After recent conversations with some state housing agencies and other housing professionals, I have begun to wonder if HUD may be adopting a compliance approach that adheres more strongly to regulation. The specific instance that came up in conversation concerned withdrawals from an investment account and the current HUD Handbook 4350.3, Rev. 1 provision that regular withdrawals—HUD uses the word “periodic”—from such accounts are treated as income.
Now, however, there is an indication that HUD may be taking a different direction on this issue. HUD headquarters is apparently taking the position that what is currently in HUD Handbook 4350.3, Rev. 1 is at variance with the regulation addressing the issue in Title 24 of the Code of Federal Regulations. HUD headquarters staff have communicated that the regulations specify that regular/periodic withdrawals from investments should be counted as income only AFTER the original amount invested has been expended. For example, a resident has an investment account having a current value of $10,000 that was opened with $1,000. The resident reports they’ll be withdrawing $200 per month to have additional income. The current handbook provision would have us count $2,400 as income. The regulatory approach would have us disregard as income the first $1,000 and count $1,400 as income.
Housing management professionals who have been in the business for more than ten years might remember that disregarding as income the initial amount invested was the guidance in HUD Handbbook 4350.3, Rev. 1 when it was issued back in 2003. Further, there is nothing wrong with HUD’s interest in ensuring that what the Department puts forward is supported by regulation.
For private owners involved with HUD project-based programs, HUD Handbook 4350.3, REV-1 is not only a major source document for program and project compliance, it is also often used to explain guidelines to applicants and residents. For these reasons, housing professionals whose program guidelines are found in the handbook must have confidence in its contents. HUD’s taking a second look at an issue such as withdrawals from investments is just one issue out of hundreds that are addressed in eight hundred-plus pages and should not, of itself, shake anyone’s confidence. Indeed, it cannot. When it comes to compliance, HUD’s handbooks and notices are and remain the source documents.