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Put your detective caps on; time to investigate those deposits!

Submitted by Serenity Lay A critical component of determining eligibility is verification of income and assets. Documents provided during the course of the verification process, such bank statements provided by applicants, commonly reveal undisclosed cash contributions, income, and additional asset sources. As affordable housing professionals, we have a duty to investigate the source and nature of any newly discovered income and assets.

*Undisclosed means the household did not include this source at the time of application.

Dust off that detective cap, it’s time to go to work!

  1. Thoroughly review deposit history on bank statements for deposits from any undisclosed sources. You may notice ATM cash deposits, check deposits, transfers, or ACH deposits not supported by verifications.

    1. Have the applicant document the source and purpose of each undisclosed​ deposit to the account, generic summary statements "such as all deposits from Venmo are repayment from loans to a family member", are not appropriate as an income source could be overlooked.

      1. Any regular, recurring contributions from persons outside the household that come directly into the household are considered income. This also includes payments made by someone outside the household if these payments are made directly to a 3rd party on the household's behalf even if the funds do not come directly into the household. Please note that groceries(not cash for groceries) provided to the household and child care payments paid directly to the child care provider are excluded income sources and will not be reflected on the TIC/HEC.

      2. ACH deposits from employers, retirement providers, Social Security administration, etc. are also considered income. Take note, bank statements alone are not sufficient to verify gross income.

      3. For more information on income, please consult ‘Exhibit 5-1, Income Inclusions and Exclusions’ from the HUD Handbook.

    2. Verify the new "undisclosed" income using an acceptable method of verification, calculate the annual earnings, and add to the TIC/HEC.

  2. Keep your eyes open for clues to unreported assets. You might see transfers from electronic fund sources such as PayPal, Cash App, or Zelle. Etc.

    1. Not only are deposits/transfers potentially indicative of unreported income, they also shed light on unreported assets.

      1. Once a potential asset source is identified, the value and interest earnings must be verified and added to the TIC accordingly.

      2. For more information on assets, please consult ‘Exhibit 5-2, Assets’ from the HUD handbook.

Keeping an open mind while processing the file will allow you to catch unreported sources before they become non-compliance!

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