Regulation vs. Guidance

This is an interesting question: When there is a conflict between HUD regulation and guidelines, which takes precedence?

As with many HUD issues, the answer is not clear cut.  I used to think that regulation usually prevailed over guidance.  I can well remember how the guidelines in the old version of HUD Handbook 4350.3 stated "a parent shall not share a bedroom with a child." This guideline wasn't changed until the early 1990's, but the Fair Housing Act Amendments -- including protections on familial status -- were implemented in 1989.  So it was possible for a housing provider to follow the "a parent shall not share a bedroom with a child" provision and find themselves in hot water with respect to fair housing.

In the above scenario, the regulation (Fair Housing Act Amendments) trumped the guidelines (HUD Handbook 4350.3).  The guidelines came BEFORE the regulation, and it was the regulation that effectively made the guidelines obsolete on that question.

Recently, however, I was contacted by a managing agent in connection with HUD Handbook 4350.3, Rev. 1, Paragraph 5-6 O.  This was a "change 2" change (2007) that said if a resident is making regular withdrawals from an investment, such receipts were to be regarded as income and any remaining funds were not to be counted as an asset.

But the regulatory authority in researching the issue discovered 24 CFR Part 5.609 that says that withdrawals from investment accounts are only income once the original amount invested had been disbursed.  Some of you may remember that this was the original Paragraph 5-6 N of HUD Handbook 4350.3, Rev. 1 when that handbook was issued on June 1, 2003.  And this indeed was the rule until Change 2 was issued in 2007.  So the guidelines changed and the regulation did not.

In this case, my argument would be that the guidelines as issued in Change 2 trump the regulation that pre-dated them.  My argument rests on the belief that a contrary position, i.e., that the regulations trump the Change 2 provisions, would effectively devalue the importance of HUD Handbook 4350.3, Rev. 1 and would also deprive the Secretary of Housing and Urban Development and his team of the authority to issue guidelines and interpretations without first changing the underlying regulations, something they are afforded the right to do under existing regulations.

As always, I feel it is important to place an issue in context and look at the whole picture before reaching a conclusion.

Wishing you all a Happy Passover, a Happy Easter, and a fine weekend.