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HUD Interim Recertifications & New Overtime Rules

Interim Recertifications for HUD Section 8 programs

Determining when an Interim Recertification (IR) is warranted and what effective date to utilize is often challenging. This portion of our three-part series will provide guidance on reporting requirements and optional changes, processing IRs, refusing IRs and the all-important question of what effective date to utilize.

This information applies to HUD Project-Based Section 8 properties only, as IR never apply to the LIHTC program

What are HUD residents required to report?

All tenants must notify the owner when:

  • A family member moves out of the unit;
  • The family proposes to move a new member into the unit;
    NOTE: At a minimum, owners must apply screening criteria for drug abuse and other criminal activity, *including State sex offender registration, and use of the EIV Existing Tenant Search to persons proposed to be added to the household, including live-in aides. The owner must make sure that the person also discloses and provides verification of his or her SSN.
  • An adult member of the family who was reported as unemployed on the most recent certification or recertification obtains employment; or
  • The family’s income cumulatively increases by $200 or more per month.

What are optional reporting requirements?

Tenants may request an IR due to any changes occurring since the last recertification that may affect the total tenant payment or tenant rent and assistance payment for the tenant. Changes a tenant may report include the following:

  • Decreases in income including, but not limited to, loss of employment, reduction in the number of hours worked by an employed family member, and loss or reduction of welfare income;
  • Increases in allowances including, but not limited to, increased medical expenses, and higher child care costs; and
  • Other changes affecting the calculation of a family’s annual or adjusted income including, but are not limited to, a family member turning 62 years old, becoming a full-time student, or becoming a person with a disability.

Tenants are not required to report when a family member turns 18 years of age between annual recertifications. However, tenants must follow the requirements in their lease for reporting changes in the household income. However, if a tenant turns 18 and has not signed the form HUD-9887, the owner must not use the EIV income reports until the form is signed. Owners must address in their policies and procedures notification requirements and timeframes for tenants who turn 18 between annual recertifications to sign the consent forms HUD-9887 and HUD-9887-A and/or lease. If the tenant fails to sign the consent form(s) the household is in non-compliance with their lease and assistance to, and the tenancy of, the household may be terminated.

What are the processing guidelines when changes are reported?

When a tenant requests an interim-recertification or when a tenant reports changes in income or other circumstances as required, the owner must take the following steps when processing an interim-recertification.

  • Interview the tenant to obtain information on the reported change. The owner must also review and ask if there have been other changes to family composition, income, assets, or allowances since the most recent certification.
  • Obtain third-party verification of the income or other facts reported as changed since the last recertification and maintain documentation in the tenant file
  • The EIV system must be used at the time a tenant reports a change in employment or income to determine if any information has been provided by the employer or if the tenant had unreported income. However, because of the delay in reporting requirements by state agencies, EIV may not contain data that can be used to verify employment or income for use in processing interim recertifications in instances where tenants report a change in employment or income. In these cases, the owner will need to use another method of verification.
  • Input any changes to the tenant’s income or other characteristics in the owner’s software program and print the HUD-50059
  • Document the resulting changes in the tenant’s rent and assistance payment by obtaining signatures on the HUD-50059 from the head, co-head, and spouse and all other adult family members. Maintain copy with original signatures in the tenant file. Provide the tenant with a separate copy.
  • After obtaining tenant and owner representative signatures, electronically transmit interim recertification to the Contract Administrator or HUD to update the tenant information in TRACS.

What if a tenant failed to report a change?

Owners must take the following steps upon learning that a tenant failed to report a change in income or family composition, as stated in the lease.

  • Tenant notification. When owners learn that a tenant has experienced a change in family income or composition that would require they must immediately notify the tenant in writing of his or her responsibility to provide information about such changes. This includes the owner using the EIV New Hires Report in accordance with their written policies and learning that the tenant, or a member of the tenant’s household, has new employment. The owner’s notice must:
    • Refer the tenant to the lease clause that requires the interim recertification;
    • Give the tenant 10 calendar days to respond to the notice; and
    • Inform the tenant that his or her rent may be raised to the market rent if the 10-day deadline is not met.
      • Timely tenant response. If the tenant responds to the notice and supplies the required information within 10 days, the owner must process the request and implement any resulting rent changes.
      • Tenant fails to respond within 10 calendar days of notice. If the tenant fails to respond within the 10 calendar days, the owner must require the tenant to pay market rent as of the first rent period following the 10-day notice period. If the tenant subsequently submits the required information, the owner must reduce the tenant’s rent on the first of the following month. In a Section 202 PRAC or 811 PRAC project, the owner may evict the tenant for noncompliance with the lease requirement to report changes in family income or composition.

What effective date should be used?

The most common IR-related question we receive at US Housing Consultants is what effective date to utilize for IRs and the answer depends on the owner’s policy. How many days does your policy allow for reporting required changes? How many days does your policy allow for reporting optional changes?

The HUD Handbook 4350.3 Rev-1, Chg-4 suggests that required changes need to be reported within a reasonable timeframe. Since the Handbook mentions that four weeks is a reasonable timeframe to complete an IR, it can be assumed that a month to report changes is considered reasonable, unless the owner’s policy is more strict.

If no policy is currently in place, it is recommended that one is created, implemented and distributed to all tenants as soon as possible. Without a policy, it is difficult to ensure IRs are being processed in a consistent manner.

If the tenant complies with the interim reporting requirements (and within the timeframe established by the owner), rent changes must be implemented as follows:

  • Rent increases. If the tenant’s rent increases because of an interim adjustment, the owner must give the tenant 30 days advance notice of the increase. The effective date of the increase will be the first of the month commencing after the end of the 30-day period.
  • Rent decreases. If the tenant’s rent will decrease, the change in rent is effective on the first day of the month after the date of the action that caused the interim certification. E.g., first of the month after the date of loss of employment. A 30-day notice is not required for rent decreases.

If the tenant does not comply with the interim reporting requirements (and within the timeframe established by the owner), and the owner discovers the tenant has failed to report changes as required, the owner initiates an interim-recertification and implements rent changes as follows:

  • Rent increases. Owners must implement any resulting rent increase retroactive to the first of the month following the date that the action occurred.
  • Rent decreases. Any resulting rent decrease must be implemented as of the first rent period following completion of the recertification.

Owners must provide the tenant with written notice of the effective date and the amount of the change in TTP or tenant rent resulting from the interim recertification.

For interim recertifications, both the change in assistance payment and change in TTP or tenant rent is effective on the same day.

Scenarios: Verification of Income Change Immediately After Tenant Notification
  • Tenant reports on April 10, 2016, a job loss.
  • On April 11, 2016, an owner receives verification of termination.
  • The verification states employment terminated on February 2, 2016.
  • The owner’s policy for reporting optional changes is within 10 days.

What effective date should be utilized for this IR to remove employment income?


May 1, 2016. Since the tenant did not comply with the owner’s policy of reporting changes within 10 days, the action that is causing the IR is the tenant reporting the change; therefore, the effective date is May 1, 2016.


  • Tenant reports on April 10, 2016, a new job and the tenant was previously unemployed.
  • On April 12, 2016, the owner receives a verification of employment which states employment began April 9, 2016, and the tenant’s income increased more than $200 per month.
  • The owner’s policy for reporting the required changes is 20 days.

What effective date should be utilized for this IR to add employment income?


June 1, 2016, to allow a 30-day notice of rent increase (unless the state and/or local law dictates a date that is of greater benefit to the tenant) since the tenant reported the required change timely.

  • Tenant reports on April 30, 2016 that an unborn child was born on January 20, 2016.
  • Tenant provides child’s birth certificate and verification of Social Security number on April 30, 2016.
  • Owner’s policy for reporting required changes is 30 days.

What effective date should be utilized for this IR to add the child?


May 1, 2016. The tenant did not report a required change timely; therefore, the action that is causing the reduction in tenant rent is the tenant reporting the change.


  • Tenant reports on April 2, 2016 that an ineligible non-citizen household member is now an eligible non-citizen.
  • Tenant provides documentation to support citizenship status on April 2, 2016 and completes new citizenship documents, including signing the Verification Consent.
  • Management confirms through the use of SAVE that the tenant became an eligible non-citizen on December 15, 2015.
  • Owner’s policy for reporting optional changes is 30 days.

What effective date should be utilized for this IR to change citizenship status?

Answer: May 1, 2016. The tenant did not report an optional change timely; therefore, the action that is causing the reduction in tenant rent is the tenant reporting the change.

New Overtime Final Rule and the Impact on Multifamily HousingThe Labor Department recently issued its final rule that lifts the overtime pay threshold from $23,660 to $47,476 for exempt Executive, Administrative and Professional workers. The effective date of this rule is December 1, 2016, and the threshold will be updated every three years.

What is the difference between an exempt and a non-exempt employee?

Non-exempt employees are eligible for overtime pay. Employers must pay non-exempt employees one-and-a-half times their regular rate of pay when they work more than 40 hours in a week.

Exempt employees are not eligible for overtime pay. The Fair Labor Standards Act contains dozens of exemptions under which specific categories of employers and employees are exempted from overtime requirements. The most common exemptions are the white-collar exemptions for administrative, executive, and professional employees, computer professionals, and outside sales employees.

What changed?

Exempt employees who were not required to receive overtime pay for time worked over 40 hours per week are now required to receive overtime pay at one-and-a-half times their regular rate of pay if their salaries are less than $47,476 per year.

For example, an administrative assistant works 50 hours per week and is exempt/salaried and earns $45,000 per year. The employers’ options with this newly updated standard salary level are:

  • Increase the salary of the employee to at least $47,476; or
  • Pay an overtime premium of one and a half times the employee’s regular pay rate for any overtime hours worked over 40 hours; or
  • Reduce or eliminate overtime hours; or
  • Reduce the amount of pay allocated to base salary (provided the employee still earns at least minimum wage) and pay overtime; or
  • Use a combination of the above options
How does this affect the affordable housing industry?

As always, owners/management agents must ensure the accuracy of the salary and hourly rate provided by the employer on the employment verification. Additional employer clarification may be required as a result of the Final Rule which becomes effective December 1, 2016. We recommend consulting with your state housing finance agency and/or local HUD office/Contract Administrator for additional guidance.

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