The Art of Clarification

Written by Melissa Zera, Compliance Analyst

The key to a well documented file is clarity and organization.  Clarifications are just as essential to the compliance as the other verification forms and documents.  They answer the who’s, how’s , what’s and why’s that left unanswered could lead to potential noncompliance.

Third party verifications often are returned with missing fields, crossed-out or illegible information or data that is just not understandable.  Like the rental application, all data fields must be answered .  Auditors will not make the assumption that the unanswered questions means that they do not apply.  For example, if the overtime field is left blank, then it leads to a possibility, an unknown, a mystery.  They could be receiving.  An indication of  “n/a” or “none” is the proper answer leaving no speculation.  Follow-up should be made directly with whoever completed the form(s) to confirm any missing information not provided.

The use of a separate clarification form is essential.  These forms should immediately precede or follow the verification they are supporting in the file, remember organization is key.  When contacting the employer/bank/etc., be sure to document “who” you spoke with, the company they work for, time/date of contact, “what” information was requested to be clarified and the notate all details resolving the issues.

As document experts, some Property Management companies have become creative in development of specific forms to clarify recurring inconsistencies.  For example, when paystubs are used in lieu of employment verifications, we have seen an Unable to Obtain Third Party Verification form utilized.  If an application is partially completed by the applicant and partially by the manager (a huge red flag during an audit), clarification is noted on an affidavit as to “why” assistance was given by the manager. The use of a calculation worksheet takes the “how” out of determining what numbers were used to annualize income and so forth.

Always take all guess work out of your files.  At the end of the day what story will they tell?  Hopefully not mysteries but happily-ever-afters with zero non-compliance.

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