Zero Assets

Written by Mike Sprague, Spectrum Enterprises

Many of the files that come through our office show applicants that are claiming to have zero assets.  While in some instances this is actually true, it is not common for a household (HH) to have zero assets.

HUD defines an asset as an item of value that can be turned into cash.  By this definition, cash itself is also an asset.  For a list of items that are not considered assets, please refer to Exhibit 5-2 in the HUD 4350.3.

In instances where an applicant is stating that they have zero assets a manager needs to ask follow up questions.  Here are some examples that we are seeing.

Example 1:  Head of Household (HOH) is working full time and pay stubs show direct deposit or deductions for a retirement account.  The account that is used for direct deposit is an asset, and the retirement account is most likely an asset too.  The only time that a retirement account would not be counted is if the applicant cannot access the account while employed with the company.  Be careful here though.  If an applicant is charged a fee to withdraw from the account, it means that they can access the account and it needs to be counted as an asset.

Example 2:  The HOH’s direct deposit in the above example goes onto a Debit Card that is not tied to a bank account.  HUD recognizes these cards as an asset and they need to be treated like a savings account.    

Example 3:  HOH receives child support, TANF, SSDI/SSI, Unemployment, etc.  More often than not, each of these benefits is received on an electronic debit card.  For example, as of March 2013 the SSA stopped issuing paper checks and has only been using a Direct Express Debit Card when the claimant has no bank account (http://www.rbdnow.com/documents/hudblast/email%20blast%20022813.htm).  Remember that HUD recognizes these cards as an asset.  The current balance needs to be counted. 

Example 4:  The HOH receives income, but has no bank account and does not have an electronic debit card.  Whenever we see this we wonder how the applicant will be able to pay their security deposit and first month’s rent.  If they have no money saved up, where will this money come from?  The most common response is that the HOH will use a money order.  In order to create a money order, the HOH would need cash; otherwise the money order would have a $0.00 value.  Remember that cash on hand is an asset.

The IRS allows the use of an Under $5,000 Asset Cert to verify assets rather than having to 3rd party verify.  While an applicant is allowed to Self Certify their assets (as long as the total value of all assets is less than $5,000) it does not mean that the manager shouldn’t ask questions when the applicant is claiming to have zero assets.  Per the 8823 Guide, “owners may not rely on a low-income tenant’s signed, sworn statement of income from assets if a reasonable person in the owner’s position would conclude that the tenant’s income is higher than the amount presented by the tenant.  In these cases, the owner must obtain other documentation.”  Part of building a strong file and being in compliance is showing due diligence.  


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