APPLICANTS
An unmarried couple applies for an apartment and they tell you during the application process that they are expecting a baby in 5 months. How many people are in the household?
(LIHTC/HUD) Three. Unborn children of pregnant women are household members. Use the three person income limit for this household.
(HOME/RD) Two. Unborn children of pregnant women are not considered household members. Use the two person income limit for this household.
Carol Cook applies for an apartment. The only other household member listed is her 3‐year‐old son, Fred Flintstone. You notice on the application that her current landlord is also named Fred Flintstone and that she pays no rent. What should you do?
Ask more questions about her current living situation. Similarities like this could be a result of countless situations, but you should ask when you see that the current landlord appears to be related to a household member or that no rent is currently being paid. The answer you get could indicate more assets or other household members or other income. Besides, chances are, you are going to contact Fred Flintstone for a landlord reference anyway. Don’t hesitate to get as much information as possible up front.
You go on a lunch break. When you return to the office you see that someone has dropped off an application. Some of the
questions were not answered. So, you write “NONE” next to all the stuff they left blank. This is the correct thing to do: true or false?
False. NEVER write on an application (with exception to the top right box on the first page for “Manager Use Only”). You should call the applicant and clarify the missing information by having them come back in to finish the application.
Bob and his girlfriend, Kate, are applying to live at your property. Kate has a job and her income brings the household to $800 below the income limit. The applications show that Bob was working less than a month before they filled out the applications but now claims to have no anticipated income. What should you ask?
Why doesn’t he anticipate any income in the next 12 months? Follow up is needed where an adult has recent employment history but now claims zero income status. Remember, the LIHTC program is looking at all anticipated income for the next 12 months (not just the current status). In this case we would want ask if Bob is receiving unemployment benefits; have him complete an Unemployed Affidavit; ask if he is looking for work. Bob should also document why his status has recently changed. He could have a reasonable explanation for his zero income status (such as health issues, becoming a student, etc.). If you don’t ask and the household is over income at first annual recertification (due to Bob becoming employed shortly after move‐in), you won’t be able to show you’ve met the due diligence requirement and the unit could be at risk for losing credits.
A divorced man applies to live at your property. He has a job which pays him $25,000 per year. The one person income limit is $22,250. According to his divorce arrangement, he must pay his ex‐wife $1,000 per month for child support. Is this a qualified household?
No. You cannot deduct child support payments from an individual’s income.
ASSETS
An applicant has a checking account with a current balance of $4,000 and an average 6‐month balance of $4,275. The interest rate is 0.00%. There are no other assets. What is the correct amount counted for this asset? What is the imputed income?
Asset Value ‐ $4,275 and Imputed Income ‐ $0.00. Always use the average 6‐month account balance for checking accounts. Do NOT impute interest unless the combined value of all assets is $5,000 or more.
Mrs. Jones owns a home that is for sale. The taxable value (Fair Market Value ‐ FMV) of the property is $100,000. Mrs. Jones owes $25,000 on the mortgage for the home. The standard seller’s fees are set at 6%. What is the cash value of this asset? What is the imputed income from this asset?
Cash Value = $69,000; Imputed Income from Asset = $1,380
A married couple from New York wants to retire, cash out their matured Certificate of Deposit in the amount of $500,000, move to Florida and live in one of your affordable housing properties. After getting the application and verifying all of their income and assets, you inform them that they are over the income limit by $200. They decide to give the $500,000 from the CD to their children and ask you to remove the asset as it no longer is an asset they have. Since they are doing this before the move‐in date, there is no effect. True or false?
False. This is an asset disposed of for less than Fair Market Value and must be counted as an asset for two years. The imputed income from this asset could keep them over the income limit.
REMEMBER these few tips when dealing with assets disposed of for less than Fair Market Value:
- Any asset that is disposed of for less than its full value is counted, including cash gifts as well as property.
- Any asset disposed of for less than Fair Market Value is counted for a period of two years after the disposal date. (i.e. It’s verified that an applicant sold their home for less than Fair Market Value on 12/1/11; the current move‐in date is 12/1/12. The asset would be counted until 12/1/13.)
- The rule ONLY applies when the Fair Market Value of all assets given away during the past two years exceeds the gross amount received by more than $1,000.
- Assets disposed of for less than Fair Market Value as a result of foreclosure, bankruptcy, divorce, or separation are NOT counted.
DEPENDENTS
A single parent with one child applies to live at your property. The household income is $26,000. The 1‐person income limit is $25,000, the 2‐person income limit is $30,000. How do you document custody and that the child will live in the unit at least 50% of the time?
It is required that you obtain documentation such as a court order or custody agreement indicating that the child will reside in the unit at least 50% of the time; this is especially important when the inclusion of children is needed in order to qualify for a unit. Only in situations where NO legal documentation is available, will a statement from the other parent suffice.
A divorced woman applies for a 2‐bedroom apartment. She explains to you that her 15‐year‐old daughter stays with her every other weekend, so she needs the extra bedroom. She is willing to pay the higher rent amount. Her only source of income is a job which pays her $25,000 per year. The 1‐person income limit is $22,250 and the 2‐person income limit is $27,750. Is this a qualified household?
No. A child may only count as a household member for income limit testing if they reside in the unit at least 50% of the time.
Earned income of minors (family members under the age of 18) is counted. True or false?
False.
Benefits or other unearned income, such as Supplemental Security Insurance of minors (family members under the age of 18) is counted. True or false?
True.
INCOME
You fax an Employment Verification for your resident to Harry’s Hot Dog Hut. When it is sent back, the only questions answered are the hourly wage and number of hours worked per week. What should you do?
It is best practice to call the employer and explain the necessity of all fields being completed, then resend the employment verification to be completed in entirety. NEVER write on a verification form after it was signed by the third party.
John Johnson is a retired widower whose only income is Social Security. When you get his award letter, you see that it lists three different monthly amounts. It shows his monthly gross award is $1,230.70 and he should receive $1,230 per month. However, the award letter then goes on to explain that due to an overpayment, he will only receive $900 per month for the next 12 months. What is the correct amount to be counted for annual income?
$900 x 12 = $10,800. When the Social Security Administration is recovering for an overpayment, you should use the reduced amount. Other deductions (i.e. child support, alimony) cannot be subtracted and the gross benefit amount must be used in these circumstances.
An applicant tells you not to bother sending an employment verification to his employer because the company he works for has a policy that they will not complete such verifications. He does give you his last 8 consecutive paystubs. Do you need to attempt to obtain employment verification as well?
Yes. You are required to attempt to obtain a third party verification of employment. You must document your efforts to verify before you resort to other forms of verification. Make sure to obtain last year’s tax returns in addition to paystubs.
You receive employment verification for a job which lists $10 per hour, 25 hours per week, and no additional pay from overtime, commissions, bonus, etc. A $1.00 per hour raise is scheduled for six months after move‐in. The individual is paid weekly. What is the correct math calculation to use?
$10/hour x 25 hours x 26 weeks AND $11/hour x 25 hours x 26 weeks. Don’t forget to include raises that are verified.
An applicant has a new part time job, 18 hours per week, at Don’s Donuts. His application shows recently he was previously
working part time, 25 hours per week, at Cindy’s Coffee Shop. What should you verify?
Verify employment with Don’s Donuts and verify termination of employment with Cindy’s Coffee Shop. It is not uncommon for people to work two part‐time jobs in order to make ends meet. It is best practice to verify termination of employment when an individual’s current employment is new. You should also verify if he is eligible for, and if so, receiving unemployment.
STUDENTS
A household lives at your 100% LIHTC property; they do not receive Section 8 or Rental Assistance. The household consists of a married couple. The husband works full‐time and his monthly gross income is $1,000. The wife attends college full‐time and receives $600 per month in grants, after tuition is paid. She also works part‐time, with a gross monthly income of $500. What is the household’s total gross monthly income?
$1,500. Because the household is NOT receiving Section 8 or Rental Assistance, all forms of student financial assistance (i.e. grants, scholarships, education entitlements, work study programs, etc.) are NOT included in annual income calculations.
A household lives at your 100% LIHTC property; they receive Section 8 Assistance. The household consists of a married couple. The husband works full‐time and his monthly gross income is $1,000. The wife attends college full‐time with a monthly tuition cost of $600; she receives $1,000 per month in scholarships. She also works part‐time, with a gross monthly income of $500. What is the household’s total gross monthly income?
$1,900. Because this household is receiving Section 8 Assistance, all monies (in excess of tuition) received from grants, scholarships, federal work study programs, etc. are included in annual income calculations.
However, this guideline does not apply for households that meet one or both of the following criteria:
- The student is over the age of 23 with dependent children; or,
- The student is living with his or her parents who are applying for or receiving Section 8 assistance
In these cases, no student financial assistance is counted.
A household lives at your 100% LIHTC property; they receive Section 8 Assistance. The household consists of a single mother, age 33, and her two children, ages 8 and 16. The mother attends college full‐time with a monthly tuition cost of $1,000; she receives $2,000 per month in scholarships. She also receives $1,000 per month in child support. Her oldest child works part‐time and receives $500 per month. What is the household’s total gross monthly income?
$1,000. Because this household is receiving Section 8 Assistance and consists of a single parent over the age of 23 with minor children in the household, all student financial assistance amounts are NOT counted. The income from the 16‐year‐old is also not counted because the dependent is under the age of 18.
SIDE TRACK:
Q: What would the total gross monthly income of the household be if the oldest child in this household was 18 and attending school full‐time while earning a monthly gross income of $500?
A: $1,480. If a full‐time student is 18 years of age or older AND a dependent, you would only count the lesser of actual income earned or $480.
Q: What would the total gross monthly income of the household be if the oldest child in this household was 18, NOT attending school, and earned a monthly gross income of $500?
A: $1,500. The oldest child is no longer considered a dependent because they are now age 18 and not a full‐time student; their total gross monthly income is counted.