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GCN Home > 10/09/06 issue

True to form

GCN Agency Award | HUD system verifies tennants’ reported income, frees up space for low-income families

By Trudy Walsh, GCN Staff

When she was working for the Baltimore Housing Authority, Nicole Faison liked to go to nearby Lexington Market for lunch.

One day Faison recognized the person working the counter. “You’re one of my tenants, aren’t you?” she asked. The person selling her a chicken sandwich had reported that he didn’t have a job. Well, clearly, he did.

When Faison moved in September 2002 to the Housing and Urban Development Department’s Office of Public Housing, the problem just got bigger.

The office, part of HUD’s Office of Public and Indian Housing, administers two large rental assistance programs: public housing and the Housing Choice Vouchers program, formerly known as Section 8. HUD relied until fairly recently on the integrity of tenants to report their income, Faison said.

Employers provided some written, third-party verification, but there was no way to verify all sources of income. The temptation for tenants to underreport their income is great, since the higher their income, the more rent they have to pay.

“When I was working for the city of Baltimore, I thought it’d be nice if we could punch a tenant’s Social Security number into a computer and see if the income they reported was really true,” Faison said.

She even wrote her master’s thesis (while she was in Baltimore) on developing such a system using game theory.

That theory is now reality. Two years ago, HUD began developing the Enterprise Income Verification System, a Web-based system that is helping 4,100 public-housing agencies throughout the nation validate tenant-reported income, including wages, unemployment and Social Security benefits.

Faison calls Jan. 23, 2004, “the happiest day of my life.” That was the day HUD got the green light to negotiate with the Health and Human Services Department to access HHS’ National Directory of New Hires database.

A 2001 study showed that HUD had made $3.2 billion in improper rental assistance subsidy payments in 2000, of which $978 million was attributed to tenants’ underreporting of income. Since HUD implemented EIV, these underreporting errors have dropped to $266 million, a reduction of 73 percent.

EIV findings

Underreporting household income can keep a family that truly needs housing assistance out of the system. EIV has turned up some relatively prosperous families receiving housing assistance benefits.

For example, a family of three adults and five children in Tampa, Fla., reported a household income of $2,400 a year in child support as its sole income. The housing authority entered the Social Security number of the head of the household into EIV, and discovered that two adult members of the household were working for the school system and were each making between $40,000 and $50,000 a year.

“If HUD hadn’t made payments based on tenants’ reporting fraudulent income, we could have housed an additional 55,000 families in one year,” Faison said.

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