MSHDA - Office of Housing Voucher Programs Policy and Procedures Manual

Chapter IX: Interim Re-Examinations

Effective: May 2010

Introduction

Certain changes in household income or family status generate a need for processing interim re-examinations. Participants must report any family size changes and increases in income immediately (within 14 days) except annual increases in SS, SSI, or pensions. All reported income changes that have a gross monthly income increase of $100 or more (the threshold amount for MSHDA) must be processed as an interim re-examination and become effective with a 30-day notice to the family of the change. Reported income increases that are under the threshold will not be processed as an interim re-examination unless a move occurs.

Changes to MSHDA’s payment standards should not result in an interim re-examination as payment standards can only be changed at an annual re-examination or move.

Section A: Income Change

All reported gross monthly income increases of $100 or more (the threshold) must be processed as an interim re-examination. Gross income increases of less than $100 per month will be disregarded (except for zero income entire households) until the next annual (or interim exceeding the threshold) re-examination. If the HA determines that the $100 threshold will not be exceeded, document the information on an Income Increase Threshold Worksheet (MSHDA 490) including written calculations demonstrating that the threshold will not be exceeded and forward document for inclusion in the official file. Do not process other reported increases under the threshold until move or annual re-examination, whichever occurs first.

If an unreported increase in income exceeding the threshold is discovered at the next annual re-examination, the participant must sign a Repayment Agreement (MSHDA 103). A Repayment Agreement must be executed and signed for zero income households who did not report income increases regardless of whether or not the threshold is exceeded.

Process reported income increases regardless of the amount for the following situations:

1. Zero-Income Entire Household

• Process all increases in income for zero-income households, regardless of the amount. A zero-income household is defined as a household in which no members of the family have earned or unearned income. A household with benefits or non-earned income (i.e. Social Security, child support, FIA, etc.) to minors (family members age 17 and under) is not considered a zero-income household. See Chapter IV for more detail.
• If unreported income is discovered for a zero-income household at the next annual re-examination, the participant must sign a Repayment Agreement (MSHDA 103) to pay back the inaccurate rent subsidy paid due to unreported income.

2. Tenant Request

Upon family request, process all interims regardless if threshold has been met. Note: Processed earned income increases benefit the escrow account for FSS participants. Follow procedures identified in Section C.

3. Fraud/Unreported Income

• Any HA suspecting or receiving notification of a discrepancy must verify it including reviewing allegations (i.e. complaints) about a participant’s unreported income.
• If a HA discovers unreported income when reviewing documents and it is verified the participant was unable or failed to report income in a timely manner (i.e. guardian didn’t notify HA, etc.), process increase with interim re-examination.
• Refer to Section B of this Chapter; Chapter IV, Income Verifications; and if appropriate, Chapter XXVIII. Processing Tenant Repayment Agreements.

4. Earned Income Disregard Disallowance Period

At the end of the 12-month allowance period, include 50% of earned income or all earned income (24 months) at end of the earned income disallowance period.

5. Co-Head/Spouse turns 18

When a minor co-head/spouse turns 18, they no longer qualify for the dependant allowance. Change the relationship code in Elite by selecting the correct choice from the pull-down menu which will remove the $480 deduction. Also include any earned income to household income. Process an interim re-examination/annual change.

Section B: Verification Procedures

1. Documents and Verifications

• After a tenant reports an income change or other change (i.e. no longer working, change in medical disability status, receiving unemployment compensation, etc.), which will require processing an interim re-examination, MSHDA does require verification from a third party source. This includes employer verification that the tenant is no longer working. Follow the third-party verification hierarchy and income verification process as outlined in Chapter IV, Income Verification Requirements. It may be necessary to pull an EIV Tenant Income Data (TID) Report to view historical income data for comparison.
• Forward the following forms to the participant:
  1. Household, Income, Asset, and Expense Declaration (MSHDA 1890).
  2. Certification of Live-In Aide Status (MSHDA 15) if applicable.
  3. Authorization to Release Information (HUD 9886) if applicable.
• Upon receipt of the completed forms, review the MSHDA 1890 to determine what additional verifications are necessary.
• Any items where an adult household member other than head of household indicates ‘no’ on the Declaration (MSHDA 1890) and signs below, the certification/ penalty language needs no further verification. The ‘no’ and signature provide adequate documentation that income/assets/expenses do not apply.
• If the entire household has zero income, refer to Chapter IV, Income Verifications, Zero Income for further instructions.
• If the gross monthly income threshold is not exceeded, the HA should complete the Income Increase Threshold Worksheet (MSHDA 490), check the “threshold not exceeded” box in the MSHDA USE area on the bottom of the form, sign and date. The original form must be forwarded to the DT for inclusion in the official MSHDA file.
• Enter/change data in Elite and approve the entry. Submit a Case Data Summary to the DT. If applicable, execute a Repayment Agreement.

2. No Response Procedure

• If the tenant fails to respond to a request for documents, or, verifications are not received from the third party source by the designated date (usually 14 days); send a Final Notice (MSHDA 14) requesting receipt of missing documents within 14 days (28 days total). If no response again occurs, then notify the landlord that assistance will be terminated via a Contract Termination Notice (MSHDA 95) and the tenant via a Program Termination Notice (MSHDA 1634b). The effective date of the termination must always be the end of a month with at least a 30-day notice to the landlord.
• If the tenant requests an informal hearing within the 10 days, refer to Chapter XXVI, Informal Hearings for procedures.
• If the tenant does not request an informal hearing within 10 days, a Case Data Summary (MSHDA 1344E), along with a copy of the MSHDA 95 and MSHDA 1634b, must be forwarded to the DT for termination. Follow termination procedures, Chapter XV.

Section C: Income Increases

The tenant must report all income changes to the HA within 14 days. Income changes that have a gross monthly income increase of $100 or more must be processed as an interim re-examination.

1. Effective Date

If the income threshold is exceeded and an increase in the tenant rent portion is required, the effective date of the rent increase for the family will be the first of the month following 30 days advance written notice to the participant via the Adjustment Notification (MSHDA 34). There is no pro-rating of the subsidy. If applicable, execute a Repayment Agreement.

2. Corrections

Upon notification, the HA must correct calculation income errors (i.e. wage increase not entered). If the tenant’s rent share increases, the HA must allow a 30-day notice (no pro-rating) before making the increase effective. State law requires a 30-day advance written notice to the tenant of all tenant rent increases.

Example of a possible correction needed:

• Utility Assistance Payments (UAP). The DT found an error, which causes the UAP to be decreased (i.e. UAP was $111; should be $44). HUD requires a 30-day notice to the tenant.

3. Notification

• Prepare and distribute an Adjustment Notification (MSHDA 34) at least 30 days in advance of the effective date.
• Submit a Case Data Summary (MSHDA 1344) to the DT along with all required documentation. Refer to the Forms Reference/Submission Chart (MSHDA 284).

Section D: Income Decreases

Process all reported income decreases regardless of the amount of decrease when a family reports a loss of income or assets, or an increase in expenses except when the family reports a loss of welfare benefits due to fraud, or a failure to participate in an economic self-sufficiency or work activity. Imputed welfare income is the amount of annual income not actually received by the family due to a welfare benefit reduction or sanction.

The family may dispute the imputed income and request an informal hearing. Refer to Chapter IV, Income, for more information.

Process decreases in income if:

• The decrease period is expected to last one month or more, provided that the decrease was not considered in the original calculation. Process this decrease via an interim re-examination.

Do Not process a decrease if:

• A lay-off period (or other break) was accounted for when calculating annual income, and a lay-off period/break occurs.
• The decrease is expected to last less than one month. For example: A decrease in income due to missing two weeks of work (with no pay during absence) because of illness, etc.

Document on a MSHDA 77 (for inclusion in the MSHDA file) that the tenant reported an income decrease; however, an interim was not processed.

1. Effective Date

Changes for decreases in income must become effective the first day of the month following notification (no pro-rating). Verification may be dated after the effective date. HA must verify only the reported changes in income.

Process all reported decreases other than the situations noted above regardless of the amount of the decrease and annual re-examination date. For example, process even a $10 reported decrease effective 30 days prior to the annual re-examination date. The intent of the program is to assist the family. Any reduction in Tenant Rent benefits the family.

2. Corrections

Upon notification, the HA must correct calculation income errors. If the tenant’s rent share decreases, the HA must process a correction back to the effective date of the transaction.

Example of Correction:

• An interim re-examination that has been calculated incorrectly - 5/1/05 interim with a tenant rent of $280 was processed. Correcting the error in the calculations changes the tenant rent to $97. Since the error results in a decrease to tenant rent, a new MSHDA 34 must be issued correcting the amounts for the 5/1/05 interim effective date.

3. Notification

• Prepare and distribute an Adjustment Notification (MSHDA 34).
• Submit a Case Data Summary (MSHDA 1344) to the DT along with all required documentation. (Refer to the Forms Reference – Submission Chart [MSHDA 284].)

Section E: Changes in Family Composition

Program applicants/participants are advised at the initial briefing (MSHDA 145) and mover’s briefing (MSHDA 139) that they are responsible to report all family size changes within 14 days either verbally or in writing. Process an interim re-examination to add or remove members of a household, unless the effective date coincides with the effective date for an annual re-examination or move. An interim re-examination must be performed if a Live-In Aide changes.

1. Adding Household Members

• The Tenancy Addendum (HUD 52641A)/HAP Contract requires that all additions to the household must have written approval. The family must obtain written approval from both the landlord and MSHDA to add new members to the household such as a new spouse, children, other relatives, friends, significant others. Adding a child by birth, adoption, or court-awarded custody to the family composition does not require approval from the landlord or MSHDA.
• A signed and dated letter from the tenant with a landlord approval statement which includes the landlord’s signature and date is an acceptable written approval. HA must verify landlord signature on the approval statement. Completion of an Adjustment Notification form signifies MSHDA approval.
• Adding members to a household also requires:
  1. Screening – The HA must perform all required screenings including criminal and sex offender screening for all persons age 18 or older being added to the family (including live-in aides). MSHDA cannot approve adult members who do not pass the screening criteria.
  2. Issuance of a New Voucher (HUD 52646) – If approved additional members increase the voucher eligibility size, execute a new voucher of the appropriate size effective with the next annual re-examination or move, whichever occurs first.
  3. Issuance of an Adjustment Notification (MSHDA 34) – Identify the new household members in the Additional Provisions section of the form, which signifies MSHDA approval of additional members.
  4. For Live-In Aides, the completion of a Certification of Live-In Aide Status (MSHDA 15).

2. Removing Household Members

• If the family size decreases causing a lesser voucher eligibility size, the HA must immediately notify the family in writing via the Family Size Subsidy Decrease form (MSHDA 147). This form includes an explanation of the decision, the circumstances under which the family may obtain a waiver, and informal hearing rights.
• If the removal of the household member is due to death, effective date of the change is the first day of the month following the date of death. Example, spouse dies on March 27. New househould/voucher size becomes effective April 1. HA must recalculate rents based on new income verifications. The interim re-examination would be effective retroactively.
• If a waiver is not requested or approved, decrease to the new eligibility size payment standard effective with the next annual re-examination or move, whichever occurs first.
• Removing members from a household requires:
  1. Issuance of a New Voucher (HUD 52646) – If the family size decrease reduces the eligibility size, execute a new voucher of the appropriate size at the next annual re-examination or move, whichever occurs first except in case of death. Death of head of household or family member requires change the 1^st of the month following date of death.
  2. Issuance of an Adjustment Notification (MSHDA 34) – Identify the members no longer residing in the household (or list current household members) using the Additional Provisions section of the form.

Section F: Contract Rent Increases

• After the initial lease term, with 60-days notice (HUD Contract requirement), and pursuant to lease renewal provisions and rent reasonableness criteria, the landlord may increase the Contract Rent.
• Process interim re-examinations for contract rent increases that do not coincide with annual re-examinations.
• If the landlord requests a written mid-term increase, the HA must review the lease to verify the landlord complies with the provisions identified in the lease. If the increase request complies with the lease renewal provision (and rent surveys support the increase), process the increase as an interim revision in Elite.
  1. If the renewal provision in the lease identifies a renewal term of month-to-month, the HUD Tenancy Addendum supersedes the lease provision and 60 days written notice is required. The landlord can increase the contract rent more than once in a one-year period with 60 days written notice prior to each increase.
  2. If the renewal provision identifies a renewal term of greater than 60 days, the Contract Rent may be increased (following the 60-day written notice requirement) only as designated in the lease terms (i.e. every six months, every year).

Section G: Subsidized Development Rent Increase

• Process an interim reexamination when a subsidized development has an approved rent increase that does not coincide with the annual re-examination. Upon proper notification to the HA by the subsidized development of the approved rent increase (versus request to approve), the HA will process the rent increase with an interim reexamination as of the increase effective date, even if the increase effective date occurs during the initial lease term.
• Document the rent increase by submitting a copy of the notification to the tenant of the increase, documentation of the rent increase approval by HUD, Rural Development, or MSHDA, an Adjustment Notification (MSHDA 34), a Case Data Summary (MSHDA 1344), and new rent comps.

  Note: If an HA is unable to give a 30-day notice to a tenant due to a delayed notice to the HA of an approved rent increase, the HA must call their RS to discuss appropriate action.

Section H: Zero HAP

If the interim re-examination change results in a HAP payment of zero, the family remains eligible for the program for six months. HA should check back at the end of six months and cancel the contract if the family is still at zero HAP. (Note: This cancellation could occur before the end of the HAP Contract). Follow zero HAP procedures identified in Chapter VIII, Annual Re-Examinations.

Section I: Repayment Agreement

If the family does not report a required change within 14 days of when the change occurs, the family will have caused an unreasonable delay in the interim re-examination processing and MSHDA will require repayment of excess assistance received.

• An increase in tenant rent will become effective retroactive to the date it would have been effective had the increase been reported on a timely basis. The family is liable for any overpaid housing assistance and must sign a Repayment Agreement or pay the debt in full. Refer to Section C-1 – Effective date for Increase.

If unreported income is discovered for a zero-income household at the next annual re-examination, the participant must sign a Repayment Agreement (MSHDA 103) to pay back the inaccurate rent subsidy paid due to unreported income.

Section J: Elite Procedure

See Elite User Guides for instructions on how to enter Interim Re-examinations in the Elite data system.

Section K: Applicable Forms