Section 1

The Rent and Income Integrity Problem

3

What Is the Overall Problem?

A 2001 Office of Policy Development and Research (PD&R) study found that HUD:

Overpaid $2.6 billion in annual housing subsidies $1.7 billion in administrative/component

errors $600 to $900 million in unreported tenant

income Underpaid $634 million in annual

housing subsidies

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HUD Rental Program

Excess Subsidy-Unreported Earnings

Excess Subsidy-Unreported Unearned

Excess Subsidy-POA Error

Subsidy Shortfall-POA Error

Net Total QC/Income Match Error

Public Housing

$280 $14 $431 $201 $524

HCV/ Mod Rehab

$369 $49 $876 $256 $1,038

Section 8- Project Based

$199 $67 $362 $177 $451

Total $848 $130 $1,669 $634 $2,013

Error Measurement Estimates from 2001 QC Study and Income

Matching

This chart includes a breakdown of the various subsidy determination errors by program groupings in $ millions. The first two columns of data come from income matching, the third and fourth from the QC study.

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Presidential Management Initiative

#10 Mandate HUD mandated to reduce errors by

50% by 2005

HUD’s Annual Performance Plan set interim goals:

A 15% reduction in the dollar amount of error by FY 2003

A 30% reduction by FY 2004

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Rental Housing Integrity Improvement

Project (RHIIP) Comprehensive approach that

identifies the best methods of reducing program errors

Addresses the root causes of income and rent errors in public housing and Section 8 HCV programs

Takes action to ensure the “right benefits go to the right persons”

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RHIIP Formula for Success

HUD and PHAs must work together to reduce errors and ensure fundamental fairness among families.

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RHIIP Components

Error measurement Program guidance Training and technical assistance Program simplification Up-front income verification (UIV) Rental integrity monitoring (RIM) Consequences and Fraud

Section 2

Update on HUD RHIIP Activities

Section 2A

Error Measurement

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2003 PD&R Quality Control Rental

Assistance Subsidies Study HUD PD&R measurement of progress

in reducing number/dollar amount of rent calculation errors for FY 2003

Data collected from 2,700 households at 600 sites (Section 8, Section 811, Section 202, public housing)

Information from tenant files & in-person interviews

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2003 PD&R Quality Control Rental Assistance

Subsidies Study Data collection completed in early

Summer 2003 for first half of FY 2003 with results available late 2003 for the Performance and accountability Report and Financial Statement Audit

Additional data collected in the last six months of FY 2003, with results available in mid-2004.

Section 2B

Program Guidance

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PIH Guidance Materials Pubic Housing Occupancy Guidebook

Housing Choice Voucher Program Guidebook

Program Fact Sheets

Forthcoming Verification Guidance for HUD Field Offices and Public Housing Authorities

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PIH RHIIP Web Site

Source for information and links to critical documents, HUD regulations, guidebooks, and fact sheets

FAQs on RHIIP, RIM, verifications, and income and rent

Training materials and presentations

PIH RHIIP website location: http://www.hud.gov/offices/pih/programs/ ph/rhiip/index.cfm

Section 2C

Training and Technical Assistance

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Training—HUD Field Office Staff

Purpose: To Enhance occupancy knowledge and skills of HUD staff

Focus: Basic occupancy with emphasis on eligibility, income, rent, and subsidy calculations

Spring 2002: Field Office basic rent and income training

June 17, 2002: RIM satellite training May 5-9, 2003: RHIIP Training Conference

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Training—PHA Staff

PIH Rental Integrity Summits Orlando, Florida

January 26-28, 2004 January 28-30, 2004

Anaheim, California February 2-4, 2004 February 4-6, 2004

Look for registration details on RHIIP Web Site!

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Technical Assistance

PIH has a contract with MDStrum Housing Services to:

Provide technical assistance to challenged PHAs

Identify and address root causes of error

Perform HUD-Form 50058 software analysis

To date, onsite TA has been provided to 8 selected sites

Section 2D

Program Simplification

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Simplification Plans

Statutory proposals

Moving-to-Work

Regulatory options

Section 2E

Up-front Income Verification

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Up-front Income Verification

Definition: Verification of income through an independent source making use of income information databases maintained systematically and uniformly, such as those maintained by the State Wage Information Collection Agencies (SWICAs), the Social Security Administration (SSA), and private vendors before and during a family reexamination.

Key strategy for reducing the error rate

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Current Sources for UIV Data

Social Security (SS) and Supplemental Security Income (SSI) information accessed via a secure Internet facility (TASS)

State Wage Information Collection Agencies (SWICAs)

State TANF systems Private sector databases (e.g., The

Work Number)

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HUD’s Tenant Assessment Subsystem

(TASS) The system compares tenant-reported information to other HUD systems with income data stored in the SSA and the IRS databases

HUD strongly encourages PHAs to systematically use the system to reduce incidents of undisclosed SS and SSI income

HUD TASS website location: http://www.hud.gov/offices/reac/online/reasyst.cfm

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UIV System Pilot

Commenced on August 18, 2003

Participants: Select PHAs in Florida and Texas

The UIV application was deployed as part of the HUD Tenant Assessment Subsystem (TASS)

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UIV System Pilot (cont.)

Objectives:

Obtain feedback on how wage and benefit data is displayed

Identify and assess implications of accessing SWICA data

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HUD UIV System: Rollout Schedule

August through October 2003: TASS/PASS UIV System Pilot

Late 2003: Selected PHAs will participate in pilot of UIV System

Early 2004: UIV System available to all PHAs within states where HUD received income data

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Coming Soon: HUD UIV System

Will make integrated income data available to PHAs from one source via the Internet

Allows PHAs to view quarterly wage, weekly/bi-weekly unemployment, and monthly SS benefit information for tenants in their jurisdiction

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UIV System

Provides wage and benefit information through a data matching process for households covered by a HUD Form 50058

For tenant recertifications, not new admissions, as wage and benefit data is pulled from existing Social Security Numbers (SSNs) in the PIC system

PHAs may not view the tenant data without a signed Authorization for the Release of Information/Privacy Act Notice (e.g., Form HUD-9886) in the household’s file

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UIV System Discrepancy Reports

Compares total benefits reported by tenant to total benefits reported by SSA and SWICAs

Shows if the tenant’s SSN-date of birth-surname combination does not match SSA records

Shows if tenant’s claim was denied or benefits terminated

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UIV System Privacy Requirements

Data must only be used for verification of tenant income and eligibility

• Data must not be disclosed in any way that would violate the privacy of the individuals represented in the system

Tenants must be provided with access to their records and an opportunity to correct or challenge their contents

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UIV System Security

Ensures that access rights, roles and responsibilities within PHAs are appropriately and adequately assigned and monitored

Quarterly reviews conducted for all User IDs to determine if user still needs access to UIV data

Maintain security-related records Conduct security awareness training

Section 2F

Rental Integrity Monitoring (RIM)

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Rental Integrity Monitoring (RIM)

In June of 2002, HUD Headquarters directed HUD Field Offices to conduct onsite monitoring of PHAs—RIM reviews—to:

Detect and reduce errors in income and rent calculations at targeted PHAs

Reduce rent underpayments and overpayments by residents

Maximize HUD’s limited housing resources

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What Is a RIM Review?

Onsite monitoring of PHA policies and procedures related to income and rent determinations, performed by Field Office reviewers, including: Review of randomly selected sample tenant files Gathering of PHA income and rent information Assessment of PHA policies and procedures Identification of income and rent errors Analysis of income and rent errors to establish

root causes/recommended corrective actions Recording of income and rent findings and

errors

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RIM Review Close-Out

HUD Field Offices will:

Meet and discuss preliminary finds and observations/concerns with PHA staff

Discuss strategies for corrective action

Gives PHAs an opportunity to discuss RIM review finds and observations/concerns

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Post Review Activities

HUD Field Offices: Issue RIM review reports to PHAs on findings,

concerns, observations, and recommended actions

Monitor PHAs’ progress in correcting findings and errors

Provide ongoing technical assistance

Close findings when required actions are completed

Submit error reports to HUD Headquarters

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Corrective Action Plans (CAPs)

Required if a finding is not resolved by the time a PHA responds to a RIM report (within 45 days)

Finding: A condition not in compliance with handbook, regulatory, or statutory requirements

Systemic Finding: A pattern of deficient PHA performance in one or more areas of income and rent determination

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Baseline for RIM Review Results Report

368 reviews conducted between June 2002 and January 2003

144 of the 368 reviews involved large PHAs that comprise over 25% of HUD’s subsidies

Income and rent errors recorded on Error Tracking Reports for each RIM review formed the baseline results

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Second Round of RIM Reviews

April 2003 through September 2003

346 targeted PHAs administering public housing and HCV programs, covering 55% of HUD subsidies paid

RIM Review Results Report to be completed early 2004

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Baseline RIM Review Results

Errors found in Public Housing and Housing Choice Voucher programs in initial 368 reviews divided into two categories:

Component Errors: Errors in specific income and expense components used to calculate rent (e.g., earned income, Social Security, pensions, dependent allowance, etc.)

Administrative Errors: Errors in procedures, including calculation and transcription errors and failure to verify information

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Top Three Component Errors

Public Housing Calculation of earned income (wages) Calculation of pensions, public assistance

& other income Application of allowable deductions

Housing Choice Voucher Calculation of earned income (wages) Calculation of pensions, public assistance

& other income Using incorrect utility allowance schedule

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Top Three Administrative Errors

Public Housing Improper transfer of 50058 data from file

to PIC Lack of quality control Lack of verification of income/deductions

Housing Choice Voucher Lack of verification of income/deductions Lack of quality control Improper transfer of 50058 data from file

to PIC

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Re-reviews

PHAs receiving initial review in the first two rounds will receive a re-review to ensure corrective actions were implemented

Approximately 20 re-reviews completed to date, remaining conducted during FY 2004

Study of 50 PHAs undergoing re-reviews to be included in FY2003 Performance and Accountability Report

Section 2G

Consequences and Fraud

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Consequences of Program ErrorsRIM

Follow-up by HUD Field Offices and the Inspector General

May impact several performance indicators found under the Section Eight Management Assessment Program (SEMAP)

Expect PHAs to implement CAPs in timely manner to prevent adverse action

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Consequences of Program Errors (cont.)

UIV

HUD will examine discrepancy reports for large numbers of errors in wage and benefit determination

HUD will target PHAs with multiple errors for further action

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Letter to CPAs

August 26, 2003 letter from PIH Assistant Secretary Liu to CPAs who audit PHAs

Outreach to independent auditors to assess/mitigate PHA program risk and to identify and report improper calculation of subsidy payments

Errors identified during the RIM reviews are being compared to the income and rent findings identified in the PHAs audit reports

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OFFICE OF INSPECTOR GENERAL U.S. Department of Housing and Urban Development WASHINGTON, D.C. 20410-4500

HOTLINE COMPLAINT INTAKE FORMCOMPLAINT INFORMATION

Date:_______

COMPLAINANT CONTACT INFORMATION

PHA Name:________________________

Point of Contact Name:______________________

Address:___________________________ (Street)

___________________ _____________ _______________ (City) (State) (Zip Code)

Telephone: (Work)___________ (Cell Phone)_________________

Email:___________________________

SUBJECT INFORMATION

Subject Name or Name of Business:_____________________________________

Subject Address (If known) __________________, _________, ______ _________ (Street) (City) (State) (Zip Code)

COMPLAINT SUMMARY (Attach additional pages if necessary):

Loss Amount:

Nature of Allegation:

Initial Certification:________Recertification:________ U.S. Department of Housing and Urban

Development WASHINGTON, D.C. 20410-4500

Reporting Fraud

Hotline: 800-347-3735

Fax: 202-708-4829

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United States Attorney Southern District of New York

FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICEJUNE 3, 2003 MARVIN SMILON, HERBERT HADAD,

MICHAEL KULSTADPUBLIC INFORMATION OFFICE(212) 637-2600

 BARBARA GUSS(914) 993-1903

31 CHARGED WITH FEDERAL HOUSING FRAUD THAT COST THE GOVERNMENT MORE THAN $650,000

JAMES B. COMEY, the United States Attorney for the Southern District of New York; RUTH A. RITZEMA the Special Agent in Charge of the New York/New Jersey Office of the Inspector General of the U.S. Department of Housing and Urban Development (“HUD”); and CHARLES A. COLA, the Commissioner of the Yonkers Police Department, announced that 31 defendants were charged with obtaining private housing rental subsidies to which they were not entitled. Twenty-seven were arrested and 4 others were being sought. The defendants were charged in 14 separate criminal Complaints unsealed in White Plains federal court and were presented in Court today before United States Magistrate Judge George A. YANTHIS. The defendant’ fraud is alleged to have costthe federal government more than $650,000.

Reporting

Fraud

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Yonkers housing fraud bust nets charges against 31

By WILL DAVID THE JOURNAL NEWS (Original publication: June 4, 2003)

YONKERS — A federal and local investigation aimed at stamping out fraud in the Yonkers Municipal Housing Authority's Section 8 rent subsidy program culminated yesterday with the arrests of 27 people, and four others are being sought in connection with the probe, authorities said.

The 31 people charged in the investigation — all but two from Yonkers — are accused of obtaining private housing rental subsidies they were not entitled to because their incomes were too high, said James B. Comey, the U.S. attorney for the Southern District of New York.

Section 3

PHAs’ Role in RHIIP

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PHAs and RHIIP

HUD is committed to its error reduction goals, but we need PHA cooperation and support to succeed in all our RHIIP initiatives!

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PHA Action—UIV

Use the TASS system now to verify benefit information and reduce incidents of undisclosed income

Use the UIV system, when it is operational, to ensure all wage and benefit income is disclosed

Implement controls that encourage follow up on significant income discrepancies

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PHA Action—UIV System

PHAs should review policies, practices, and SWICA regulations in preparation for availability of wage information and possibility of increases in cases of undisclosed income. Policies include:

Criteria for repayment agreements

Thresholds for legal action related to fraud Zero income policies Interim reexamination thresholds

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PHA Action—UIV System (cont.)

Maintain, communicate, and enforce standard operating procedures for UIV data

Emphasize to staff the importance of carefully and accurately entering tenant data into PIC HUD Form 50058 for accessing wage and benefit information

Ensure all staff accessing UIV System have a current signed user agreement and PIH Access Authorization Form on file

Inform tenants that your PHA has access to wage, SS, and unemployment benefit information

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PHA Action—RIM

Develop/implement an internal quality control system to ensure income and rent determination policies/procedures are followed consistently and accurately

Address concerns raised during RIM reviews and create and execute corrective action plans to address all findings

Use UIV sources and/or third party verification to verify wage/benefit data

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PHA Action—RIM (cont.)

Review competency of occupancy specialists and train as needed on income and rent determination

Update policies and procedures and interview forms

Ensure consistency between policy and practice (e.g., occupancy file, Form 50058, administrative plan/ACOP)

Document, document, document!

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General Recommendations

Know resources available, including: 24 Code of Federal Regulations (24

CFR) PIH notices and Federal Registers Public Housing Occupancy

Guidebook Housing Choice Voucher Guidebook Rental Integrity Monitoring Guide

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General Recommendations

Bookmark the PIH RHIIP Web Site and check it often for program updates, new guidance, and new FAQs

Keep in contact with your HUD Field Office

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Conclusion

Working together, HUD and PHAs can reduce income determination and rent calculation errors and ensure that there’s more housing money for those who need it the most.

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Questions and Answers