As property owners continue to strive for compliance, more questions arise as to what establishes proper verification. The HUD Handbook includes a useful outline of third party verification that may help answer these questions.
For some time, it was thought that a document completed by the third party but provided by the resident was not third party verification; however, HUD has indicated that this is still considered third party verification. Some examples of this may be check stubs, when a designated Verification of Income is not supplied, or if a resident provides a tax return that is prepared by the employer or an accountant.
Another proper third party Verification of Income is a more common one. This form of documentation is sent directly from the third-party. There are many ways this can be done. The form can be mailed, emailed, or faxed. No matter what form of delivery, it still needs to be verified that it is from the correct source. If it is mailed, your state agency or management company may require that you include the envelope as backup.
One source that has been in question for some state agencies is information verified from the Internet. This is considered third party verification if it can be shown and documented that it is from a reliable source. The HUD Handbook states that a printout from the Internet is suitable verification. It is important that if the owner is using this as the Verification of Income that the reliability of the source is shown.
Finally, it is important to note that verification made over the phone may also be considered third party. It is often suggested that the owner or owner representative be the one calling the third party to ensure it is a reliable source and the person on the phone is the correct party. When the third party is initiating the call, it is harder to verify who is on the phone.
Keep in mind that there are some instances when such information is not sufficient. If the documentation provided is not current and it is not clear if the information has changed, then the household could be out of compliance for failure to provide sufficient Verification of Income. Another example of when such information may not be sufficient is when the documentation provided, no matter the source, is not complete. If for instance, a resident provides check stubs completed by the employer and the pay isn’t clear, the frequency isn’t listed, or there are not enough check stubs to determine the income, then this form of verification may not be acceptable due to the inability to properly verify the income.
With most everything, the state agencies can enforce stricter rules and have specific ways they want documentation obtained. Though knowing the HUD guidance and regulations is important, it is just as important to verify with your state as to how they want Verifications obtained and documented.