Can I use The Closing Docs for Section 8/subsidized housing applicants?
Yes, The Closing Docs supports Section8/subsidized housing applicants.
HUD stipulates that:
"Generally the owner must use current circumstances to anticipate income. The owner calculates projected annual income by annualizing current income. Income that may not last for a full 12 months (e.g., unemployment compensation) should be calculated assuming current circumstances will last a full 12 months. If changes occur later in the year, an interim recertification can be conducted to change the family’s rent."
The Closing Docs is reporting annualized current income: deposits received by the HOH/account holder over the preceding 12-month period and classified by recurring (W2 wages) or non-recurring (cash-based earnings, commissions, bonuses, entitlements payments received, tax refunds, stimulus payments, etc.). The major benefit, here, is you will no longer rely on reported income. The Closing Docs is reporting actual deposits.
Additionally, we are reporting assets: savings or retirement accounts current, available and average balances are reported in our automated income verification.
HUD accepts three methods of verification: third-party verification (like what's available using The Closing Docs), review of documents, or family certification. While The Closing Docs delivers 100%-verified applicant income, a review of documents will leave you susceptible to the potential for fraudulent/manipulated documents. Run a quick Google search of, "Make fake pay stub" and you will receive over 100,000 returned results. Are your investigators/screeners cybersecurity forensics experts? The third method, family certification, requires collecting signed affidavits, a cumbersome process that is a burden to both the investigator and the applicant. Instead, you can quickly and easily send an invite to your applicants to have them confirm and 100% verify their income in minutes. Not hours. Not days. Not weeks.
And record keeping couldn't get any easier. The screener and the applicant are both instantly provided a PDF of their automated income verification report.
As regards IRC section 42, The Closing Docs is reporting deposit history for the most recent 12-month period. The onus rests with the screener to make a determination regarding the relationship to 60% of local county average income.