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Real Estate as an Asset

Posted on: July 18th, 2019 by Christa Landram No Comments

Model house with man holding pen in background

Under Section 42, all assets must be accounted for, with the exception of assets that have been disposed of more than two years ago. Real estate is an asset that must be counted. Since there are a few types of real estate, it can be confusing how to calculate the value.

To determine the asset value of real estate that has been sold at market value, the cash value of the property and the imputed value (if it exceeds $5,000) must be calculated. Once that is completed, the higher value is used. The cash value is determined by taking the actual value of the property and deducting the outstanding mortgage, closing costs, and any other applicable fees.

A household using their own real estate as a rental property may apply to live in your property. When dealing with this scenario, two calculations must be done. The cash value must be determined as noted above. The second calculation is determining the monthly income that is received for rent on their real estate. The actual income received is not what is included. Management must take that amount and subtract the mortgage and any applicable maintenance fees.

If real estate has been foreclosed on, then it will not be considered in the asset calculations as the tenant will not be receiving income from the foreclosure. However, keep in mind that until the foreclosure is complete, the real estate is sold at an auction, or the title has been transferred to another party, the real estate is still technically considered the tenant’s.

The real estate may have gone through a short sale.  In this case, it is typically not considered an asset, as most often, the owner will not be receiving income from this. However, if there is a difference in the sale that is in favor of the resident, that difference is counted as an asset.  Also, it must be verified by a third party if it is a HOME project and if it exceeds $5,000 for LIHTC.

One final note is in regard to reverse mortgages. These are similar to a loan since the income from this must be paid back. Keep in mind that the real estate would still need to be treated as an asset and calculated accordingly. The calculation for the cash value is done by taking the market value less the principal balance due on the reverse mortgage.

There are many scenarios when dealing with real estate, so please ensure you are consulting with your HFA or State Agency if you come across one of these examples.

YTD Calculation

Posted on: July 18th, 2019 by Christa Landram No Comments

As of October 2018, the following guidance was provided for Year-to-date (YTD) calculation.

Procedurally, we do not require a property to use a year to date (YTD) calculation method and conversely, will not cite a property for using this method; however, if they do use it, we will also consider that calculation in our review(s).

Many properties choose to use this calculation due to concerns that the paystubs or employer’s verification provided, do not show a true reflection of hours, pay, etc. This can be for a number of reasons, which can include hours, OT, commission, and bonuses.

If a property does choose to use YTD, it should be used consistently and with all files where YTD is provided. When a property is not consistent with the use or non-use of this calculation, we will write it up as a general comment.

In the event we review a file that would have been over-income by use of YTD, and the owner chose not to include the calculation for this reason, we will cite it as noncompliance if the owner’s standard procedure is to use that method for all other files.

In summary, we will monitor this calculation in a manner consistent with the owner’s procedures.

Child Support

Posted on: July 18th, 2019 by Christa Landram No Comments

Child support agreement sitting on desk with pen on top

A few people have expressed confusion regarding how Florida Housing monitors child support; so, I have written a succinct explanation in hopes that it will provide clarification.

If an owner has a court order and a printout from the enforcement agency, the owner is now allowed to use the average payment from the printout, if:

1. The printout is from the actual enforcer (this does not include myflorida.gov); AND

2. There is at least 3 months of history (this can include $0).

If one of the above criteria is not met, then the amount on the court order MUST be used.

As a reminder, the following steps should always be taken:

1. Every household should be asked if there is child support or if child support is due, even if children are not present in the household.

2. A child support affidavit is not required if the file is properly documented with these answered questions:

a. Do you receive child support?

b. Are you entitled to receive child support?

c. At what frequency are you entitled to receive child support?

3. The questions should cover ALL children.

4. The court order in its entirety is recommended; however, if the printout from the enforcement agency clearly shows the amount due to them, the frequency of pay, the contributor, and the children(s) names, then it will not be a discrepancy if the court order is not present. This is an exception and should not be the standard. Most everyone can retrieve their court order, as they are located and accessible in court archive

 

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