4832 Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Rules and Regulations 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 5, 92, and 908 

[Docket No. FR–4998–F–02] 

RIN 2501–AD16 

Refinement of Income and Rent 

Determination Requirements in Public 

and Assisted Housing Programs; Final 

Rule 

AGENCY: Office of the Secretary, HUD. 

ACTION: Final rule. 

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. 

DATES: 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: 

I. Background 

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 

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Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Rules and Regulations 4833 

1The Social Security Administration (SSA) has 

determined that 38,269 of these individuals have an 

invalid Social Security Number (SSN). Some of 

these errors may be attributed to PHA data entry 

errors. Through its internal HUD pre-screening 

process, HUD has determined that the PHAreported SSN for the remaining 251,774 individuals 

is invalid because the reported number does not 

meet SSA standards as a valid SSN. 

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 § 5.609. However, 

participating jurisdictions may continue 

to use one of the three definitions of 

‘‘annual income’’ permitted by 

§ 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. 

Comment: Two commenters urged 

HUD to delay development of the final 

rule until the future of the section 8 

Voucher Reform Act (SEVRA, H.R. 

1851) in Congress is clear. SEVRA 

would make several major policy and 

procedural changes to HUD’s housing 

assistance programs. The commenters 

suggested that HUD consider holding off 

on rulemaking until it is clear what will 

happen legislatively, or that HUD limit 

the changes in the regulation to the bare 

minimum of what it believes is 

necessary, in order to minimize the 

disruption and costs that would 

otherwise result from having to 

implement two sets of potentially 

conflicting changes within a short time 

frame. 

HUD Response: The purpose of this 

rulemaking is to strengthen income and 

rent integrity, thereby reducing 

overpayments. To delay issuance of the 

final rule would delay significant 

reductions in the level of improper 

payments within HUD’s rental 

assistance programs. 

B. Comments Specific to Proposed 

Amendments to § 5.216 

Comment: Two commenters 

questioned HUD’s authority under 

section 165 of the Housing and 

Community Development Act of 1987 

(42 U.S.C. 3543) to deny housing 

assistance to an otherwise eligible 

individual or household because the 

individual has not been assigned a 

Social Security Number. The 

commenters also wrote that the changes 

to § 5.216 in the proposed rule 

contradict HUD’s previous 

interpretation of 42 U.S.C. 3543, in 

which HUD required the disclosure only 

of assigned Social Security Numbers. 

HUD Response: HUD has not revised 

the rule in response to these comments. 

HUD has determined that the legal 

authority exists to deny housing 

assistance to individuals and 

households who have failed to disclose 

his or her Social Security Number. HUD 

believes this regulatory change is 

essential to assuring the financial 

integrity of its rental assistance 

programs. 

Typically, individuals who are U.S. 

citizens or who are in this country 

legally possess a Social Security 

Number. Based on HUD’s analysis of 

participant data in its public and Indian 

housing (PIH) programs, there are 

290,043 individuals who have invalid 

Social Security Numbers 1 and 54,612 

individuals who have not disclosed a 

Social Security Number. Thus, 344,655 

individuals out of a total of 7,570,271 

individuals (nationwide), or 5 percent of 

individuals, may not have disclosed an 

accurate and complete Social Security 

Number. To prevent fraud and abuse 

within HUD rental assistance programs, 

HUD is seeking to terminate assistance 

to those individuals who have not 

disclosed a valid Social Security 

Number. 

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4834 Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Rules and Regulations 

Based on HUD’s analysis of 

participant data in its Office of Housing 

programs, there are 29,074 individuals 

out of a total 2,186,268 individuals 

nationwide who have invalid Social 

Security Numbers (the Social Security 

Number for 1,542 of these individuals is 

invalid because the reported number 

does not meet the standards of the 

Social Security Administration (SSA) as 

a valid Social Security Number, and the 

remaining 27,532 are individuals who 

have not disclosed a Social Security 

Number). Thus, 1.3 percent of 

individuals may not have an accurate 

and complete Social Security Number. 

To prevent fraud and abuse within 

HUD’s multifamily rental assistance 

programs, HUD is seeking to terminate 

assistance to those individuals who 

have not disclosed a valid Social 

Security Number. It should be noted 

that HUD’s use of Social Security 

Numbers is for the purpose of ensuring 

that limited federal resources serve as 

many eligible individuals and families 

as possible. As previously publicized in 

its Federal Register notices, HUD has 

implemented appropriate privacy 

safeguards to protect each Social 

Security Number collected and utilized 

for identity and income-matching 

purposes. The public should be assured 

of HUD’s commitment to safeguarding 

individuals’ private information. 

Comment: One commenter wrote that 

HUD’s proposal to prorate assistance for 

households in which one or more 

members do not have an assigned Social 

Security Number is at cross-purposes 

with current statutory (42 U.S.C. 1436a) 

and regulatory (24 CFR 5.518(b)) 

authorities that permit a temporary 

deferral of full assistance to households 

who have a refugee or asylum 

application pending final adjudication. 

HUD Response: As noted above in 

this preamble, HUD has, upon 

reconsideration, decided not to make 

final the provisions of the proposed rule 

regarding the proration of assistance 

based upon failure to submit a Social 

Security Number. 

HUD must comply with the 

provisions of 42 U.S.C. 1436a, which 

provide restrictions on use of assisted 

housing by non-resident aliens. Eligible 

for financial assistance under this 

statute are U.S. residents who are 

refugees (or aliens who are lawfully 

present in this country pursuant to 

admission under section 207 of the 

Immigration and Nationality Act (8 

U.S.C. 1157)), and aliens who are 

granted asylum under section 208 of 

this statute (8 U.S.C. 1158). Aliens in 

these groups are covered under 24 CFR 

5.500. These individuals would have 

Social Security Numbers. 

Until the family members have been 

determined to have eligible status (i.e., 

their applications are no longer 

pending), they are not authorized under 

the regulations to receive rental 

assistance. Such individuals may be 

eligible for a temporary deferral of 

termination of assistance—i.e., 

temporary deferral of eviction. Proration 

of rental assistance, however, is not an 

option if the family member(s) do/does 

not have eligible status, since there 

would be no assistance to prorate. 

Comment: Three commenters urged 

HUD to permit a phase-in period for the 

required disclosure and verification of 

Social Security Numbers, especially for 

children under 6 years of age who do 

not have Social Security Numbers or 

cards. One commenter suggested a 2- 

year implementation period, in order to 

provide for adequate notification of 

participants. 

HUD Response: Based on HUD’s 

analysis of participant data, there are a 

small number of children under the age 

of 6 without a Social Security Number. 

The proposed rule provided for a phasein period of not more than one year. 

Upon the effective date of the final rule, 

PHAs and O/As must notify the affected 

households of this policy. As of August 

21, 2008, there are approximately 

62,246 individuals under the age of 6 

who would be impacted by the final 

rule. In the Office of Housing’s 

programs, as of September 9, 2008, there 

are 21,083 individuals under the age of 

6 who will now be required to have a 

Social Security Number as a result of 

the final rule. Based on the minimal 

amount of time it takes to apply for and 

receive a Social Security Number and 

card, it is in the best interest of HUD to 

limit the phase-in period to no more 

than one year. 

Comment: One commenter suggested 

that, if applicants for housing assistance 

must disclose their Social Security 

Number at the time of application, the 

same procedure should apply to new 

household members seeking to become 

participants, rather than forcing them to 

wait until the next interim or regularly 

scheduled examination. 

HUD Response: HUD agrees with this 

comment, and has incorporated this 

suggestion into the final rule. 

C. Comments Specific to Proposed 

Amendments to § 5.218 

Comment: Four commenters raised 

the issue about the effect of proposed 

revisions to § 5.218 on ‘‘mixed 

families,’’ defined as those households 

that have a member who is unable to 

obtain documentation of a Social 

Security Number. Because proposed 

§ 5.218 does not allow for proration of 

housing assistance to applicants, the 

commenters expressed concern that the 

final rule would exclude such mixed 

families from housing assistance 

programs, even using a prorated 

assistance structure. 

HUD Response: The final rule has 

been revised to allow applicants who 

cannot provide Social Security Numbers 

for all family members to be admitted to 

the waiting list; however, the head of 

household must disclose his or her 

Social Security Number. In addition, all 

members of the household must 

disclose his or her Social Security 

Number before the household is 

admitted to assisted housing. 

Comment: Four commenters wrote 

that the language concerning proration 

of assistance in § 5.218 and the interplay 

between the assistance provisions in 

§ 5.216 and § 5.218 was confusing. For 

example, proposed § 5.216 would 

require the disclosure of Social Security 

Numbers and verification and 

documentation for all household 

members. However, proposed § 5.218 

would permit ‘‘mixed participant 

households’’ to receive prorated housing 

assistance when the ineligible person is 

residing in the unit. 

HUD Response: HUD agrees with this 

comment, and has revised § 5.218 to 

remove references to proration of 

assistance, and references to mixed 

families. 

Comment: One commenter agreed that 

proration of assistance can be 

appropriate where some, but not all, 

household members provide Social 

Security Numbers with appropriate 

documentation and verification. 

However, the commenter also suggested 

that PHAs and owners should inquire 

into whether there may be extenuating 

circumstances that warrant other, more 

appropriate, relief. 

HUD Response: The final rule 

provides ample time for affected parties 

to disclose and submit adequate 

documentation of his or her SSN, and 

references to proration have been 

removed. 

Comment: One commenter suggested 

that the final rule should more clearly 

give PHAs the right to deny 

participation in the assisted housing 

programs unless and until all Social 

Security Numbers have been submitted 

and documented for each household 

member. 

HUD Response: HUD has not revised 

the rule in response to these comments. 

The change suggested by the commenter 

might have the unintended consequence 

of creating vacancies or homelessness as 

a result of current participants not 

having a Social Security Number. The 

intent of the final rule is to notify 

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Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Rules and Regulations 4835 

affected families and require a specified 

time frame to submit the Social Security 

Numbers. 

D. Comments Specific to Proposed 

Amendments to § 5.233 

Comment: Many commenters 

expressed concerns over the proposed 

mandated use of upfront income 

verification techniques, either through 

use of HUD systems (such as the EIV 

system) or by implementing direct 

computer matching agreements with a 

federal, state, or local government 

agency or a private agency. The 

commenters specifically noted current 

problems with the EIV system, such as: 

The significant lag time in the provision 

of income data, especially for new 

applicants; a restriction on the use of 

income data older than 12 months; and 

the inability to verify certain types of 

income through EIV, including asset 

information, self-employment income, 

and other government assistance. The 

commenters wrote that HUD should 

perfect the EIV system, including 

addressing the aforementioned 

problems, before mandating its use. 

HUD Response: HUD has taken steps 

to enhance the performance of its EIV 

system. Improvement of the EIV system 

is an ongoing process, and HUD 

welcomes comments and suggestions 

from PHAs and O/As on possible future 

changes to the system. As noted above 

in this preamble, the final rule requires 

use of the EIV system for verifying 

income sources maintained in the EIV 

system of current participants only. The 

use of the EIV system will be required 

to ensure that participants have 

disclosed all income sources that are 

verifiable through HUD computermatching programs. 

Comment: Two commenters wrote 

that mandating UIV use would be costprohibitive. One commenter wrote that 

small PHAs will not have the 

administrative funds necessary to pay 

for computer-matching agreements with 

other agencies. One commenter 

requested that § 5.233 not be applied to 

programs administered or sponsored by 

nonprofit housing agencies. By 

requiring the use of a particular vendor 

or software, HUD would be increasing 

costs for small nonprofit housing 

providers, and rents are not sufficient to 

support these additional costs. 

HUD Response: HUD is sympathetic 

to the cost concerns raised by the 

commenters and has revised the rule to 

address this issue. Specifically, the final 

rule requires PHAs and O/As to use 

HUD’s EIV system, which HUD provides 

to program administrators at no cost. 

Comment: One commenter suggested 

that there is no statutory authority for 

portions of the data available in the EIV 

system to be made readily accessible to 

multifamily property owners and 

contract agents who administer HUD’s 

multifamily housing programs. The 

commenter noted that, although HUD 

and PHA representatives may have 

direct access to wage, employment, and 

Social Security income data, such 

access by multifamily owners or agents 

should be granted only after notice-andcomment rulemaking. 

HUD Response: HUD has not revised 

the rule in response to this comment. 

Sections 453(j)(7)(E)(iv)(I) and (II) of the 

Social Security Act (42 U.S.C. chapter 7) 

authorize HUD to disclose information 

from the computer-matching program to 

a private owner, a management agent, 

and a contract administrator after 

appropriate safeguards have been put in 

place. 

Comment: One commenter expressed 

concern about the ability to share tenant 

or participant EIV data with affected 

tenants or participants, even when an 

adverse action is being taken against the 

tenant or participant based on the EIV 

data. The commenter suggests that HUD 

add the following language to § 5.233, 

which is currently found in HUD 

Handbook 4350.3, REV–1, CHG–2: ‘‘The 

applicant’s or tenant’s file should be 

available for review by the applicant or 

tenant upon request or by a third party 

who provides signed authorization for 

access from the applicant or tenant.’’ 

HUD Response: HUD has not revised 

the rule in response to this comment. In 

accordance with the Federal Privacy Act 

(5 U.S.C. 552a), including HUD’s 

regulations implementing the Federal 

Privacy Act at 24 CFR part 16, and 24 

CFR 5.236(b)(3)(ii), the PHA and O/A 

are authorized to: (1) Provide the tenant 

with information obtained from a 

computer-matching program; and (2) 

verify such information with the tenant. 

Comment: Three commenters 

discussed the proposed language in 

§ 5.233(b) involving penalties, including 

sanctions, for noncompliance with the 

mandated use of UIV techniques. The 

commenters expressed concern about 

what the commenters perceived to be 

open-ended or undefined penalties for 

noncompliance. The commenters wrote 

that safe harbor provisions, including a 

reasonable implementation period, 

should be included in the final rule. 

HUD Response: HUD has not revised 

the rule in response to these comments. 

Ninety-eight percent of all active PHAs 

already have access to EIV. The final 

rule provides for a 6-month transition 

period before use of the EIV system 

becomes mandatory for multifamily 

housing. This transition period will 

allow for O/As to become more familiar 

with using the National Directory of 

New Hires (NDNH) data, which has 

been available to O/As only since 

January 2008. 

E. Comments Specific to Proposed 

Amendments to § 5.508 

Comment: One commenter suggested 

that section 8 housing assistance be 

available only to U.S. citizens and legal 

immigrants. The commenter also 

suggested that if applicants for housing 

assistance cannot provide the required 

documentation, they should be denied 

assistance immediately whether or not 

they have legal family residing in this 

country. 

HUD Response: The regulations at 24 

CFR part 5, subpart E, implement the 

requirements of section 214 of the 

Housing and Community Development 

Act of 1980 (42 U.S.C. 1436a(a)). Section 

214(a) provides that notwithstanding 

any other applicable provision of law, 

the Secretary may not make financial 

assistance available for any alien unless 

that alien is a resident of the United 

States and one of seven categories of 

eligible aliens. Pursuant to section 

214(b)(1), ‘‘financial assistance’’ 

includes ‘‘assistance made available 

pursuant to the United States Housing 

Act of 1937.’’ Section 214(b)(2) provides 

that: 

If the eligibility for financial assistance of 

at least one member of a family has been 

affirmatively established under the program 

of financial assistance and under this section, 

and the eligibility of one or more family 

members has not been affirmatively 

established under this section, any financial 

assistance made available to that family by 

the applicable Secretary shall be prorated, 

based on the number of individuals in the 

family for whom eligibility has been 

affirmatively established under the program 

of financial assistance and under this section, 

as compared with the total number of 

individuals who are members of the family. 

A ‘‘mixed family’’ is defined under the 

regulations (24 CFR 5.504), to mean a 

family whose members include those 

with citizenship or eligible immigration 

status, and those without citizenship or 

eligible immigration status. 

Comment: Three commenters wrote 

that the requirements for proof of 

citizenship are extremely burdensome 

to residents already participating in the 

program (particularly those who may be 

elderly or disabled, have limited English 

proficiency, or who are victims of 

domestic violence, dating violence, 

stalking, or sexual assault) and to PHAs 

and owners who must verify such 

citizenship status. Two commenters 

suggested that, by requiring proof of 

citizenship, HUD is taking away the 

PHAs’ discretion in establishing 

program standards. 

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HUD Response: Verification of 

citizenship status is statutorily required. 

Further, the majority of participants and 

applicants already have the necessary 

proof of citizenship or eligible 

noncitizen status. HUD also provides 

program administrators use of the 

Systemic Alien Verification for 

Entitlements (SAVE) system to assist in 

the verification of non-U.S. citizens’ 

immigration status. 

Comment: Three commenters raised 

questions regarding the meaning of 

‘‘eligible immigration status’’ and the 

type of documentation, including 

submission of documentation 

electronically, that would be acceptable 

in meeting the requirements of § 5.508. 

The commenters requested that HUD 

clarify ‘‘eligible immigration status’’ to 

ensure that immigrant victims of 

domestic violence and Cuban/Haitian 

immigrants are eligible for federal 

housing assistance. Moreover, the 

commenters urged HUD to clarify that 

the list of documents in § 5.508(b) is an 

illustrative, rather than exhaustive, list, 

since many types of documents serve to 

establish eligible, non-citizen status. 

HUD Response: Any immigrant who 

is lawfully in this country and meets 

other program eligibility requirements is 

eligible to participate in HUD’s rental 

assistance programs. HUD’s list of 

acceptable documents for eligible 

immigration status will reflect those 

documents referenced by the 

Department of Homeland Security 

(Bureau of Immigration and Customs 

Enforcement), as prescribed in HUD 

administrative instruction and 

guidance. 

Comment: Two commenters suggested 

that HUD establish time frames for the 

tenant to obtain and provide the 

necessary citizenship documentation, 

and for PHAs to implement the 

documentation requirement. 

HUD Response: HUD has not revised 

the rule in response to these comments. 

However, HUD may issue 

administrative guidance as questions 

arise regarding implementation of this 

final rule, or as HUD may otherwise 

determine is necessary, to assist affected 

parties in complying with the new 

regulatory requirements. 

Comment: One commenter stated that 

the current regulations governing 

assistance to non-citizens are very 

difficult to interpret, and that the 

proposed revisions at § 5.508 do not 

improve the clarity. The commenter 

suggests that HUD rewrite the 

regulations at 24 CFR part 5, subpart E, 

Restrictions on Assistance to 

Noncitizens, to make them easier to 

understand and follow. 

HUD Response: HUD has not revised 

the rule in response to these comments. 

As noted in the response to the 

preceding comments, HUD may issue 

administrative guidance at a later date 

to assist affected parties in complying 

with the new regulatory requirements. 

F. Comments Specific to Proposed 

Amendments to § 5.518 

Comment: One commenter suggested 

that, instead of eliminating temporary 

deferrals of termination of assistance for 

families with noncitizen members, such 

temporary deferrals should be 

expanded. Because obtaining the 

necessary documentation for all family 

members can be time-consuming and 

expensive, the commenter wrote that 

the proposed revisions would be a 

further constraint on noncitizens and 

cause temporary homelessness. 

HUD Response: HUD must ensure that 

all individuals in the program are 

eligible. Only those individuals who 

need to be verified would incur the cost 

of obtaining documentation. In addition, 

the PHA or O/A may at its discretion 

extend the time period to obtain 

documentation, which may enhance the 

individuals’ ability to afford the 

expense. The 18-month deferral period 

was a sufficient length of time and has 

long since elapsed. With the exception 

of refugees and persons seeking asylum, 

families with temporary deferral of 

termination of assistance with 

noncitizen members should no longer 

be receiving housing assistance. 

G. Comments Specific to Proposed 

Amendments to § 5.609 

Comment: Several commenters wrote 

that, because HUD’s EIV system does 

not capture ‘‘actual time’’ data, the 

proposal in § 5.609 to amend the current 

definition of annual income, from 

anticipated ‘‘future income’’ to ‘‘actual 

income,’’ is not compatible with the 

method of collecting individuals’ actual 

income. The commenters suggested that 

until such time as the EIV system can 

be used to verify current income, the 

definition of annual income should not 

be changed. One commenter suggested 

that HUD permit PHAs to rely on EIV 

data for the purpose of determining 

annual income, unless it possesses 

credible information that such data are 

not accurate. 

HUD Response: The final rule gives 

the PHA or O/A the discretion to use 

either actual past income or projected 

future income to minimize possible 

errors in the reexamination/ 

recertification system (for example, 

where a tenant quits a job before 

reexamination/recertification and 

assistance is calculated at a higher 

level). PHAs and O/As may use actual 

past annual income from EIV, so long as 

the tenant does not dispute the income 

information and current tenantprovided documentation or third-party 

verification does not suggest higher 

income in the next 12 months. 

Comment: Several commenters wrote 

that although the rationale for using past 

income is that it is a known amount, 

anticipated future income more 

accurately reflects what applicants and 

participants are receiving when they are 

seeking housing assistance. One 

commenter suggested that PHAs or 

owners look at the previous year’s tax 

return to determine ‘‘annual income.’’ 

HUD Response: As noted in the 

preceding response, the final rule gives 

the PHA or O/A the discretion to use 

either actual past income or projected 

future income to minimize errors in the 

reexamination/recertification system. 

The use of information from the 

previous year’s tax returns is not an 

effective method of determining annual 

income because tenants may not file tax 

returns. 

Comment: Four commenters wrote 

that the change in the ‘‘annual income’’ 

definition would increase the 

administrative workload and the 

complexity of verifying actual income 

received, and that PHAs would lose 

money and would need increased 

operating subsidy while complying with 

the new requirements. One commenter 

suggested that HUD provide grants to 

PHAs that are earmarked for 

implementing investigative and 

paralegal staffing to combat program 

fraud and abuse. 

HUD Response: The final rule gives 

the PHA or O/A the discretion to use 

either actual past income or projected 

future income. PHAs and O/As may use 

actual past annual income from EIV, so 

long as the tenant does not dispute the 

income information and current tenantprovided documentation, or third-party 

verification does not suggest higher 

income in the next 12 months. 

Comment: Two commenters focused 

on the new requirement in § 5.609(b) for 

PHAs to ‘‘annualize the income data to 

determine the family’s income for the 

12-month period.’’ One commenter 

asked HUD to clarify what it meant by 

‘‘annualize the income data.’’ One 

commenter urged HUD to strike this 

new requirement and consider issuing 

guidance that encourages sponsors to 

use newer information if it reflects 

substantial changes in household 

income. 

HUD Response: ‘‘Annualize the 

income data’’ means to convert periodic 

income to an annual amount. For 

example, if the PHA or O/A determines 

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that the tenant’s monthly income is 

$500, this amount should be multiplied 

by 12 to compute an annual amount of 

$6,000. Again, the final rule provides 

the PHA or O/A with the discretion to 

use either actual past income or 

projected future income to minimize 

errors in the reexamination/ 

recertification system. PHAs and O/As 

may use actual past annual income from 

EIV, so long as the tenant does not 

dispute the income information and 

current tenant-provided documentation, 

or third-party verification does not 

suggest higher income in the next 12 

months. 

Comment: One commenter asked 

HUD to clarify whether income 

generated from assets should be 

considered as income from the previous 

12 months or as ‘‘anticipated future 

income.’’ 

HUD Response: The regulation for 

determination of income from assets is 

not being changed, and references the 

12-month period in § 5.609(a)(2), which 

is the 12-month period following 

admission or recertification effective 

date. Accordingly, income from assets is 

‘‘anticipated future income.’’ 

Comment: One commenter requested 

that HUD provide guidance and 

standards for PHAs and owners to 

follow when dealing with ‘‘atypical 

income situations,’’ such as: A loss of 

employment, waiting periods for Social 

Security income, welfare payments, zero 

income, and self-employment. 

HUD Response: The PHA’s interim 

policy and multifamily housing’s 

interim policy defines how the PHA or 

O/A will deal with atypical income 

situations. HUD encourages PHAs and 

O/As to implement policies that will 

minimize unwarranted zero or 

minimum rents. 

Comment: One commenter wrote that 

HUD should ensure that proposed 

§ 5.609(a) properly follows the statutory 

definition of ‘‘income’’ at 42 U.S.C. 

1437a(b)(4) and thus exclude ‘‘any 

amounts not actually received by the 

family.’’ The commenter also requested 

that HUD make all necessary technical 

changes in the regulation to account for 

incorrect cross-references. 

HUD Response: The current 

regulatory definition makes reference to 

the term of income ‘‘anticipated to be 

received.’’ The proposed rule removes 

the term anticipated, which results in 

counting only income, received by the 

family. This change is consistent with 

the statutory definition of the term 

‘‘income,’’ and HUD has not revised the 

rule in response to this comment. 

Comment: One commenter wrote that 

some PHAs and owners may 

misinterpret the language in § 5.609(b) 

to mandate interim reporting or 

adjustment of rent for increases in 

income that occur in between annual recertifications. The commenter urged 

HUD to clarify that the proposal is not 

intended as a substantive change to 

interim reporting and rent adjustment 

requirements, and that PHAs and 

owners should follow their existing 

policies or HUD guidance regarding 

when interim reporting or rent 

adjustment is required for increases in 

income. 

HUD Response: The final rule does 

not mandate interim reexaminations, 

but gives the PHA the discretion to 

determine annual income using actual 

past annual income or projected future 

income based on current income. The 

PHA has discretion in developing 

interim increase reexamination policies; 

however, O/As do not. While these 

types of policies are helpful in reducing 

income reporting errors, HUD does not 

require PHAs to adopt interim increase 

reexamination policies. O/As must 

continue to follow existing policies for 

conducting interim recertifications. 

Comment: One commenter suggested 

that HUD allow PHAs to accept 

recertifications of income performed by 

other federal, state, or local government 

entities for purposes of determining the 

annual income of applicant households 

and recertifications of participant 

households. 

HUD Response: HUD has not revised 

the rule in response to this comment. 

Third-party recertifications for other 

benefits from other federal, state or local 

entities may not be effective due to the 

different program requirements in 

determining eligibility. 

Comment: One commenter suggested 

that HUD give PHAs the discretion to 

rely on (or to reject) evidence of recent 

income changes when determining 

annual income. The commenter wrote 

that some program participants have 

been known to manipulate their income 

temporarily before annual 

recertifications, in order to reduce their 

rent obligation. 

HUD Response: HUD does support 

PHA and O/A discretion in accepting or 

rejecting changes in family income. PIH 

published guidance in 2004, PIH Notice 

2004–01 (located at http:// 

www.hud.gov/offices/pih/), which 

requires the tenant to provide 

acceptable documentation to the PHA. 

Multifamily housing has guidance in 

Chapter 7 of Handbook 4350.3 REV–1. 

Furthermore, this final rule allows the 

PHA and O/A the flexibility and 

discretion to use either actual past 

annual income or projected future 

income based on current income. This 

flexibility will enable PHAs and O/As to 

minimize the occurrence of tenant 

income manipulation and ensure that 

participants pay their fair share of rent. 

It should be noted that the EIV system, 

as well as income information derived 

from the Social Security earnings 

statement (use SSA form–7004 available 

at http://www.ssa.gov to obtain this 

information) can provide the PHA and 

O/A with historical annual earned 

income of a participant. HUD recognizes 

that there are atypical situations in 

which an individual’s income may 

fluctuate as a result of seasonal and 

sporadic employment, or in which a 

participant intentionally discontinues 

employment prior to an interim or 

annual reexamination or recertification, 

in order to minimize his or her 

contribution to rent, thus avoiding the 

imposition of a higher rental subsidy on 

the individual’s family. PHAs and O/As 

are encouraged to utilize income 

information provided by HUD and 

available from other federal, state, and 

local agencies, as well as from private 

sector entities (such as The Work 

Number) to improve the integrity of 

income, or lack of income, reported by 

families. 

H. Comments Specific to Proposed 

Amendments to § 92.203 

Comment: One commenter wrote that 

the income determination under the 

HOME program should be based on the 

prior 12-month period, because 

‘‘anything else is too confusing and the 

HOME Program is confusing enough as 

it is.’’ 

HUD Response: HUD has changed the 

proposed rule to require participating 

jurisdictions to calculate a family’s 

annual income based on the actual 

income being received at the time the 

participating jurisdiction determines the 

family is income eligible, projected 

forward for a 12-month period. 

However, if the participating 

jurisdiction is unable to determine 

annual income using current 

information because the family reports 

little to no income or because income 

fluctuates, the participating jurisdiction 

may average past actual income 

received or earned within the last 12 

months before the determination date to 

calculate annual income. This provides 

the participating jurisdiction with the 

discretion needed to respond to a 

variety of family situations. 

Comment: One commenter wrote that 

the proposed requirements in § 92.203 

are a duplication of effort because, 

absent an accessible and constantly 

updated source of income data for the 

previous 12 months, participating 

jurisdictions must contact employers or 

review paycheck stubs to verify such 

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income, which must then be verified to 

determine if the income is different 

from the previous 12 months. The 

commenter also recommended that 

HUD amend the HOME regulations to 

permit subrecipients and developers 

using HOME funds to perform income 

determinations on behalf of the HOME 

participating jurisdiction. 

HUD Response: HUD has changed the 

rule to require participating 

jurisdictions to calculate a family’s 

annual income based on the actual 

income being received at the time the 

participating jurisdiction determines the 

family is income eligible, projected 

forward for a 12-month period. 

However, the final rule also gives 

program administrators the discretion to 

use a family’s past actual income when 

the program administrator is unable to 

project the family’s annual income 

based on current verified income 

information. This is most useful in 

situations where it is difficult for the 

participating jurisdiction to accurately 

determine a family’s projected annual 

income due to fluctuations in the 

family’s income or because the family 

reports little or no income. 

Subrecipients are nonprofit 

organizations and public agencies that 

are under contract with the participating 

jurisdiction to administer HOME 

programs on the participating 

jurisdiction’s behalf. The HOME 

regulations already permit subrecipients 

to perform income determinations for 

the participating jurisdiction. However, 

developers are not under contract to 

perform the functions of the 

participating jurisdiction and are not 

permitted to perform those functions 

independent of the participating 

jurisdiction. While these entities cannot 

perform income determinations, they 

can collect income documentation for 

the participating jurisdiction to review. 

As such, no further changes to 24 CFR 

part 92 are required at this time. 

I. Comments Specific to Proposed 

Amendments to § 908.101 

Comment: One commenter suggested 

that HUD strike the proposed language 

in § 908.101 requiring sponsors to retain 

form HUD–50058 during the term of 

each assisted lease and for at least 3 

years thereafter. The commenter argued 

that PHAs should not be required to 

maintain such form in the files, and that 

compliance with standards in state law 

and imposed by audit requirements are 

sufficient to protect HUD’s interests. 

HUD Response: HUD is requiring the 

PHA to maintain the form HUD–50058 

in its tenant’s files (either electronically 

or paper) to ensure that information 

transmitted to HUD is consistent with 

what is on file at the PHA. Previous 

PHA audits have in some instances 

revealed significant disparities between 

the actual PHA transaction and the 

transaction transmitted to HUD via the 

Public and Indian Housing Information 

Center (PIC) system. 

Comment: Two commenters opposed 

the change to require paper copies of 

each Form HUD–50058 in the tenant’s 

file. The commenters wrote that such a 

requirement would impose 

administrative burden and additional 

expense for PHAs and staff. Moreover, 

the commenters wrote that the 

information is readily available 

electronically. One commenter 

suggested that PHAs be required to keep 

only the most recent 2 years of form 

HUD–50058, and to maintain the file for 

3 years after move-out. 

HUD Response: The rule does not 

require paper copies of the form HUD– 

50058. The PHA has discretion to 

determine how they will maintain the 

form HUD–50058. PHAs are encouraged 

to retain electronic copies of the form. 

V. Findings and Certifications 

Executive Order 12866, Regulatory 

Planning and Review 

The Office of Management and Budget 

(OMB) reviewed this rule under 

Executive Order 12866 (‘‘entitled 

Regulatory Planning and Review’’). This 

rule was determined to be economically 

significant under E.O. 12866, and a 

regulatory impact analysis has been 

prepared for this rule. 

At both the proposed rule and this 

final rule stage, HUD determined that 

implementation of the regulations 

proposed and now promulgated through 

this final rule could result in transfers 

of funding to and among stakeholders of 

more than $100 million per year. 

Findings from an ongoing HUD study 

indicate that the gross transfer resulting 

from eliminating all the under- and 

over-payments of rents is approximately 

$925 million ($584 million in rent 

subsidy overpayment and $341 million 

in rent subsidy underpayment). Of these 

amounts, about $138 million in rent 

subsidy overpayment and $17 million in 

rent subsidy underpayment are 

attributable to errors in earned income 

reported to, or recorded by, program 

administrators, as determined by the 

study interviewers. In addition, income 

matches with the National Directory of 

New Hires (NDNH) reports an 

additional $359 million in rent 

underpayment due to tenants’ failure to 

report income to program administrators 

and the study interviewers. If the rule 

succeeds in reducing gross errors found 

in the study by at least 20 percent, the 

gross transfers among HUD-assisted 

tenants would be above the $100 

million annual threshold. The majority 

of the financial and economic impact of 

the final rule would result from the 

implementation and use of upfront 

verification of income to ensure truthful 

and correct reporting and recording of 

tenants’ income. The anticipated 

impacts of this rule are discussed more 

fully in the regulatory impact analysis 

that accompanies this rule. 

It should be noted that the 

implementation of this final rule would 

improve the integrity of HUD’s rental 

assistance programs and would result in 

some transfer. However, it may not 

necessarily lead to a reduction in 

subsidy needs and could in fact lead to 

a needed increase in the program 

funding to maintain the number of 

households served by the programs. The 

EIV system is already available and 

being used by program administrators. 

Therefore, this final rule would not 

impose significant additional costs. 

Assuming the rule is 100 percent 

effective in eliminating earned incomebased rent errors, if no over-subsidized 

tenants left the program in response to 

rent increases based on correct 

determination of earned income, then 

the net transfer to new tenants would be 

about $480 million per year, resulting in 

approximately 92,284 new tenants 

served (assuming an average total 

subsidy per tenant of $5,091 per year). 

At the other extreme, if all households 

who were over-subsidized due to 

earned-income error left HUD-assisted 

housing in response to rent corrections 

under the rule, the transfer to new 

tenants would amount to approximately 

$1,715,667,000 per year, resulting in 

about 337,000 new tenants served, 

assuming the same average subsidy 

costs. 

Notwithstanding, it is not realistic to 

expect the rule to be 100 percent 

effective, since there is no realistic basis 

for assessing a range of effectiveness 

away from a range of $0 to $480 million. 

There is also no basis for assessing the 

primary estimate. For all of these 

reasons, $1.715 million would represent 

the high estimate (assuming 100 percent 

effectiveness and 100 percent of existing 

tenants leave replaced by 337,000 new 

tenants) and $0 would represent the low 

estimate, assuming 0 percent 

effectiveness. 

The docket file, which includes the 

regulatory impact analysis, is available 

for public inspection in the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Room 10276, Washington, DC 20410– 

0500. Due to security measures at the 

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HUD Headquarters building, please 

schedule an appointment to review the 

docket file by calling the Regulations 

Division at 202–708–3055 (this is not a 

toll-free number). Persons with hearing 

or speech impairments may access this 

number through TTY by calling the tollfree Federal Information Relay Service 

at 800–877–8339. Additionally, the 

Economic Analysis prepared for this 

rule is also available for public 

inspection at the same location and on 

HUD’s Web site at http://www.hud.gov. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. This final rule 

is concerned with those entities that are 

responsible for making eligibility 

determinations and conducting income 

reexaminations or recertifications under 

sections 3 and 5 of the United States 

Housing Act of 1937 and tenant-based 

and project-based housing assistance 

under section 8 of the United States 

Housing Act of 1937. Specifically, the 

final rule strengthens HUD’s internal 

controls, refines regulations where 

unclear, and requires the use of HUD’s 

EIV system to verify the employment 

and income of existing participants. The 

U.S. Housing Act of 1937 defines a 

small PHA as a PHA that administers 

250 or fewer public housing units and 

irrespective of the number of vouchers 

that the PHA administers. HUD uses 

this number of units to also measure 

small multifamily housing 

developments. With fewer units to 

administer, there are fewer families for 

whom income verification is needed. 

Nonetheless, regardless of the number of 

units or families to administer, income 

verification processes are reduced with 

the use of the EIV system. Public 

housing and multifamily housing 

administrators are relieved of the 

burden of obtaining written verification 

of employment, wages, unemployment 

compensation, and Social Security 

benefits from third-party income 

sources, which is time consuming. 

Additionally, PHAs, large and small, are 

already familiar with and have begun 

using EIV. The final rule provides an 

additional 6 months for administrators 

of multifamily housing developments, 

large or small, to transition to EIV. 

Therefore, this final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

Accordingly, the undersigned certifies 

that this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Environmental Impact 

This final rule involves external 

administrative requirements or 

procedures that are related to income 

limits and exclusions with regard to 

eligibility for or calculation of HUD 

housing assistance or rental assistance. 

Such requirements or procedures do not 

constitute a development decision that 

affects the physical condition of specific 

project areas or building sites. 

Accordingly, under 24 CFR 50.19(c)(6), 

this final rule is categorically excluded 

from environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.). 

Paperwork Reduction Act 

The information collection 

requirements in this final rule have been 

approved by the Office of Management 

and Budget (OMB) under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520) and assigned OMB Control 

Numbers 2577–0220 and 2502–0204. In 

accordance with the Paperwork 

Reduction Act, HUD may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information, 

unless the collection displays a 

currently valid OMB Control Number. 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits, to the extent 

practicable and permitted by law, an 

agency from promulgating a regulation 

that has federalism implications and 

either imposes substantial direct 

compliance costs on state and local 

governments and is not required by 

statute, or preempts state law, unless the 

relevant requirements of section 6 of the 

Executive Order are met. This final rule 

does not have federalism implications 

and does not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the Executive 

Order. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531– 

1538) (UMRA) establishes requirements 

for federal agencies to assess the effects 

of their regulatory actions on state, 

local, and tribal governments, and on 

the private sector. This final rule would 

not impose any federal mandate on any 

state, local, or tribal government, or on 

the private sector, within the meaning of 

UMRA. 

Congressional Review of Final Rules 

This rule constitutes a ‘‘major rule’’ as 

defined in the Congressional Review 

Act (5 U.S.C. Chapter 8). This rule 

therefore has a 60-day delayed effective 

date and will be submitted to the 

Congress in accordance with the 

requirements of the Congressional 

Review Act. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance numbers applicable to the 

programs affected by this rule are 

14.103, 14.135, 14.149, 14.157, 14.181, 

14.195, 14.850, and 14.871. 

List of Subjects 

24 CFR Part 5 

Administrative practice and 

procedure, Aged, Claims, Crime, 

Government contracts, Grant 

programs—housing and community 

development, Individuals with 

disabilities, Intergovernmental relations, 

Loan programs—housing and 

community development, Low and 

moderate income housing, Mortgage 

insurance, Penalties, Pets, Public 

housing, Rent subsidies, Reporting and 

recordkeeping requirements, Social 

Security, Unemployment compensation, 

Wages. 

24 CFR Part 92 

Administrative practice and 

procedure, Grant programs—housing 

and community development, Low and 

moderate income housing, 

Manufactured homes, Rent subsidies, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 908 

Computer technology, Grant 

programs—housing and community 

development, Rent subsidies, Reporting 

and recordkeeping requirements. 

■ Accordingly, for the reasons described 

in the preamble, HUD amends 24 CFR 

parts 5, 92, and 908 to read as follows: 

PART 5—GENERAL HUD PROGRAM 

REQUIREMENTS; WAIVERS 

■ 1. The authority citation for part 5 

continues to read as follows: 

Authority: 42 U.S.C. 1437a, 1437c, 1437d, 

1437f, 1437n, 3535(d), and Sec. 327, Pub. L. 

109–115, 119 Stat. 2936. 

■ 2. Revise § 5.216 to read as follows: 

§ 5.216 Disclosure and verification of 

Social Security Number (SSN) and 

Employer Identification Numbers (EIN). 

(a) Disclosure required of assistance 

applicants. Each assistance applicant 

must submit the following information 

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to the processing entity when the 

assistance applicant’s eligibility under 

the program involved is being 

determined: 

(1) The complete and accurate SSN 

assigned to the assistance applicant and 

to each member of the assistance 

applicant’s household; and 

(2) The documentation referred to in 

paragraph (f)(1) of this section to verify 

each such SSN. 

(b) Disclosure required of individual 

owner applicants. Each individual 

owner applicant must submit the 

following information to the processing 

entity when the individual owner 

applicant’s eligibility under the program 

involved is being determined: 

(1) The complete and accurate SSN 

assigned to the individual owner 

applicant and to each member of the 

individual owner applicant’s household 

who will be obligated to pay the debt 

evidenced by the mortgage or loan 

documents; and 

(2) The documentation referred to in 

paragraph (f)(1) of this section to verify 

each such SSN. 

(c) Disclosure required of certain 

officials of entity applicants. Each 

officer, director, principal stockholder, 

or other official of an entity applicant 

must submit the following information 

to the processing entity when the entity 

applicant’s eligibility under the program 

involved is being determined: 

(1) The complete and accurate SSN 

assigned to each such individual; and 

(2) The documentation referred to in 

paragraph (f)(1) of this section to verify 

each SSN. 

(d) Disclosure required of 

participants. (1) Initial disclosure. Each 

participant whose initial determination 

of eligibility under the program 

involved was begun before March 30, 

2009 must submit the following 

information to the processing entity at 

the next interim or regularly scheduled 

reexamination of family composition or 

income, or other recertification for the 

program involved: 

(i) The complete and accurate SSN 

assigned to the participant and to each 

member of the participant’s household; 

and 

(ii) The documentation referred to in 

paragraph (f)(1) of this section to verify 

each such SSN. 

(2) Subsequent disclosure. Once a 

participant has disclosed and the 

processing entity has verified every 

SSN, the following rules apply: 

(i) When a participant requests to add 

a new household member, the 

participant must submit that SSN to the 

processing entity at the time of the 

request or at the time of processing the 

interim reexamination or recertification 

of family composition that includes the 

new member(s): 

(A) The complete and accurate SSN 

assigned to each new member; and 

(B) The documentation referred to in 

paragraph (f)(1) of this section to verify 

the SSN for each new member. 

(ii) If the participant or any member 

of the participant’s household has a 

previously undisclosed SSN, or has 

been assigned a new SSN, the 

participant must submit the following to 

the processing entity at the next interim 

or regularly scheduled reexamination of 

family composition or income, or other 

recertification: 

(A) The complete and accurate SSN 

assigned to the participant or household 

member involved; and 

(B) The documentation referred to in 

paragraph (f)(1) of this section to verify 

the SSN of each such individual. 

(iii) Additional SSN disclosure and 

verification requirements, including the 

nature of the disclosure, the verification 

required, and the time and manner for 

making the disclosure and verification, 

may be specified in administrative 

instructions by: 

(A) HUD; and 

(B) In the case of the public housing 

program or the programs under 24 CFR 

parts 882 and 982, the PHA. 

(e) Disclosure required of entity 

applicants. Each entity applicant must 

submit the following information to the 

processing entity when the entity 

applicant’s eligibility under the program 

involved is being determined: 

(1) Any complete and accurate EIN 

assigned to the entity applicant; and 

(2) The documentation referred to in 

paragraph (f)(2) of this section to verify 

the EIN. 

(f) Required documentation. (1) Social 

Security Numbers. The documentation 

necessary to verify the SSN of an 

individual who is required to disclose 

his or her SSN under paragraphs (a) 

through (d) of this section is a valid SSN 

card issued by the Social Security 

Administration (SSA), or such other 

evidence of the SSN as HUD may 

prescribe in administrative instructions. 

(2) Employer Identification Numbers. 

The documentation necessary to verify 

any EIN of an entity applicant that is 

required to disclose its EIN under 

paragraph (e) of this section is the 

official, written communication from 

the IRS assigning the EIN to the entity 

applicant, or such other evidence of the 

EIN as HUD may prescribe in 

administrative instructions. 

(g) Effect on assistance applicants. (1) 

Except as provided in paragraph (g)(2) 

of this section, if the processing entity 

determines that the assistance applicant 

is otherwise eligible to participate in a 

program, the assistance applicant may 

retain its place on the waiting list for the 

program, but cannot become a 

participant until it can provide: 

(i) The complete and accurate SSN 

assigned to each member of the 

household; and 

(ii) The documentation referred to in 

paragraph (f)(1) of this section to verify 

the SSN of each such member. 

(2) For applicants receiving assistance 

pursuant to the section 8 Moderate 

Rehabilitation Single Room Occupancy 

(SRO) Program for Homeless Individuals 

under subpart H of part 882 of this title, 

the documentation in paragraph (g)(1) of 

this section must be provided to the 

processing entity within 90 days from 

the date of admission into the program, 

except that the processing entity may, at 

its discretion, extend this period for an 

additional 90 days. 

(h) Rejection of documentation. The 

processing entity may reject 

documentation referred to in paragraph 

(f) of this section only for such reasons 

as HUD may prescribe in applicable 

administrative instructions. 

(i) Information on SSNs and EINs. (1) 

Information regarding SSNs and SSN 

cards may be obtained by visiting the 

IRS.gov Web site or calling the IRS tollfree Business and Specialty Tax Line at 

800–829–4933. 

(2) Information regarding EINs may be 

obtained by contacting the local office of 

the IRS or consulting the appropriate 

IRS publications. 

■ 3. Amend § 5.218 by revising 

paragraph (a), the introductory text of 

paragraph (b), and paragraph (c) to read 

as follows: 

§ 5.218 Penalties for failing to disclose and 

verify Social Security and Employer 

Identification Numbers. 

(a) Denial of eligibility of assistance 

applicants and individual owner 

applicants. The processing entity must 

deny the eligibility of an assistance 

applicant or individual owner applicant 

in accordance with the provisions 

governing the program involved, if the 

assistance or individual owner 

applicant does not meet the applicable 

SSN disclosure, documentation, and 

verification requirements as specified in 

§ 5.216. 

(b) Denial of eligibility of entity 

applicants. The processing entity must 

deny the eligibility of an entity 

applicant in accordance with the 

provisions governing the program 

involved; if: 

* * * * * 

(c) Termination of assistance or 

termination of tenancy of participants. 

The processing entity must terminate 

the assistance or terminate the tenancy, 

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Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Rules and Regulations 4841 

or both, of a participant, in accordance 

with the provisions governing the 

program involved, if the participant 

does not meet the applicable SSN 

disclosure, documentation, and 

verification requirements specified in 

§ 5.216. 

* * * * * 

■ 4. Add a new § 5.233 to read as 

follows: 

§ 5.233 Mandated use of HUD’s Enterprise 

Income Verification (EIV) System. 

(a) Programs subject to this section 

and requirements. (1) The requirements 

of this section apply to entities 

administering assistance under: 

(i) Public housing; 

(ii) Section 8 Housing Choice Voucher 

(HCV) program under 24 CFR part 982; 

(iii) Moderate Rehabilitation under 24 

CFR part 882; 

(iv) Project-based voucher program 

under 24 CFR part 983; 

(v) Project-based Section 8 programs 

under 24 CFR parts 880, 883, 884, 886, 

and 891; 

(vi) Section 202 of the National 

Housing Act of 1959 (12 U.S.C. 1701q); 

(vii) Section 811 of the CranstonGonzalez National Affordable Housing 

Act (42 U.S.C. 8013); 

(viii) Sections 221(d)(3) and 236 of the 

National Housing Act (12 U.S.C. 

1715l(d)(3) and 1715z–1); and 

(ix) Rent Supplement program under 

section 101 of the Housing and Urban 

Development Act of 1965 (12 U.S.C. 

1701s). 

(2) Processing entities must use 

HUD’s EIV system as a third-party 

source to verify tenant employment and 

income information during mandatory 

reexaminations or recertifications of 

family composition and income, in 

accordance with § 5.236. 

(b) Penalties for noncompliance. 

Failure to use the EIV system may result 

in the imposition of remedial actions as 

outlined in 24 CFR 84.62, except as 

provided in paragraph (b) of this 

section. For multifamily owners and 

management agents, failure to use the 

EIV system may result in the imposition 

of sanctions and/or the assessment of 

disallowed costs associated with any 

resulting incorrect subsidy or tenant 

rent calculations, or both. 

(c) Implementation Date for 

Multifamily Owners and Management 

Agents. For entities administering 

assistance under paragraphs (a)(1)(v) 

through (a)(1)(ix) of this section, use of 

the EIV system is required commencing 

on September 30, 2009. 

■ 5. Amend § 5.508 by revising 

paragraphs (b)(1), and (b)(2) to read as 

follows: 

§ 5.508 Submission of evidence of 

citizenship or eligible immigration status. 

* * * * * 

(b) * * * 

(1) For U.S. citizens or U.S. nationals, 

the evidence consists of a signed 

declaration of U.S. citizenship or U.S. 

nationality. The responsible entity must 

obtain verification of the declaration by 

requiring presentation of a U.S. 

passport, U.S. birth certificate, 

Employment Authorization card, 

Temporary Resident card, or other 

appropriate documentation, as provided 

by section 214. 

(2) For noncitizens, adequate 

evidence consists of: 

(i) A signed declaration of eligible 

immigration status; and 

(ii) One of the Section 214 documents 

listed in § 5.508(b)(1) and referred to in 

§ 5.510. 

* * * * * 

■ 6. Amend § 5.516 by revising 

paragraph (c) to read as follows: 

§ 5.516 Availability of preservation 

assistance to mixed families and other 

families. 

* * * * * 

(c) Assistance available to other 

families in occupancy. In accordance 

with § 5.518, temporary deferral of 

termination of assistance may be 

available to families receiving assistance 

under a section 214-covered program on 

June 19, 1995, and who either include 

a refugee under section 207 of the 

Immigration and Nationality Act, or an 

individual seeking asylum under 

section 208 of the Immigration and 

Nationality Act. 

* * * * * 

■ 7. Amend § 5.518 by revising 

paragraph (b), removing paragraph (c), 

and redesignating existing paragraph (d) 

as paragraph (c) to read as follows: 

§ 5.518 Types of preservation assistance 

available to mixed families and other 

families. 

* * * * * 

(b) Temporary deferral of termination 

of assistance. (1) Eligibility of temporary 

deferral of termination of assistance: If 

a family was receiving assistance under 

a section 214-covered program on June 

19, 1995, and the family includes a 

refugee under section 207 of the 

Immigration and Nationality Act or an 

individual seeking asylum under 

section 208 of the Immigration and 

Nationality Act, the family may be 

eligible for temporary deferral of 

termination of assistance if necessary to 

permit the family additional time for the 

orderly transition of those family 

members with ineligible status, and any 

other family members involved, to other 

affordable housing. Other affordable 

housing is used in the context of 

transition of an ineligible family from a 

rent level that reflects HUD assistance to 

a rent level that is unassisted; the term 

‘‘affordable housing’’ refers to housing 

that is not substandard; that is of 

appropriate size for the family; and that 

can be rented for an amount not 

exceeding the amount that the family 

pays for rent, including utilities, plus 25 

percent. 

(2) Housing-covered programs: 

Conditions for granting temporary 

deferral of termination of assistance. 

The responsible entity shall grant a 

temporary deferral of termination of 

assistance to a mixed family if the 

family is assisted under a Housingcovered program and the family was 

receiving assistance under a Section 

214-covered program on June 19, 1995, 

and the family includes a refugee under 

section 207 of the Immigration and 

Nationality Act or an individual seeking 

asylum under section 208 of the 

Immigration and Nationality Act. 

* * * * * 

■ 8. Amend § 5.609 as follows: 

■ a. Revise paragraph (a); 

■ b. Remove existing paragraph (d); 

■ c. Redesignate existing paragraphs (b) 

and (c) as paragraphs (d) and (e), 

respectively; 

■ d. In newly designated paragraph 

(d)(3), revise the reference to ‘‘paragraph 

(b)(2) of this section’’ to read ‘‘paragraph 

(d)(2) of this section’’; 

■ e. In newly designated paragraph 

(d)(4), revise the parenthetical reading 

‘‘(except as provided in paragraph 

(c)(14) of this section)’’ to read ‘‘(except 

as provided in paragraph (e)(14) of this 

section)’’; 

■ f. In newly designated paragraph 

(d)(5) revise the reference to ‘‘paragraph 

(c)(3) of this section’’ to read ‘‘paragraph 

(e)(3) of this section’’; 

■ g. In newly designated paragraph 

(d)(6)(B), revise the reference to 

‘‘paragraph (c) of this section’’ to read 

‘‘paragraph (e) of this section’’; 

■ h. In newly designated paragraph 

(d)(8), revise the reference to ‘‘paragraph 

(c)(7) of this section’’ to read ‘‘paragraph 

(e)(7) of this section’’; 

■ i. In newly designated paragraph 

(e)(6), revise the reference to ‘‘paragraph 

(b)(9) of this section’’ to read ‘‘paragraph 

(d)(9) of this section’’; 

■ j. In newly designated paragraph 

(e)(17), revise the reference to ‘‘24 CFR 

5.609(c)’’ to read ‘‘24 CFR 5.609(e)’’; and 

■ k. Add new paragraphs (b) and (c) to 

read as follows: 

§ 5.609 Annual income. 

(a) Annual income means all 

amounts, monetary or not, which: 

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4842 Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Rules and Regulations 

(1) Go to, or on behalf of, the family 

head or spouse (even if temporarily 

absent) or to any other family member; 

and 

(2) Are based on, at the time of 

admission, reexamination, or 

recertification: 

(i) Actual income being received 

(projected forward for a 12-month 

period); or 

(ii) Past actual income received or 

earned within the last 12 months of the 

determination date, as HUD may 

prescribe in applicable administrative 

instructions when: 

(A) The family reports little or no 

income; and 

(B) The processing entity is unable to 

determine annual income due to 

fluctuations in income (e.g., seasonal or 

cyclical income); 

(3) Which are not specifically 

excluded in paragraph (e) of this 

section. 

(4) Annual income also means 

amounts derived (during the 12-month 

period) from assets to which any 

member of the family has access. 

(b) Historical amounts. If the 

processing entity is unable to determine 

annual income using current 

information because the family reports 

little to no income or because income 

fluctuates, the processing entity may 

average past actual income received or 

earned within the last 12 months before 

the determination date to calculate 

annual income. The processing entity 

may also request the family to provide 

documentation of current income. If the 

family can provide acceptable 

documentation dated either within the 

60-day period preceding the 

determination date or the 60-day period 

following the request date, the 

processing entity may use this 

documentation to determine annual 

income. 

(c) Rejection of documentation. The 

processing entity may reject any income 

documentation for such reason as HUD 

may prescribe in applicable 

administrative instructions. 

* * * * * 

PART 92—HOME INVESTMENT 

PARTNERSHIPS PROGRAM 

■ 9. The authority citation for part 92 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d) and 12701– 

12839. 

■ 10. Revise § 92.203(d)(1) to read as 

follows: 

§ 92.203 Income determination. 

* * * * * 

(d)(1) The participating jurisdiction 

must calculate the annual income of the 

family based on the actual income being 

received at the time the participating 

jurisdiction determines the family is 

income eligible, projected forward for 

the 12-month period. If the participating 

jurisdiction is unable to determine 

annual income using current 

information because the family reports 

little to no income or because income 

fluctuates, the participating jurisdiction 

may average past actual income 

received or earned within the last 12 

months before the determination date to 

calculate annual income. The 

participating jurisdiction may also 

request the family to provide 

documentation of the current income, 

and if the family can provide acceptable 

documentation dated either within the 

60-day period preceding the 

determination date or the 60-day period 

following the request date, the 

processing entity may use this 

documentation to determine annual 

income. Annual income shall include 

income from all family members. 

Income or asset enhancement from the 

HOME-assisted project shall not be 

considered in calculating annual 

income. 

* * * * * 

PART 908—ELECTRONIC 

TRANSMISSION OF REQUIRED 

FAMILY DATA FOR PUBLIC HOUSING, 

INDIAN HOUSING, AND THE SECTION 

8 RENTAL CERTIFICATE, RENTAL 

VOUCHER, AND MODERATE 

REHABILITATION PROGRAMS 

■ 11. The authority citation for part 908 

continues to read as follows: 

Authority: 42 U.S.C. 1437f, 3535d, 3543, 

3544, and 3608a. 

■ 12. Revise § 908.101 to read as 

follows: 

§ 908.101 Purpose. 

The purpose of this part is to require 

Public Housing Agencies (PHAs) that 

operate public housing, Indian housing, 

or section 8 Rental Certificate, Housing 

Choice Voucher (HCV), Rental Voucher, 

and Moderate Rehabilitation programs 

to electronically submit certain data to 

HUD for those programs. These 

electronically submitted data are 

required for HUD forms HUD–50058, 

Family Report; and HUD–50058–FSS, 

Family Self-Sufficiency Addendum. 

Applicable program entities must retain 

form HUD–50058 during the term of 

each assisted lease, and for at least 3 

years thereafter, to support billings to 

HUD and to permit an effective audit. 

Electronic retention of form HUD–50058 

fulfills the retention requirement under 

this section. 

Dated: January 13, 2009. 

Roy A. Bernardi, 

Deputy Secretary. 

[FR Doc. E9–1248 Filed 1–26–09; 8:45 am] 

BILLING CODE 4210–67–P 

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