Presentation Transcript

1. Compliance and Your Property

   Best practices in meeting the ever increasing regulatory demands forced on the affordable housing industry.
2. Set Aside Requirements
3. 100 Unit Development Set-aside Requirement: - 40% of the units @ 60% of the Area Median Income, adjusted to family size - How many units must be occupied to meet this requirement? 40% x 100 units = 40 Example
4. Example Set-Aside for Housing Credit and MMRB Set-Asides Housing Credit: 100% @ 60% MMRB: 30% @ 35% and 70% @ 60% 100 Unit Development 30% @ 35% x 100 units = 30 units 70% @ 60% x 100 units = 70 units
5. Requirements in the EUA or LURA Developmental amenities and unit features Public Policy Criteria Tenant Programs Financial Programs Computer Labs Health Care Frequency Set-asides
6. Where would you find the set-aside requirements for your Development? MMRB Program HOME Program Land Use Restriction Agreement (LURA)
7. Housing Credit Program Extended Use Agreement (EUA) or Extended Low Income Housing Agreement
8. Application Qualify the Applicants Fully Completed and Executed List all Occupants All Sources of Income Child Support Sworn Declaration
9. Application Total Assets and Asset Income Student Status Previous Residence Roommates Guarantors
10. Whose Income is Counted? Income of Household Members Adults: Head of household, spouse or co-head, and other adult members of the household. Benefits or other unearned income of minors is counted.
11. Annual Household Income When determining annual household income, all income expected to be received within the following twelve month period must be included. Examples of Income: Employment Wages Social Security/ Disability Child Support Regular Contribution and Gifts
12. Employment Wages Total amount of income earned prior to any deductions. Overtime Bonuses Shift Differential Raises Commission
13. Determining Annual Income Employment Wages Earned Income Part-Time, Full-Time, or Self-Employment. Consider Pay Frequency: hourly, weekly, bi-weekly, semi-monthly, monthly, or annually. Consider Any Potential Overtime, Bonuses, Commissions, Tips, Shift Differential, or Anticipated raises. Use Gross Income Amount Except When Self-Employed Project Income For Next 12 Months Chapter 4, Section 3-HUD 4350.3
14. Calculating Annual Household Income Example #1 Ron, a public school teacher gets $27,000/ year. Although the school in in session for only nine months, he receives the remaining parts of his salary when school breaks for the summer. His employment verification from the District School Board supports this figure with the following calculation: 9 months X $2,500 $22,500 3 months X $1,500 $4,500 Annual Household Income = $27,000
15. Calculating Annual Household Income Example #1 Upon further research it was found that during the summer months, he tutors and earns on average $2,150 per year. 9 months X $2,500 = 22,500 3 months X $1,500 = $4,500 Summer months tutoring = $2,150 Actual Annual Household Income = $29,150
16. Example#2 Mary, a sales representative for a pharmaceutical supply firm, has a third party verification form showing her gross salary as $32,897 per year. The Verification also shows she is eligible for bonuses that are capped at 10% of her yearly salary Gross salary $32,897.00 Bonuses $ 3,289.70 Annual Household Income = $36,186.70
17. Example #3 Rachel works part-time at a department store. The third party verification states that her pay is $8.48 per hour and she works 15-20 hours per week, 52 weeks per year. Which calculation would you use?: Gross salary A = $8.48 x 15 x 52 B = $8.48 x 17.5 x 52 C = $8.48 x 20 x 52
18. Example #3 Upon further review it was observed that Rachel has also been awarded child support in the amount of $200 per month through a court order. Rachel claims that she hasn’t received any in the past year however she is unable to provide documentation of attempts to collect. Would you include the amount listed on the court order?
19. Example #3 Yes, you would include the amount as listed on the court order. New income calculation: Gross Salary from Employment $ 8,819.20 Child Support $ 2,400.00 Annual Household Income = $11,219.20
20. Example #4 A Military Professional applies and provides a copy of his LES statement. It is indicated that in addition to his income, there is a clothing allowance and hostile fire pay. His earned income is $25,000 a year. Calculation is as follows: Total earned income is $25,000 Clothing Allowance $2,000 Hostile Fire Pay($500 a month) $6,000 Hostile Fire Pay is not included as income ($6,000) Annual Income appears to total = $27,000
21. Example #4 Upon further review, it is determined his housing allowance (BAH) is not included on his LES statement because he is currently living on the Military base. When he moves into your unit he will be receiving the housing allowance. Calculation is as follows: Total earned income is $25,000 Clothing Allowance $2,000 Hostile Fire Pay($500 a month) $6,000 Hostile Fire Pay is not included as income ($6,000) Housing allowance ($900 a month) $10,800 Annual Income totals = $37,800
22. Disability and Retirement Compensation Total amount of compensation received prior to any deductions. Social Security Retirement Social Security Disability Pension
23. Requirements for Determining Annual Household Income Annual income is the amount anticipated to be received by a household during the 12-month period following move-in or recertification effective date. Educational Employees Nurses Servers & Hair Stylists
24. Example A school bus driver works 9 months and receives $1100 per month. During the summer recess, the bus driver works for the YMCA for $500 per month, in addition he is a personal trainer at $35 per hour. Calculate annual income based on current income: $9900 ($1100 x 9) $1500 ($500 x 3) 15 Hours a week at $35 per hour personal training during summer 7.5 Hours a week at $35 per hour personal training during school year
25. Helpful Tips To ensure compliance with this prospective household there are a few steps that must be achieved. Begin with listing out some questions that need a little more clarification
26. Questions for the School Bus Driver Employee Is there an anticipated increase in salary over the next 12 months as a bus driver? Is the employee paid over 9 months or 12 months? Does the bus driver receive additional income for driving during field trips? Is there an anticipated increase in salary from the YMCA during the summer? Is his income and/or number of hours going to increase from personal training over the next 12 months?
27. Irregular Employment Income These are some circumstances that present unusual challenges: Seasonal work Sporadic work
28. Irregular Employment Income Seasonal Work Chad is a Landscaper. He does not work when it is raining. Chad’s employer is able to provide documentation showing the number of regular and overtime hours he has worked in the past two years. Without a statement showing anticipated income for the upcoming certification year, how would you calculate his income?
29. Irregular Employment Income The best practice for calculating Chad’s anticipated income is to use the average of the hours provided (which in this case is the past two years) times his current regular pay rate. Then take the average overtime hours times his current overtime rate and add that to the anticipated income.
30. Irregular Employment Income Sporadic Work The Head of Household is a Farm Worker. He is paid by the number of pieces of fruit picked daily. The amount of fruit picked is calculated on a daily basis and the income from this is paid on a weekly basis. There are a couple of questions to ask the individuals occupying the unit: Head of Household- Farm Worker goes to Washington, D.C. to pick fruit in the summer. How much does he anticipate making in Washington, D.C.? Will all the other family members stay in the unit? Months when the Farm Worker is unemployed he receives unemployment benefits and food stamps. How many months/ weeks is he typically unemployed?
31. Irregular Employment Income Sporadic Work Son to the Head of Household: is 18 and a fulltime student. He works as a mechanic’s assistant at $8 an hour for 25 hours per week. Mother of the Head of Household: lives in the unit and receives $600 a month in Social Security Wife of the Head of Household: babysits two kids per week at $35 per week per child
32. Methods for Projecting Annual Household Income Use current circumstances to anticipate annual income Income may not last a full 12 months; however shall be calculated assuming current circumstances will last a full 12 months. Example: unemployment and disability If information regarding changes expected to occur during the year is available, use that information to determine the total anticipated income for all known sources during the year. Example: raises and overtime
33. Verification of Income General Requirements Timeframe Required Verification and Consent Methods Documenting Effective Term Inconsistent Information
34. COMPLIANCE PERIOD HOUSING CREDIT HOME MMRB Qualified Project Period for Bond Financed Properties Use the most stringent rule! Multiple Programs?
35. RECORD KEEPING HC HOME MMRB
36. FOF First Occupancy Files
37. Failure to BACKUPand securely store FOF’s can result in TAX CREDIT LOSS
38. Management Reviews and Physical Inspections Administrative Procedures File Inspection Physical Inspections Management Review Report Response to Management Review
39. Administrative Procedures Rent Roll Tenant Rent Ledgers Marketing and Advertising Next Available Unit Documentation
40. Files Inspected
41. Uniform Physical Condition Standards(24 CFR 5.703) Real Estate Assessment Center (REAC) f/k/a Housing Quality Standards (HQS)
42. THE END