South Carolina State Housing Finance & Development Authority

1. Income Certification Training South Carolina State Housing Finance & Development Authority March 2013

2. Welcome • Introduction • Presenter: Brenda Johnson Compliance Manager CA/SHA • Required Regulations • Questions & Answers

3. How to Prepare • Today’s discussion is focused on items generally needed for an applicant to be approved/certified as income eligible at move-in • Calculations for Annual and Interim Certifications

4. Information needed by Managers • Income Verification • Verification of Assets • Verification of Child Support or lack of • Number of people in Household • Ages of household members

5. Income • Wage: Number of hours & hourly rate Employment Paid: Weekly x 52 Bi-Weekly x 26 Semi-Monthly x 24 (example: State twice a month) Monthly x 12 Yearly – Amount annual salary listed * Overtime – 1½ times current hourly rate (anticipated overtime must be noted or listed as none expected) * Salary & Tips– Should never be less than Minimum wage for number of hours worked

6. Employment and Income Data Available in the EIV System • Social Security Benefits (SS) • Supplemental Security Benefits (SSI) • Dual Entitlement Benefits • Medicare Premium information • Disability Status • New Hires (W-4) • Quarterly Wages for Federal & Non-Federal employees • Quarterly Unemployment Compensation Benefits

7. Verification of Income: • Four methods of verification are acceptable to HUD. Verifications shall be attempted in the following order: 1) EIV System with check stubs 2) Third-party verification (written or oral) 3) Review of documents provided by the applicant 4) Self-certification

8. Verifying Income • Income must be clear and accurate – not subject to question • If a verification shows salary, over-time , wage differential , bonus, or tips calculated incorrectly or subject to questions management must verify information with the person that completed the Income Verification form. The verification must be documented with whom you spoke, time, date, initialed and outcome of conversation. • In the event the employer would not complete the Income Verification – 4 to 6 or 6 to 8 pay stubs may be used to verify gross income. (Suggest 6 weeks consecutive paystubs) • Child Support – Must be verified for all children 17 & younger. Third Party verification from the court or if voluntary child support, from the parent or parents providing income. • Social Security – When Social Security or SSI is not available on EIV, income must be verified by use of a print out or Award letter

9. Income • Public Assistance – Must be verified on form sent to Public Service Provider (examples TANF & AFDC print-outs) • Unemployment Income – Verified by third party verification sent to Unemployment office or award verification letter sent to applicant • Pension or Annuity – Veterans, Federal & State Retirement benefits must be provided by provider and show gross amount of income (taxes, medical & etc. can be taken prior to amount listed) • Recurring Cash Contributions – Must be verified by provider • Alimony – If court ordered the court should provide verification. If voluntary the amount must be verified by third party. (In the event voluntary and spouse refuses to provide written documentation the HOH may sign a self declaration of income) • Zero Income – Any family member 18 years or older with no income should complete a Zero Income Verification

10. Income • Self Employment – Income should be verified by the applicants CPA and backed up with Federal Income Tax return provided by the IRS. • Management should never inform an applicant they are qualified until the application is approved and all screenings completed. Always inform applicants that additional information may or could be needed prior to final approval.

11. Assets • Checking – Verified by third party (bank) showing a six month average balance and the current interest rate. In the event the bank will not complete the verification the most recent 6 months bank statements can be used to verify average. • Savings - Verified by third party (bank, credit union, etc.) showing current balance and interest rate. If not returned use the most recent bank statement with interest rate noted. • CD’s - Verified by third party (bank, credit union, etc.) showing current balance and interest rate. • 401-K’s – Verified by third party provider. Provider must certify if the HOH has access to the 401-K account. (If the 401-K is only available at retirement or termination of employment the asset is not counted. If the applicant is 59½ or older they have access and the 401-K must be counted.)

12. Income Calculations: • Jennifer Boyd, a teaching assistant, work’s nine months per year and paid on an annual basis. She receives $1883.33 per month. Ms. Boyd has no savings but has a checking account with a six month average of $1089 at .25% interest. • She has a disabled son that receives $674 per month SSI. Ms. Boyd has a live-in-aide, that cares for her son while she works, that earns $400 per month. What is the gross household income? • What size unit does she qualify for?

13. Answer: Checking $1089 x .25% = 3. $1883.33 x 12 = $22,600. 674 x 12= 8,088. Annual Gross $30,691. A Live-in-aide’s income is not counted in household gross but they are used to verify occupancy. (persons per household)

16. Calculations: Tom Jones works with the Dept. of Corrections and earns an annual salary of $32,360. His wife is unemployed. They have an 18 year old daughter, a senior in high school who works 12 to 15 hours per week at Frankie’s Fun Park and makes $7.25 per hour. Their 20 year old son is currently unemployed, but hopes to return to work soon, he receives unemployment benefits at $107 per week. What is the total household income?

17. Answer: Mr. Jones Annual Salary $32,360.00 Mrs. Jones Income .00 Daughter’s Income 480.00 (13.50 hrs. x $7.25 x 52 =$5089.50) Son’s Income 5,564.00 (107 x 52) Household Gross $38,404.00

20. Calculations continued: • Jessica Stevens works at Wings and Things 40 hours per week at $2.50 per hour plus tips. Her employer completed her income verification as receiving salary of $5,200 plus tips of $6,240 for a total $11,440. She has two children, Marcus Sparks and Beth Stevens and receives child support from Bobby Stevens, for Beth, of $50 per week. Ms. Stevens pays childcare $145 per week. $11,440 plus $2600 = $14,040 Is the gross income correct?

21. Answer: • No and Why? • Annual salary plus tips do not equal minimum wage. • $7.25 x 40 hrs. x 52 wks. = $15,080 • + $2600 child support = $17,680 Minus Childcare $7540 & Dependents $960 • * Management did not verify child • support for Marcus Sparks

24. Calculations continued: • The employer for Ed Bowen, a construction worker, states he is paid at a rate of $9.50 per hour. He states the number of hours vary depending on weather and jobs available. Mr. Bowen has no checking or savings account. His roommate, Joey Todd does not work. Management contacts Mr. Bowen’s employer to verify hours and is told they are currently out of work but plan to start a new job next Monday. Management request Mr. Bowen’s annual salary for the past three years and told that his gross income in 2012 was $24,650, in 2011 was $29,512 and in 2010 was $23,450. • In March of this year Mr. Bowen received an inheritance of 5 acres of land in Texas which was left to him and his 2 brothers and 3 sisters. The land is valued at $120,000. What is Mr. Bowen’s annual income?

25. Answer: Salary - $24,650 + 29,512 + 23,450 (77,612) divided by 3 = $25,870.66 Assets - $120,000 Divided by 6 = $20,000 x 2% = 400 .00 (Assets over $5000 must be calculated for Imputed income at 2%. The higher of the two is used Actual Income from Assets or the Imputed amount) Mr. Todd – Zero Income verification .00 Gross annual income $26,271.00

28. Calculations continued: • Jeanne Hall, a 62 year old office assistant, works with the department of mental health. She earns an annual salary at $16,000. Ms. Hall has not applied for Social Security. • Ms. Hall has a savings account with a current balance of $401 with an interest rate of .25%. • She has a non interest checking account with a six month average of $1890. • Ms. Hall has a 401-K in the amount of $30,000 that earns interest at 2.25%. What is Ms. Hall’s Gross income?

29. Answer: • Salary $16,000.00 • Assets: Checking $1890 - Int. .00 Savings $401 - Int. 1.00 401-K $30,000 - Int. $675.00 $16,676.00 Why is her 401-K an asset?

32. Calculations continued: Patti Ware receives Social Security benefits. The award letter states her benefits are $1,240.60 per month and will been receiving $1,240 per month effective January 1, 2013. She also receives a retirement benefit from Belk’s in the amount of $117 per month. Ms. Ware has a checking account with a six month average at $983 and earns interest @.01%. She has a current savings account balance of $4354 and earns interest at .25%. Ms. Ware’s Medical expenses are prescriptions $264 monthly, AARP supplement $119 monthly, and a Lexington Hospital Bill of $3219 of which she makes payments of $150 monthly. What is her annual gross income? What about EIV – if this is n EIV she should use it not award letter

33. Answer: Income - SS - $1240.60 x 12 = $14,887.20 (must use cents noted in Award Letter) Retirement $117 x 12 = 1,404.00 Total $16,291.20 Assets - Checking $983 x .0% = $0.09 Savings $4354 x .25% = $10.89 $11.00 Total assets $5247 x 2% = $104.94 $105.00 Medical Expense Pharmacy $264 x 12 =$3,168.00 AARP $119 x 12 = 1,428.00 Hospital $150 x 12 = 1,800.00 $6396.00

36. Calculations: • Sherry Lever receives a contribution of $100 per month from her Mother for living expenses. Sherry has two children in daycare at a cost of $200 per week. She receives a weekly daycare voucher for $175 and she is responsible for the $25 balance each week. Ms. Lever is actively looking for employment. Ms. Lever does not receive child support. • Ms. Lever has no checking or savings. What is the question for the answer on the next slide?

37. Answer • Contribution $100 x 12 = $1200 • Childcare $25 x 52 = $1300 • Dependent $480 x 2 = $960 • Total Allowances = $2260 • TTP = $25 • UA check = $50 • Assistance payment = $745

40. Income & Asset Clarification: • Income and Assets: Note: Assets must show rate of interest. Some banks do not pay interest unless the client maintains a certain balance. Any account not receiving interest must be noted as such. Every verification, certification, or any follow up documentation must tell a story. Why you did, what you did and when you did it. Remember to include Who, Why, When, with a date and signature of staff member clarifying information. Calculators must be set for rounding at: up @.50 & down @.49.

41. Questions and Answers Many thanks to Luke Lukasewski, Angie Waller and Roxie Munn for their assistance in review of this presentation.

42. Contract Administration Luke Lukasewski, Director (803)896-8733 Brenda Johnson (803)896-8757 Linda Ware (803)896-8715 Sherry LeTempt (803)896-9007 • Contract RenewalsVouchers Sandra Martin (803)896-8740 Bruce Tant (803)896-8742 Loraine Trail (803)896-8762 Tammy Gallman (803)896-9334 Tracey Sweat (803)896-8755 • Special Claims Terry Powell (803)896-8748 Cheryl Longshore (803)896-8724 Rhonda Smith (803)896-9533

43. The End! • Thanks for taking part in class today hopefully you received some information and/or calculation skills that you can use on your property as well as share with others