COMMON ERRORS SUPERVISORY VISIT & COMPLIANCE REVIEW

TAAH CONFERENCE

November 13, 2015Beverly Peterson

Area Specialist, Lawrenceburg, TN

beverly.peterson@tn.usda.gov

Where to find answers....

• We can all agree that no one goes to work with the intention of doing the wrong thing. But sometimes we may not have the information that we need to make the correct decisions.

• Most answers can be found in the regulations or handbooks. “Where can I find them?” you ask….

Where to find answers....

• HB-2-3560 Chapter 3 Property ManagementChapter 6 Project Occupancy

• http://www.rd.usda.gov/publications/regulations-guidelines/handbooks

• www.rd.usda.gov

Where to find answers....

• OR - Go to MINC website at: https://usdaminc.sc.egov.usda.gov/

• You DO NOT have to be a MA User to go to the HELP tab.

• You’ll find some training modules on this website.

Handbook HB-2-3560

Notification of visit• When you receive your notice of the

scheduled visit, please read it thoroughly and be prepared to present everything listed in the notice. Many times when we visit the property, valuable time is wasted waiting for the manager to search for the information requested.

Applications• No date/time recorded at the top of the application OR

date/time recorded at the top of the application did not match the date/time recorded on the waiting list as the “Date Received”.

• Applicant’s Race/Ethnicity and/or Gender not marked at bottom of application. Application should say that the manager is required to mark for the applicant, based on visual observation or surname, if the applicant fails to complete this section. Indicate that you marked for the applicant by placing your initials next to the items marked.

Applications cont’d• Release and Consent Form not signed by all household members 18 &

older. • HB-2-3560, Chapter 6, ¶ 6.11 B. 2.“A form verifying employment

(developed by the borrower) gives applicant or resident permission for the borrower to ask questions about and verify information related to the household income and other circumstances that affect eligibility and the amount the household must pay. Applicants must sign the form as a condition of admission and continued occupancy. The form must be signed by the household head and all other household members whose income, assets, or other circumstances require verification. As long as the borrower retains the form with original signatures in its file, a photocopy of the authorization may be provided to verification sources. The borrower must ask applicants/residents to execute the form even in cases where the person has not reported any income.

Waiting Lists• Applications just not listed on the waiting list. • Sometimes we find managers do not enter applications on waiting lists

when the application is incomplete. ALL APPLICATIONS ARE TO BE ENTERED ON THE WAITING LIST. If the application is incomplete it still goes on the list and the date received is entered. Once the applicant returns with the missing items the application is considered complete and the “Date & Time Complete” is filled in on the waiting list.

• HOWEVER, you should not be entering names on waiting list just because someone picks up an application.

Waiting Lists cont’d• Documentation that the applicant has been contacted is not always with

the applications that are withdrawn or rejected. AT A MINIMUM, ALL COMPLETE APPLICATIONS MUST HAVE the initial letter that is sent within 10 days of receipt that tells the applicant one of these three things:

The applicant was selected for immediate occupancy; The application was considered complete, the applicant has been placed

on the waiting list and they will be notified when an apartment becomes available.

The application has been rejected and the reason for the rejection along with appeal rights. If the reason for rejection is because of bad credit the letter must give the name and address of the credit reporting agency used to obtain the report.

Waiting Lists cont’d• INCOMPLETE APPLICATIONS –

If the application was considered incomplete a letter must be sent to applicant within 10 days to notify the applicant of the items

that are needed for the application to be considered complete and

that priority will not be established until the missing items are received. Although regulations do not specify the number of days to give the applicant it is only fair to give them the same amount of time that you had to review the application. We recommend that you specify a date to have the items back to you so that you can say “If you do not provide the information needed by _______(date 10 days from date of letter) we will consider you no longer interested and will remove your application from the waiting list.”

Waiting Lists cont’d• The waiting list does not always have the columns to record all of the

information that is required to be recorded. One of the most overlooked items is the final disposition of the application. We should be able to look at the waiting list and be able to tell whether the application was withdrawn, rejected, moved in or if the application is still pending.

• Wrong codes being used on the waiting list. The codes must match the codes shown on the tenant certification for the Race and Ethnicity. Example: Instead of using W for white, B for black, A for Asian, etc. the waiting list should be filled out using 1 for Asian, 2 for American Indian/Alaskan Native, 3 for Black, 4 for Pacific Islander or Hawaiian and 5 for White. Instead of using H for Hispanic and N for Non-Hispanic the list should reflect “a” for Hispanic and “b” for Non-Hispanic.

Tenant Certifications

• Effective Date vs. Initial Entry Date• Initial Entry Date is the ACTUAL DATE the tenant moves in.• The Effective date must ALWAYS be the 1st day of the month

following the Initial Entry date UNLESS the tenant actually moves in on the 1st.

Examples: Tenant moves in Feb 1, 2016, both the Initial Entry date and the Effective date will be 2/1/16.

Tenant moves in Feb 2, 2016 the Initial Entry date will be 2/2/16 and the Effective date will be 3/1/16.

Tenant Certifications cont’d• Assets do not always match the verification forms.

• No Medical Deductions on any tenant. Especially on elderly complexes, make sure to include medical deductions as this can have an impact on the tenants’ rent.

Chapter 6 Section 6.9 C. Calculating Adjusted Income

4. Deductions for Disability Expenses

5. Deduction for Medical Expenses

Tenant Certifications cont’d• Zero Income Tenants 6.9 A 4 “It is the policy of Rural Development

not to accept a tenant certification for an applicant or tenant with zero income unless all income is specifically exempted.” ($100 from a relative per month is not considered “exempted income” therefore a quarterly verification is required.)

• Guidance for the verification of zero income is found in Attachment 6-B. (This is required quarterly and many times this has not been done the first time, much less quarterly.)

• The borrower must review the circumstances of the tenant quarterly to ascertain if circumstances have changed. The borrower must remind the tenant that the lease specifically states that it is the tenant’s responsibility to immediately report changes in income to management.

Tenant Certifications cont’dInformation to Verify• The borrower must verify the following information:• Disability: Disabilities are verified only if necessary to qualify the

household as an elderly family, or if a disability affects the household's eligibility for deductions from income. Verification may be provided by a physician, a clinic, welfare agency, the Social Security Administration, or other knowledgeable service.

• Household composition: Verification of household composition can be accomplished through a variety of sources and documents. For example, a birth certificate or custody agreement verifies that a minor child is part of the household. Also, divorce or separation agreements can verify that an individual is no longer a member of the household.

• Income: Acceptable Income Verification Sources for verifying income are described in Exhibit 6-3.

Maintenance Requests• No follow-up on maintenance requests. Once a

maintenance request has been made it should be tracked. Suggest a copy be retained by the manager so that the maintenance staff doesn’t take the only copy and just throw it away. Even if the maintenance staff completes the work if they don’t give it back to the manager to put in the unit file how does the manager know that the work has been completed? Recommend that the maintenance staff have the tenant to sign the request but if the tenant is not available to sign then the manager should be inspecting the work themselves and signing off on the maintenance request form.

Maintenance Requests cont’d• HB-2-3560 Chapter 5 “Project Physical Condition”• “Work orders. Managers must know what has happened

from the time a complaint has been received or a problem has been noted, to an inspection confirming the condition has been corrected. The Agency requires the project to have a work-order system that tracks the date a complaint is received, the inspection to verify the complaint, a report describing the required repair or corrective action, the assignment of the repair, the completion report, and final inspection noting satisfactory completion of the work.”

Maintenance Requests cont’d• REGULAR INSPECTIONS – Documentation is so

important. If you have a tenant tearing up an apartment you need to get them out as soon as possible. You can’t wait until you decide to start termination process to start documenting. And sometimes you won’t know that a tenant is going to be a repeat offender until it’s gone on for a while. Although regulations only require a minimum of annual inspections we recommend more frequent inspections such as monthly or quarterly.

• Many times the inspection reports we find in the files appear to be photocopies from month to month. This is not good documentation.

Maintenance Requests cont’d• At a minimal the manager should be going in and checking the

smoke alarms, checking under sinks for water damage and changing the HVAC filters. DO NOT just hand the tenants new filters when they come into the office to pay their rent (or pick up UA checks). You can’t imagine the number of times we have gone into units and found dirty air filters and a stack of clean filters inside the closet. THE MECHANICAL CLOSETS ARE NOT THE RESPONSIBILITY OF THE TENANT TO MAINTAIN. SITE MANAGERS NEED TO MAINTAIN THOSE CLOSETS. Some borrowers even put locks on the mechanical closets to keep tenants from using the closets as a broom closet to prevent a fire hazard.

Maintenance Requests cont’d• Preventive maintenance. Most maintenance work can be

predicted and scheduled—this is typically described as preventive maintenance. The Agency requires management agents to spell out procedures for scheduling routine tasks, such as garbage and trash removal, snow and ice removal, grounds upkeep, routine painting, and minor repairs. Procedures are also required for the routine maintenance of equipment consistent with service information provided by the manufacturer—biweekly or monthly routine oiling, adjusting, replacement of filters, safety checks of alarms, and outside lighting, etc.

MOVE-IN/MOVE-OUT INSPECTIONS

• Inspections. Inspecting a unit with the tenant at move-in and move-out establishes the condition of the unit at the time the tenant takes possession, and may help clarify responsibility for any damages that have occurred in the unit during the occupancy period.

• Tenant damages. The Agency requires management to establish a policy and implement a system to obtain reimbursement for damage caused by the tenant to the property beyond normal wear and tear. The policy is to be stated in the tenant’s lease as described in Chapter 6 of Handbook HB-2-3560.

Recertification Notices• Recertification notices are typically sent 90, 60 and 30 days prior to

expiration of the current tenant certification. HB-2-3560, Chapter 6, ¶ 6.28 A. 1. states:

• At least 75 to 90 days prior to the date that the certification expires, the borrower must notify the tenant in writing that they must be recertified to remain eligible to continue residence at the property. This letter will also include what information the borrower needs from the household in order to complete the certification.

•  If the household still fails to respond to the letter, the borrower should issue a second letter 30 days prior to the date which the certification expires.

Recertification Notices• The 30 day notice must inform the tenant of the:

Information needed to recertify; (Many times the letter does not say what the tenant needs to provide to the manager.)

Time frame in which the new certification must be submitted to the Agency (no later than the expiration date of current certification); and

  Consequences for failure to comply with the recertification process.

SPECIFICALLY – You must tell the tenant that their rent will be going to NOTE RATE RENT if they are not recertified by the expiration date and that their lease will be terminated.

Terminations/Evictions• Letters to tenants from management are

NOT EVICTIONS and should not be worded as such. You do not have the power to EVICT anyone! You can TERMINATE a occupancy after giving notice to the tenant that they have violated their lease and if they do not correct their actions after giving them an opportunity to do so.

Terminations/Evictions cont’d• HB-2-3560 CHAPTER 6, ¶ 6.26 – EXECUTION OF THE

LEASE WITH THE TENANT (One short paragraph) Prior to the occupancy of any unit by an applicant, the applicant and the borrower must execute a lease that has been approved by the Agency. Once a lease has been executed with the applicant, they are entitled to occupy the unit so long as they remain eligible and comply with lease renewal requirements. EXPIRATION OF THE LEASE IS NOT IN AND OF ITSELF GROUNDS FOR A TERMINATION OF TENANCY.

Terminations/Evictions cont’d• HB-2-3560 CHAPTER 6, ¶ 6.31 – LEASE VIOLATIONS

(Also one short paragraph) Borrowers may require tenants in violation of occupancy rules or the terms of their lease to vacate the property in accordance with the terms of their lease agreement. However borrowers must provide notice to such tenant in a format that is in compliance with state and local laws and is approved by the Agency.

• ¶ 6.32 TERMINATION OF OCCUPANCY (See also §3560.159 – found in Appendix 1 of HB-2-3560)

A. Tenants in Violation of the Lease

Marketing• Community contact letters that are maintained in the marketing

file and attached to the AFHMP. When we call the community leaders many times we are calling those individuals or organizations that you are sending these letters to and we are being told that they have never received the letters. Sometimes it is because they are being addressed to the wrong individuals. Sending letters for the sake of checking off an item on the AFHMP checklist does not produce the results you need, especially if you have a vacancy problem. We recommend that you call the organization PRIOR TO sending out the letters to make sure you are sending them to the attention of the correct individuals.