`[Federal Register Volume 74, Number 16 (Tuesday, January 27, 2009)]
[Rules and Regulations]
[Pages 4832-4842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-1248]



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Part II





Department of Housing and Urban Development





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24 CFR Parts 5, 92, and 908



Refinement of Income and Rent Determination Requirements in Public and 
Assisted Housing Programs; Final Rule

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

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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.

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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

[[Page 4833]]

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.
    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 Sec.  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 Sec.  
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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    \1\ The 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 PHA-reported SSN for the remaining 251,774 
individuals is invalid because the reported number does not meet SSA 
standards as a valid SSN.

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    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 phase-in 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 Sec.  5.218

    Comment: Four commenters raised the issue about the effect of 
proposed revisions to Sec.  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 Sec.  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 Sec.  5.218 and the interplay between the 
assistance provisions in Sec.  5.216 and Sec.  5.218 was confusing. For 
example, proposed Sec.  5.216 would require the disclosure of Social 
Security Numbers and verification and documentation for all household 
members. However, proposed Sec.  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 Sec.  
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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affected families and require a specified time frame to submit the 
Social Security Numbers.

D. Comments Specific to Proposed Amendments to Sec.  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 computer-
matching programs.
    Comment: Two commenters wrote that mandating UIV use would be cost-
prohibitive. 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 Sec.  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-and-
comment 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 Sec.  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 Sec.  
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 Sec.  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.

[[Page 4836]]

    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 Sec.  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 Sec.  
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 Sec.  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 Sec.  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 Sec.  5.609

    Comment: Several commenters wrote that, because HUD's EIV system 
does not capture ``actual time'' data, the proposal in Sec.  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 tenant-
provided 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 tenant-provided 
documentation, or third-party verification does not suggest higher 
income in the next 12 months.
    Comment: Two commenters focused on the new requirement in Sec.  
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

[[Page 4837]]

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 
Sec.  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 
Sec.  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 Sec.  5.609(b) to mandate interim 
reporting or adjustment of rent for increases in income that occur in 
between annual re-certifications. 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 Sec.  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 
Sec.  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

[[Page 4838]]

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 Sec.  908.101

    Comment: One commenter suggested that HUD strike the proposed 
language in Sec.  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 
income-based 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

[[Page 4839]]

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 toll-free 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.

0
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

0
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.


0
2. Revise Sec.  5.216 to read as follows:


Sec.  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

[[Page 4840]]

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 toll-free 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.

0
3. Amend Sec.  5.218 by revising paragraph (a), the introductory text 
of paragraph (b), and paragraph (c) to read as follows:


Sec.  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 Sec.  
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,

[[Page 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 Sec.  5.216.
* * * * *

0
4. Add a new Sec.  5.233 to read as follows:


Sec.  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 Cranston-Gonzalez 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 Sec.  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.

0
5. Amend Sec.  5.508 by revising paragraphs (b)(1), and (b)(2) to read 
as follows:


Sec.  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 Sec.  5.508(b)(1) 
and referred to in Sec.  5.510.
* * * * *

0
6. Amend Sec.  5.516 by revising paragraph (c) to read as follows:


Sec.  5.516  Availability of preservation assistance to mixed families 
and other families.

* * * * *
    (c) Assistance available to other families in occupancy. In 
accordance with Sec.  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.
* * * * *

0
7. Amend Sec.  5.518 by revising paragraph (b), removing paragraph (c), 
and redesignating existing paragraph (d) as paragraph (c) to read as 
follows:


Sec.  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 Housing-covered 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.
* * * * *

0
8. Amend Sec.  5.609 as follows:
0
a. Revise paragraph (a);
0
b. Remove existing paragraph (d);
0
c. Redesignate existing paragraphs (b) and (c) as paragraphs (d) and 
(e), respectively;
0
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'';
0
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)'';
0
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'';
0
g. In newly designated paragraph (d)(6)(B), revise the reference to 
``paragraph (c) of this section'' to read ``paragraph (e) of this 
section'';
0
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'';
0
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'';
0
j. In newly designated paragraph (e)(17), revise the reference to ``24 
CFR 5.609(c)'' to read ``24 CFR 5.609(e)''; and
0
k. Add new paragraphs (b) and (c) to read as follows:


Sec.  5.609  Annual income.

    (a) Annual income means all amounts, monetary or not, which:

[[Page 4842]]

    (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

0
9. The authority citation for part 92 continues to read as follows:

    Authority: 42 U.S.C. 3535(d) and 12701-12839.

0
10. Revise Sec.  92.203(d)(1) to read as follows:


Sec.  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

0
11. The authority citation for part 908 continues to read as follows:

    Authority: 42 U.S.C. 1437f, 3535d, 3543, 3544, and 3608a.

0
12. Revise Sec.  908.101 to read as follows:


Sec.  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`