Stay on TRACS: How to Comply with Recent Changes to Form HUD-50059

November 20, 2009

The Tenant Rental Assistance Certification System (TRACS) was designed by HUD to help improve financial controls over assisted housing programs by automating manual procedures and incorporating automated controls.

TRACS collects certified tenant data from owners and management agents via Form HUD-50059, Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures, and new Form 50059-A. The collected data undergo an editing process to ensure accuracy and compliance with eligibility rules.

The Tenant Rental Assistance Certification System (TRACS) was designed by HUD to help improve financial controls over assisted housing programs by automating manual procedures and incorporating automated controls.

TRACS collects certified tenant data from owners and management agents via Form HUD-50059, Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures, and new Form 50059-A. The collected data undergo an editing process to ensure accuracy and compliance with eligibility rules.

HUD depends on TRACS to collect and maintain accurate rental assistance data; automate and improve program management; reduce manual processes and paperwork; forecast budgets; and detect instances of subsidy fraud, waste, and abuse.

Because this is such an essential component of HUD program management, the Insider talked with two TRACS experts about recent changes in the submission processes and current problem areas. Mary Ross is president and CEO of Ross Business Development, Inc., which offers training and education on HUD occupancy issues. Diane Matthews is a compliance training consultant and Occupancy Specialist with Colorado Housing and Finance Authority.

“HUD continues to refine key processes related to certification issues,” Ross says. “We're finding that people are just not aware of recent changes and new requirements.”

Matthews stresses accuracy in data entry for TRACS submissions, whether you do it yourself or use a service provider. “It's important to know the software and how it works,” she says.

New or Clarified Guidance: Are Your Vouchers Really Subject to Adjustment?

TRACS 202C, which was implemented from December 2008 to March 31, 2009, provided an opportunity for HUD to clarify the instructions regarding some of the more challenging certification issues:

  • Dual subsidy and compliant move-in/move-out date;

  • Mid-month change in household composition; and

  • Voucher payments for late certifications.

“When TRACS 202C was released, HUD also released updated versions of the Monthly Activity Transmission (MAT) Guide to provide clarifications to submission requirements,” Ross explains. “Managers should review the latest clarifications provided in Chapter 4 of the MAT Guide.”

HUD-compliant move-outs; addressing dual subsidy. Specifically, HUD defines when a move-out is compliant and how to handle situations where residents move from one subsidized unit to another. HUD describes the proper steps to address dual subsidy (when a resident moves in to a new subsidized site before moving out of the current subsidized site). According to Ross, HUD clearly states that the current subsidized site receives assistance until the unit is vacated or until the owner/agent can take possession of the unit (whichever comes first).

If you receive a notice from your contract administrator or an HQ123 error message upon submission indicating that one of your residents has moved into another subsidized site, Ross says you should investigate immediately.

“If you believe that your resident is still in residence, determine the facts,” she says. “If the resident has given notice, you should submit a move-out effective on the actual move-out date. If the resident has not given notice, determine whether you are dealing with a skip or whether the resident is planning to move, but has not given notice.”

There have been cases where a resident on a waiting list at another site has been moved in by mistake, Ross notes, so do not assume that an actual move-in has occurred.

In all cases, the move-out record should record the actual move-out date or the date on which you gain possession of the unit in the case of a skip.

If you receive an MA003 error message indicating that one of your recently moved-in residents has moved out from another subsidized site after your move-in date, here are the steps to take, Ross explains:

  • Verify with the other site that the move-out date is correct. You should charge the resident market rent starting with the original move-in date and through the move-out date indicated in the MA003 message.

  • Next, terminate the resident effective on the move-in date using the new DS termination code to indicate that no subsidy is earned for the termination day.

  • Finally, perform an initial certification effective the day after the effective date of the move-out from the former site to establish the start of subsidy at the new site.

You also should submit an adjustment, on the next voucher, refunding subsidy from the original move-in effective date through the day prior to the new move-in date. Changing the move-in date, in these situations, is not appropriate, according to Ross.

EDITOR'S NOTE: To avoid these situations, managers should use the EIV Existing Tenant Query to see if an applicant is receiving a HUD subsidy.

Mid-month changes in household composition. The rules surrounding mid-month changes in household composition are to be considered when:

  • A formerly single household becomes two households (household splits); or

  • Two existing subsidized households exchange one or more members (household swaps).

HUD defines a “split” as the creation of a new subsidized household by one or more members of an existing subsidized household, leaving at least one member of the existing household in place. A “swap” is defined as a situation, starting with two existing subsidized households, where one or more members of a household move to the other household, leaving at least one member behind.

“In some cases the move is in one direction only—only one household loses members and the other gains,” Ross explains. “In other cases the move could be in both directions—each household adds and subtracts members.”

Examples of situations covered are similar to the following:

  • Head and Spouse, in a subsidized unit, decide to separate, and one or the other moves into a new subsidized unit at the same or different site, establishing a new household (split).

  • Another family member (other than the head or spouse), in a subsidized unit, moves into a new subsidized unit at the same or different site. This could be the adult child of the head, an unrelated member, the parent of the head, or someone with another relationship to the head (split).

  • A dependent child in a subsidized unit who qualifies as an emancipated minor, moves into a new (split) or existing (swap) subsidized unit.

  • A dependent child in a subsidized unit, qualifying for the $480 deduction, moves to another subsidized unit (swap).

According to Ross, household splits should be addressed by processing a move-in certification effective on the occupancy date for the household member or members establishing a new household (subsidy starts on the move-in date) and by processing an interim certification for the household member(s) remaining in the existing unit. The interim certification effective date is determined by following the rules for interims as given in Handbook Paragraphs 7-13.C and 7-13.D, and will always be on the first of the month when rent changes.

Household swaps should now be dealt with by processing two interim certifications adding or removing household members as appropriate, Ross adds. The effective dates of the two interims are determined by the rules in Handbook Paragraphs 7-13.C and 7-13.D, and may differ from one another, depending on whether the rent increases or decreases and whether the residents followed the rules in reporting the changes.

“While the deadline to implement the rule changes described in Chapter 4 of the MAT Guide was March 31, 2009, we still see cases where move-in transactions are improperly stopped by contract administrators responsible for oversight of Section 8 HAP programs,” Ross says. “Managers should be cognizant of the rule changes to ensure that residents receive all the assistance to which they are entitled. Vouchers should not be adjusted downward, and residents should not be required to pay market rent just because there are rules limiting when rent changes can take effect.”

TRACS Changes Driven by Edits to Handbook

In August 2009, HUD Handbook 4350.3, REV-1, Change 3 became effective and provided additional clarification regarding:

  • Move-out transactions when a sole household member passes away; and

  • Signature requirements for Gross Rent Change transactions.

In previous versions of the HUD Handbook 4350.3, REV-1, HUD provided instructions to owner/agents requiring move-out transactions to be effective when the family vacated the unit or no more than 14 days after the date of death, whichever is sooner, when a sole household member passed away. Unfortunately, says Ross, many families were not able to vacate the units that quickly.

“When owner/agents sent move-out transactions, the unit would appear vacant when it was not,” Ross explains. “HUD has altered the instructions to say that assistance must be prorated to the day unit is vacated or 14 days after the date of death, whichever is sooner. This means that the manager will not create a move-out transaction until the unit is actually vacant.”

Ross says the site software will continue to bill for the unit and, when the move-out transaction is entered, the software will create an adjustment for any subsidy paid from the 15th day after the date of death until the move-out date. Contract administrators should not adjust the voucher prior to the move-out.

Form 50059-A for Partial Certification Transactions

When HUD released TRACS version 202C, it introduced Form HUD-50059-A. Form HUD-50059-A is used to send partial certification transactions to TRACS. These include move-outs, terminations, unit transfers, and Gross Rent Change transactions. In HUD Handbook 4350.3, REV-1, Change 3, Paragraph 9-3-C, HUD clarified signature requirements for Gross Rent Change transactions.

According to Ross, the owner/agent must always sign Gross Rent Change 50059-As (GR 59-As). The head of household must sign the GR 59-A if there is a change in Total Tenant Payment (up or down) and/or if there is a utility allowance adjustment, she says. HUD has clarified that the GR 59-A transactions can be sent together, on one voucher, even if all signatures have not yet been obtained. However, the owner/agent must collect resident signatures, as required, no later than 60 days after the GR transaction appears on a voucher.

“This creates a bit of a challenge for many site managers since software vendors must ‘auto-sign’ the GR 59-A certifications in order to include them in a TRACS Resident File,” Ross says. “So based on the information in your software, your site managers may assume that the process is complete when the GR transactions are sent. However, managers must develop a system to ensure that resident signatures are obtained, as required, before the 60-day deadline is exceeded.”

Failure to obtain resident signatures will result in findings at the next Management and Occupancy Review, Ross adds.

Following the Form Changes

In addition to adding the Form HUD-50059-A, TRACS 202C brought about modifications in the format of Form 50059. The changes became mandatory on March 31, 2009. Some new fields were added, others removed, and others renamed, Matthews explains. (See New Form HUD-50059: Fields Removed, Added, and Renamed.)

According to Matthews, the TRACS 202C version was implemented to bring the Form 50059s and corresponding MAT files in compliance with the Handbook 4350.3 revisions; to dictate when a Form 50059 could be reported on a voucher regardless of when a certification was sent (the contract administrator and the site's voucher should still match); and to end the differences in rounding.

Matthews has noticed several issues since changes took effect.

The devil's in the details. “With EIV set to become mandatory, first and foremost it is critical that data entry is done by someone with attention to detail when entering the Form 50059,” Matthews says. “A simple typo can create much larger problems, since data for EIV is pulled from TRACS. We have begun to see a large number of certifications using the ‘previous head of household’ fields. These fields are used not only when the head of household (HOH) moves out and someone else becomes HOH, but are used to correct spellings and Social Security number (SSN) errors of the HOH.

“My understanding is that most software automatically fills these fields in if the data is changed,” she adds. “However, we often see these fields incorrectly filled, and consequently the certifications fail. Sites should understand how their software does this, so that they can enter the data the way it is needed for these fields to be filled in correctly.”

For example, if the SSN is changed, the software may pop up a box that asks, “When is this change effective?” Matthews says the user might think, “Well, I typed it in wrong when the tenant moved in, so it should be effective on the move-in date.” If the manager then sends an interim for a much later date, the previous HOH fields will not be filled in. The effective date the manager should have entered in the box is the date of the interim he is trying to report the change on. One of the previous HOH fields is the date of the last full certification. This needs to be the last full certification in TRACS for this tenant.

“We often either see the last cert as a partial cert or a last full cert that didn't make it into TRACS—a problem that can be avoided by data entry reviews,” Matthews points out.

The rules on rounding. When entering each item of income or asset, you should round it to the nearest dollar.

“We have seen some sites enter the cents in these fields,” Matthews says. “The software may round there for each item, but then may calculate the total by adding each item, including the cents, and then rounding for the total. Subsequently, they do not always add up correctly. So unless you are absolutely sure of when and where your software rounds, I recommend always entering data in this way—‘If it goes on the form, it is rounded to the nearest dollar.’”

PRACTICAL POINTER: If there is a discrepancy when calculating the tenant's rent, prorating partial months, calculating prorated households' rent, or making special claims calculations, you can use HUD's Excel spreadsheets that incorporate all the formulas so you can plug in and check the information, according to Matthews. The spreadsheets are located at: http://www.hud.gov/offices/hsg/mfh/trx/doc/tracs202cfinalspec.zip.

Reporting race and ethnicity. Since the change to 202C, the files now contain the fields to report the race and ethnicity for each household member. “If sites have not already done so, they should be checking these fields for their residents,” Matthews says. “Many seem to have not updated them.”

Timing of submissions. Sites may submit Form 50059 at any time, Matthews says. The time of submission becomes an issue when the Form 50059 can be reported and billed for on a voucher. According to the MAT guide, “Ignore any certifications effective after the first of the prior month (August 2 or later for the September voucher) with the exception of AR, IR, and IC certifications effective on the voucher date (September 1 for the September voucher).”

The Buck Stops with You

“More sites do their own TRACS submissions rather than using a service provider,” says Matthews. “However, if you use a service provider, make sure your service provider's submissions are successfully entered into TRACS. Also, the site owner or designate is responsible for signing the 52670 [voucher]. Owners are the ones requesting the funds, and they are responsible for the accuracy of the request. They should always double-check the amounts that have been put on the voucher by their service providers.”

Matthews suggests the following HUD resources:

“I would also recommend anyone doing submissions signs up for the discussion forum,” she adds. “This link is also available on the TRACS home page.”

Insider Sources

Diane Matthews: Occupancy Specialist, Colorado Housing and Finance Authority, 1981 Blake St., Denver, CO 80202; (800) 877-2432; dmatthews@chfainfo.com.

Mary Ross, CPO, FHC, MORS: President and CEO, Ross Business Development, Inc., 1449 Wood Park Way, NW, Kennesaw, GA 30152; (770) 424-1806; mary.ross@rbdnow.com.

Sidebar

What Sites Are Covered by TRACS?

TRACS is used for these assisted housing programs:

  • Section 236 Interest Reduction and Rental Assistance Payments;

  • Section 8 New Construction/Substantial Rehabilitation Housing Assistance Payments;

  • Section 8 Loan Management/Property Disposition Set-Aside Housing Assistance Payments;

  • Section 221(d)(3) Below Market Interest Rate (BMIR) mortgage insurance;

  • Rent Supplement Payments;

  • Certain Section 202 programs; and

  • Section 202/811 Project Rental Assistance Payments.

Sidebar

New Form HUD-50059: Fields Removed, Added, and Renamed

 

FIELDS REMOVED

10. Region Code

11. Field Office Code

35. Conversion Date Code

36. Age 62 at Conversion Indicator

37. Continuous Section

116. HCDA Percentage 8 Indicator

117. Percent Actually Charged

  

 

FIELDS ADDED

29. Basic Rent

44. Student Status

Form HUD-50059-A, new one-page form for partial certifications of Move-Outs, Terminations, Gross Rent Changes, and Unit Transfers

 

 

  

FIELDS RENAMED

Old Name

New Name

7. TRACSMail ID

7. Telecom Address

90. Lower Income Limit

87. Low Income Limit

100. Allowance for Dependents

97. Deduction for Dependents

105. Disability Allowance

102. Disability Deduction

107. Medical Allowance

104. Medical Deduction

108. Elderly Household Allowance

105. Elderly Family Deduction

109. Total Allowances

106. Total Deductions

 

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