HUD Revises Handbook 4350.3

On June 23, 2009, HUD issued Change 3 to Handbook 4350.3 REV-1, “Occupancy Requirements of Subsidized Multifamily Housing Programs.” The changes in the new version are not as extensive or significant as the ones HUD made in Change 2 in June 2007, but there are still some points you need to take note of to stay in compliance.

On June 23, 2009, HUD issued Change 3 to Handbook 4350.3 REV-1, “Occupancy Requirements of Subsidized Multifamily Housing Programs.” The changes in the new version are not as extensive or significant as the ones HUD made in Change 2 in June 2007, but there are still some points you need to take note of to stay in compliance.

Change 3 became effective on Aug. 1, 2009, so the first thing you should do is update your Web links and update or replace your printed copies of the Handbook. It is very easy to mistakenly rely on outdated HUD information if you are not careful about updates. The link to the new Handbook is:

Change 3 provides a number of clarifications and editorial changes to the text to make the Handbook consistent with current HUD policy. It also adds or updates some exhibits, forms, and appendices. Many of these are now available in multiple languages. The biggest changes are in Chapter 9. HUD rewrote that chapter entirely to include TRACS 202C requirements and to implement the new Form HUD-50059-A.

Housing compliance experts were not surprised by any of the changes from HUD. They noted, though, as with any changes to program rules, they will require the attention of site managers and the training or retraining of staff.

Highlights of Change 3

Here's a rundown of the key changes to the Handbook:

Using the SAVE System. Section 3-12.H details how to use the Systematic Alien Verification Entitlements (SAVE) system to verify immigration status of applicants and residents who declare eligible noncitizen status. Noncitizens (except those age 62 and older) must sign a Verification Consent Form. A sample consent form is provided in Exhibit 3-6. Each noncitizen family member must complete the form.

Determining student eligibility. Change 3 makes the Handbook consistent with current HUD policy on student eligibility and income. Section 3-13.B addresses the eligibility of students for housing assistance programs other than Section 8. In these programs, the full amount of all financial assistance, including work-study income and scholarships, is excluded from annual income. In Chapter 4, HUD has added a requirement that tenant selection plans must include the requirements for determining the eligibility of students enrolled at an institution of higher education.

Marketing to LEP population. The text of Change 3 includes new references to HUD requirements on improving access to services for persons with Limited English Proficiency (LEP). For example, Paragraph 4-12.D adds that the set of persons HUD considers “least likely to apply” includes the LEP population in the community. That means you must make affirmative marketing outreach steps to reach them. Similarly, Paragraph 6-4.A notes that leases and attachments may need to be conveyed in languages other than English for LEP persons. There is a similar statement in Paragraph 6-27.C regarding briefing materials.

PRACTICAL POINTER: HUD has made a number of multifamily brochures, notices, and forms available in multiple languages, to assist with LEP compliance. Go to: For a useful Q&A on LEP, go to:

Determining eligibility of live-in aides. Section 3-6.E.3 provides more detail on qualifications of live-in aides. A live-in aide qualifies for occupancy only as long as the person who needs the aide requires the aide's help and remains a tenant. Although a relative may be considered to be a live-in aide if he meets the requirements for an aide, a live-in aide may not qualify for continued occupancy as a remaining family member.

Limiting application of minimum rent, income-targeting rules. Paragraphs 4-5.A and 5-26.D make clear that minimum rent and income-targeting rules do not apply to the Rent Supplement, RAP, Section 221(d)(3) BMIR, or Section 236 programs.

Treating income from pensions. Paragraph 5-7.G.5 makes clear that you should treat uniformed services employee pensions in the same way you treat federal government employee pensions.

Accommodating households with members on active military duty. Change 3 encourages leniency in the treatment of households coping with deployment of military personnel to active duty. (See new Paragraph 5-6.C.)

Setting house rules on “incidental” home businesses. According to Paragraph 6-9.B, you may develop reasonable house rules to apply to residents who operate incidental businesses like computer work and babysitting in their units and who receive incidental business income. (As with all house rules, it is up to you to decide if rules on home businesses would be beneficial to your community. They are not required.)

Adjusting vouchers to make repayments. Change 3 clarifies that when HUD or a contract administrator terminates assistance payments if you do not submit a new certification to TRACS within 15 months of the previous year's recertification anniversary date, you must adjust the voucher to repay the assistance collected for the three-month period from the date the annual recertification should have been effective through the end of the 15th month when assistance was terminated. See Paragraph 7-6.

Getting signatures for Form 50059-A. According to Chapter 6, when it is required, the Form 50059-A is an attachment to the lease. According to Chapter 7, when there are gross rent changes, residents need to sign and date the Form 50059-A only if the gross rent change results in a change in the amount of rent they are required to pay or in the utility reimbursement they will receive. The head of household must also sign the form when there is a unit transfer. Whenever you prepare the form, you must provide the head of household with a copy and keep a copy in the resident's file. Owners must always sign and date the form.

Change 3 removes the requirement that you must get signatures on the Form 50059-A for gross rent increases before submitting the data to TRACS. You must now get resident signatures for gross rent changes affecting the rent or utility reimbursement within 60 days from the date you implement the gross rent change (that is, submit the voucher for assistance based on the new rent).

Retaining criminal records. Paragraphs 8-14.C.13 and 14 clarify the requirements for retaining criminal records. Criminal records obtained by a public housing authority must be destroyed upon the completion of the originally intended use. Criminal records obtained by an owner must be maintained confidentially, not misused or improperly disseminated, and destroyed three years after tenancy is terminated. Criminal records of applicants who never move in must be retained with the application for three years.


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