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How to Handle the Complex World of EIV Discrepancies... In 2001, the President's Management Agenda was released and established the reduction of erroneous payments as a key government-wide priority and required government agencies to measure improper payments annually, develop improvement targets and corrective actions and track results.
Based on a HUD study, it was estimated that 3.2 billion dollars (yes, billion!!) of improper payments were being paid out on an annual basis. As a result of this and the President's Management Agenda, HUD established a Rental Housing Integrity Improvement Project, otherwise known as the RHIIP initiative. The goal of the initiative was to address the causes of errors and improper payments and to ensure "the right benefits go to the right persons." To assist in meeting RHIIP's goals, HUD developed and began implementation of the UIV (Upfront Income Verification) which is now known as the Enterprise Income Verification (EIV) system. In the first four years of EIV's implementation, there was a 60% reduction in gross improper payments. Bottom line: EIV is an effective tool and the system has eliminated a huge amount of improper payments. A critical piece of EIV that assists with reducing improper payments is the EIV Income Discrepancy Report. Knowing how to resolve and properly document the tenant file is key. EIV Income Discrepancy Reports identify when there is a difference of $2400 or more annually in what's reported in EIV and what's reflected on the current HUD-50059.
Those unfamiliar with utilizing EIV Income Discrepancy Reports may feel a bit intimidated when reviewing a report:
At first glance, a thought bubble may look something like: "I know there's a discrepancy, but what in the world does this mean and what do I do now?" Once you've mastered the terminology and figured out what the report is telling you, you'll find discrepancy reports relatively easy to decipher. Here are some helpful definitions:
In the example above, the HUD-50059 reflects no income. EIV reflects the actual annual income of $22018.70 and annualized last quarter income of $19518.57. This results in a 100% income discrepancy of possible unreported income. Hence, you're faced with an EIV Income Discrepancy. What do you do now? Here are some guidelines to assist you on your journey.
The first step is an investigation of the tenant file to determine the validity of the discrepancy.
Potential outcomes for the first example (above):
Per HUD guidelines, tenants may report decreases in their income and an interim recertification will likely be processed. But what if at the time of annual recertification, you find that a tenant over-reported wages, unemployment and/or Social Security income by $200 or more per month? The first step again is to investigate. If it's discovered that management made a rent calculation error and the tenant over-paid rent, corrections to the prior certification(s) must be processed and the discrepancy needs to be discussed with the tenant. The owner must also provide the tenant with written notification which includes:
To comply with EIV Income Discrepancy guidelines, HUD also requires:
The EIV Income Discrepancy Report is an invaluable tool in the affordable housing industry. It supports the agenda of reducing improper payments - making sure the right benefits go to the right people – and it really does work!
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