SUMMARY: This final rule revises HUD's public and assisted housing program regulations to implement the upfront income verification (UIV) process and to require the use of HUD's Enterprise Income Verification (EIV) system by public housing agencies (PHAs), and multifamily housing owners and management agents (O/As), when verifying the employment and income of program participants at the time of all reexaminations or recertifications. This final rule will ensure that deficiencies in public and assisted housing rental determinations are identified and cured. This final rule is consistent with HUD's comprehensive strategy under the Rental Housing Integrity Improvement Project (RHIIP) initiative to reduce the number and dollar amount of errors in HUD's rental assistance programs. This final rule follows publication of a June 19, 2007, proposed rule, and makes certain changes at this final rule stage in response to public comment and further consideration of certain issues by HUD.

EFFECTIVE DATE: Effective Date: March 30, 2009.

FOR FURTHER INFORMATION CONTACT: For Office of Public and Indian Housing programs, contact Nicole Faison, Director of the Office of Public Housing Programs, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 4226, Washington, DC 20410, telephone number 202-708-0744. For Office of Housing Programs, contact Gail Williamson, Director of the Housing Assistance Policy Division, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 6138, Washington, DC 20410, telephone number 202-402-2473. (These are not toll-free numbers.) Persons with hearing or speech impairments may access these numbers through TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION: Sections 6 and 8 of the United States Housing Act of 1937 (42 U.S.C. 1437d and 1437f), section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), sections 221(d)(3), 221(d)(5), and 236 of the National Housing Act (12 U.S.C. 1715l(d) and 1715z-1), section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013), and section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) authorize HUD to provide financial assistance in the form of rent subsidies for participants in HUD's public and assisted housing programs. The regulations implementing this authority are located in parts 5, 236, and 891 of Title 24 of the Code of Federal Regulations.

As part of the procedures for determining proper rent subsidies, PHAs and O/As must conduct income verifications for applicants and participants in covered HUD programs. As a condition for obtaining financial assistance, HUD requires the disclosure and verification of Social Security Numbers, Employer Identification Numbers, and citizenship or eligible immigration status. With few exceptions, HUD cannot make financial assistance available to applicants and participants who do not have eligible status with respect to citizenship or who have noncitizen immigration status. However, temporary deferrals of financial assistance termination may be allowable in limited circumstances.

In addition to these eligibility requirements, HUD requires the determination of annual and adjusted income of applicants and participants who apply for or receive assistance in the public and assisted housing programs. In part, "annual income" means all income amounts that a family anticipates to receive in the 12-month period following admission or a participant's reexamination or recertification effective date. Furthermore, PHAs and O/As are required to electronically submit family characteristics data to HUD through certain forms.

II. The June 19, 2007, Proposed Rule

On June 19, 2007, at 72 FR 33844, HUD published for public comment a proposed rule to revise HUD's public and assisted housing program regulations, by requiring PHAs and O/As to conduct UIV of participants in assistance programs through the use of HUD's EIV system. The purpose of the proposed regulatory amendments was to address HUD's priority of reducing errors, including overpayment of subsidy to PHAs and O/As, caused by incorrect income determinations and rent calculations in HUD's public housing program, and in tenant-based and project-based rental assistance programs.

For more detail on the proposed revisions to HUD's public and assisted housing program regulations, please see the preamble of the June 19, 2007, proposed rule.

III. This Final Rule; Changes to the June 19, 2007, Proposed Rule

In response to public comments, discussed in section IV of this preamble, and following further consideration of several aspects of the proposed rule, HUD has made certain changes at this final rule stage. This section of the preamble highlights some of the more significant changes.

1. Social Security Numbers of participants. The final rule provides that each participant whose initial determination of eligibility was before the effective date of the final rule must submit their Social Security Number at the next interim or regularly scheduled reexamination or recertification.

2. Social Security Numbers of new household members. The final rule provides that if the participant's household adds a new member, including a child or children, the participant must submit the new member's Social Security Number at the time of the request for assistance or at the time of processing the interim reexamination/recertification of family composition.

3. Waiting list position retained despite failure to provide Social Security Number. The final rule has been revised to allow applicants who cannot provide Social Security Numbers for all family members to retain their place on the waiting list for the program; however, all members of the household must provide appropriate documentation of his or her Social Security Number before the household is admitted into the program. The final rule removes the proposed rule language permitting the applicant to participate in the program, provided it submits to the processing entity appropriate documentation within 60 days from the date of admission into the program. HUD recognizes, however, that homeless persons face additional challenges in obtaining appropriate documentation of their Social Security Number. Thus, in this final rule, HUD has created an exception for applicants receiving assistance under the section 8 Moderate Rehabilitation Single Room Occupancy Program for Homeless Individuals. Such applicants have 90 days after admission into the program to provide appropriate documentation, with discretion given to the processing entity to extend this period for an additional 90 days.

4. Removal of pro-rata rental assistance provisions. The proposal to prorate rental assistance for family members who do not have Social Security Numbers was not adopted by the final rule.

5. Required use of HUD's EIV system. The final rule requires PHAs and O/As to implement and use HUD's EIV system for verifying income of current participants only. For multifamily housing O/As, implementation of the use of EIV will commence 6 months after the effective date of this final rule to allow them additional time to become as familiar with using the EIV system as their PHA counterparts and to prepare for the full implementation of EIV. The public may view the System of Records notice and Privacy Impact Assessment for the EIV system at http://www.hud.gov/offices/cio/privacy/documents/fed_reg_sornotice_eiv.pdf and http://www.hud.gov/offices/cio/privacy/pia/eiv.pdf, respectively.

6. Required verification of U.S. citizenship or nationality. The final rule requires that the responsible entity obtain verification of the signed declaration of U.S. Citizenship or U.S. nationality.

7. Discretion to use either actual past income or projected future income. The final rule gives PHAs and O/As discretion to use either actual past income or projected future income for purposes of calculating annual income.

8. Calculation of annual income under the HOME program. The final rule requires participating jurisdictions in the HOME Investment Partnerships Act Program (HOME Program) to determine the time period for calculating a family's annual income in accordance with SEC 5.609. However, participating jurisdictions may continue to use one of the three definitions of "annual income" permitted by SEC 92.203(b).

9. Other technical changes. In addition to the changes described above, HUD has taken the opportunity afforded by the final rule to make other nonsubstantive, technical, changes to the regulatory language for purposes of clarity and organization.

IV. Discussion of Public Comments Received on the June 19, 2007, Proposed Rule

The public comment period for the June 19, 2007, proposed rule closed on August 20, 2007. HUD received 34 public comments. HUD received public comments from a variety of sources, including: Individuals; PHAs; national PHA and redevelopment organizations; affordable housing advocacy associations; and immigration policy groups.

The following provides a summary of the significant issues raised by the public commenters on the June 19, 2007, proposed rule, and HUD's response to those issues.

A. General Comments

Comment: Three commenters, although generally in support of HUD's goal of reducing errors in the calculation of rental subsidy, wrote that the proposed rule would result in increased administrative burdens and requirements on PHAs and O/As. Examples of increased administrative burdens include: Changes in software, model leases, and training; increases in document collection responsibilities by PHAs, individuals, and households; and extensive revisions to current operating procedures.

HUD Response: HUD is sympathetic to concerns regarding the administrative burdens imposed by its regulations, and strives to minimize such burdens in the development of new regulatory policy. HUD does not agree with the commenters that the regulatory changes will increase administrative burden. Rather, the final rule will, in many instances, reduce the administrative requirements for PHAs and O/As. For example, the income verification processes will be reduced with the use of the EIV system. PHAs and O/As in many instances will not be required to obtain written verification of employment, wages, unemployment compensation, and Social Security benefits from third-party income sources, so long as the PHA or O/A obtains and maintains documentation of EIV system consultation/usage. PHAs and O/As may accept tenant-provided documentation, and this documentation will meet HUD's requirement for obtaining third-party verification when supplemented by the EIV income report and/or, for PHAs, the EIV individual control number, in the tenant file.

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule.

CFR Part: "24 CFR Parts 5, 92, and 908"

RIN Number: "RIN 2501-AD16"

Citation: "74 FR 4832"

Document Number: "Docket No. FR-4998-F-02"

Federal Register Page Number: "4832"

"Rules and Regulations"

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