that you don't know what it takes to be compliant,” Atkins points out.

Sloppy files not only raise a red flag for reviewers, they can make your job tougher when it comes to day-to-day management tasks. “One of the most important things that can be done for the file is organization,” says housing compliance expert Mark Chrzanowski. “If a file is well organized, in good order with everything fastened in its place, it is easier to audit.”

Atkins and Chrzanowski offer the following tips for avoiding the most common errors they see with household files.

Tip #1: Double-check signatures and dates. Missing signatures and dates are the most common errors in household files, Atkins and Chrzanowski agree. Such oversights can be very costly in a review, Atkins cautions, dropping your overall management and occupancy review (MOR) points. “It looks like management is deficient and does not have knowledge of compliance,” she says.

Tip #2: Be sure all information can be clearly understood. “The other most common error is missing, incomplete, or illegible information,” Chrzanowski says. “Any information that is not clear and easily understandable should be clarified with the source and documented in the file.”

Tip #3: Check for initial recertification notice. “One of the common mistakes I see is that the initial notice for recertification is not in the file,” Atkins says. “It's there for move-in, but not all recertifications. It's an easy step for a manager to do, but it doesn't always get done.”

Tip #4: Don't file information you should not have—not even temporarily. Your household files should never contain anything that includes a medical diagnosis, Atkins and Chrzanowski warn. As an example, Atkins uses information about a household member's disability. “You can have information that he needs a certain type of unit due to his disability, but not specific information about the disability,” she explains. “If you use a standard template to verify the disability with the medical provider, then you won't acquire information you shouldn't have.”

A key issue with any such information being in a household file has to do with fair housing rules. If you have information on an individual's disability, for instance, it could appear that you treated the person differently in your housing decisions because of it.

Another example of information that could be in a household file, but should not, is anything on an individual who does not live in the household. For example, Atkins says, you may have gathered information on someone who was going to be part of the household, but never moved in.

Tip #5: Avoid altering third-party verifications. You should not modify any documents you receive from third parties for verification of household information. If you have to change something on a document you have been given by a third party, be sure to put a detailed note in the household file explaining what you changed and why, Atkins advises.

Tip #6: Take care with financial information. While you must gather certain financial information about households for certification and recertification, there are some things that should not be part of the file. For example, says Chrzanowski, you should not place copies of a household member's saving bonds in the file.

A problem Atkins sees with financial information is a failure to use a six-month average for the value of checking and savings accounts. “Often we see just a copy of a recent or current month's statement,” she says. “We still see managers who don't get the six month's average.”

Tip #7: Ensure verification of Social Security number. As Chrzanowski points out, Social Security numbers must be verified—and proof of the verification must be in the household file—before an applicant can be housed. Atkins finds that some managers put copies of the Social Security card in the file. Her recommendation is not to do that, but rather to verify the number and document how you did so. (HUD lists documents that can be used for Social Security number verification in Handbook 4350.3, Appendix 3.)

Tip #8: Incorporate EIV reports as required. With mandatory use of the EIV system came requirements for certain reports from EIV to be placed in household files. Among them, says Chrzanowski, are the existing tenant search that's run before move-in and the identity verification report, as well as the new hire and income verification reports that are run 90 days after move-in.

Atkins finds that her clients still are getting accustomed to EIV and the required reports; she often finds the reports are not yet in the files. Some HUD notices have not been clear about the requirements, she believes. “MORs will include findings about missing EIV reports, so that is problematic,” she says.

Tip #9: Look for lease addenda. Any addenda that are part of your lease must be in the household file, with the necessary signatures. Both Chrzanowski and Atkins find that the Violence Against Women Act acknowledgement is one that is often missing.

Tip #10: Schedule periodic spot checks. Atkins tells managers her top tip for keeping on top of household files is to do a spot check once a year. “Don't check them just when you know a review is coming up,” she says. “Do it at different times of the year.”

Chrzanowski advises getting a fresh set of eyes to check over the files. “The best tool I have found in maintaining an organized, complete, and accurate file is peer review,” he says. “If one person works a file, another person audits it. The extra pair of eyes is more likely to spot errors than someone who has been working with the file for a period of time. Using this check system has greatly reduced errors and improved MOR ratings for those managers that have implemented the audit system. It's easy to do,” he adds, “and costs the site nothing but a few moments per file.”

The bottom line is organization, whatever your system is, Chrzanowski stresses. “When it comes to MORs, if the file is organized, the reviewer can find what he's looking for and he's less likely to look at every scrap of paper in the file,” he says. “If he has to hunt for what he wants, he's looking at more parts of the file than he would if what he wanted was right where he needed it to be. Less scrutiny equals fewer documented errors equals better ratings.”

Insider Sources

Amanda Atkins: Owner, Atkins Consulting Professionals, 2135 Arthur St., Eugene, OR 97405; (541) 683-1500;

Mark Chrzanowski: Compliance Software Administrator, Gene B. Glick Co., Inc., 8425 Woodfield Crossing, Ste. 300W, Indianapolis, IN 46240; (317) 469-5885;

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