HUD Housing Programs: Tenants’ Rights (The Green Book): 4.3.6 Treatment of Lump-Sum Income
HUD rules recognize two distinct types of lump-sum payments. First, there is a lump-sum addition to family assets.
HUD rules recognize two distinct types of lump-sum payments. First, there is a lump-sum addition to family assets.
For public housing and Section 8 Tenant-Based Vouchers, federal statute requires that some welfare income that is not actually “received” be imputed as income if the family’s assistance is reduced because of any failure of any family member to comply with the conditions of the assistance requiring participation in an economic self-sufficiency program or work requirements.338 However, a PHA may not refuse a requested rent reduction based on reduced welfare income until it receives specific written notice from the welfare agency verifying tha
Not all amounts of money a family receives are considered “income” for rent calculation purposes, even if they might be income under normal accounting principles. Applicable rules may exclude certain funds received from specific sources from household income used for rent calculation. Additionally, some or all of certain earned income may be excluded for a period of time.
When HUD-supported project-based units are lost, HUD ordinarily provides tenant-based assistance to replace the public housing or project-based assistance previously provided. In some situations, for example public housing conversions or agency initiated terminations of Project-Based Section 8 contracts, the replacement assistance takes the form of tenant protection Vouchers. These are Housing Choice Vouchers provided to eligible tenants by the PHA, which enable the family to search for, and hopefully lease, alternative affordable housing.
The most common form of replacement housing assistance are tenant protection Vouchers. Tenant eligibility is determined by the statute or rules governing the specific conversion event, or, occasionally, by the broad language of the tenant protection set aside in any applicable appropriations law.
If an owner decides to opt-out of the Project-Based Section 8 contract or prepay an unrestricted HUD-subsidized mortgage, most previously assisted or subsidized tenants are eligible to receive Enhanced Vouchers as replacement assistance.656 Congress has also authorized Enhanced Vouchers for certain at-risk unassisted tenants in properties with expiring mortgages or use restrictions.657 These special Vouchers have enhanced payment standards if necessary, as well as a “right to remain” fea
As LIHTC properties have become the federal government’s primary vehicle for creating new affordable housing units, their preservation is increasingly vital. When first established in 1986, the LIHTC program initially required that project owners agree to only 15-year use restrictions.
Tenants displaced from their homes as a result of federal funding and federal programs are usually eligible for relocation assistance.
The URA establishes relocation assistance standards for persons displaced from their dwellings as a direct result of federally funded programs and projects.
In addition to the URA, certain HUD programs are also subject to section 104(d) of the Housing and Community Development Act of 1974.739 Section 104(d) provides relocation assistance to low-income tenants displaced due to the demolition or conversion of affordable housing funded by740 the Community Development Block Grant, Urban Development Action Grant, HOME Investment Partnerships, Neighborhood Stabilization, and Section 108 Loan Assistance programs.
The CFPB director is appointed by the president of the United States (“the president”) for a term of five years,41 and the Act states that the director may be removed only for cause for inefficiency, neglect of duty, or malfeasance in office.42 On June 29, 2020, the Supreme Court ruled in Seila Law L.L.C. v.
On January 4, 2012, President Obama, relying on his recess-appointment power, named Richard Cordray as the CFPB’s initial director. The same day, the president appointed individuals to the National Labor Relations Board (NLRB) also as recess appointments.
The CFPB has extensive rule-writing and enforcement authority concerning consumer financial services. For example, it has authority to issue rules under the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, and other federal consumer credit statutes.
The Act transfers to the CFPB authority to issue many other regulations that were previously issued by the Federal Reserve Board, the Department of Housing and Urban Development, or other federal agencies, interpreting what are called the “enumerated statutes.” Rules interpreting enumerated statutes will not be discussed in this chapter, as they are analyzed in other NCLC treatises:
The Consumer Financial Protection Act of 2010 authorizes the CFPB to take action against any entity under its jurisdiction that engages in an unfair, deceptive, or abusive act or practice (UDAAP) in connection with any transaction with a consumer for a consumer financial product or service or the offering of such a product or service.93 The Act also authorizes the CFPB to write rules and issue guidance to prevent unfair, deceptive, or abusive acts or practices in connection with a broad array of consumer financial products and services.
The Act does not include a definition of “deception,” but the FTC102 and a large body of decisions have interpreted the deception standard under the Federal Trade Commission Act (FTC Act) and state UDAP statutes.103 (UDAP is a term referring to state statutes that prohibit unfair or deceptive acts and practices. Because the CFPB can also prohibit abusive practices, its authority is termed UDAAP authority.)
The statutory definition of “unfair” incorporates the definition found in the FTC Act:
(A) the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers; and
(B) such substantial injury is not outweighed by countervailing benefits to consumers or to competition.110
To be abusive, a practice only needs to satisfy one of four tests. The first test is whether the practice materially interferes with a consumer’s ability to understand a term or condition of a consumer financial product or service.
The CFPB has said that:
Material interference may include actions or omissions that obscure, withhold, de-emphasize, render confusing, or hide information relevant to the ability of a consumer to understand terms and conditions.
To be abusive, a practice need meet only one of four tests. The first test, described in § 3.2.4.2, supra, involves materially interfering with a consumer’s understanding. The other three tests involve a company taking unreasonable advantage of the consumer. Those include:
The second test for an abusive practice (and the first based on taking unreasonable advantage) concerns a financial services provider taking unreasonable advantage of the consumer’s lack of understanding of material risks, costs, and conditions of a consumer financial product or service. This test is similar to the first test, which addressed interference with a consumer’s understanding. The first test, however, requires a company’s affirmative action in interfering with that understanding.
A third way a practice can be abusive—and a second way of taking unreasonable advantage—is if a financial services provider takes unreasonable advantage of consumers’ inability to protect their own interests when selecting or using a product or service.
A fourth way a practice can be abusive—and the third way of taking unreasonable advantage—is if a financial services provider takes unreasonable advantage where the consumer relies on the financial service provider. “First, reasonable reliance may exist where an entity communicates to a person or the public that it will act in its customers’ best interest, or otherwise holds itself out as acting in the person’s best interest . . .
On February 6, 2020, the CFPB issued a Statement of Policy Regarding Prohibition on Abusive Acts or Practices.214 On March 19, 2021, the CFPB rescinded the statement.215 Then, on April 3,2023, the CFPB issued a new Policy Statement on Abusive Acts and Practices.216
The CFPB described the new policy statement in this way:
Deception, unfairness, and abusive practices are separate concepts, and practices can violate any one of these standards without violating the others—or a practice can violate more than one of them. Unfairness does not rely on the financial provider’s bad conduct or a consumer being misled, but instead involves a balancing of interests between a practice’s injury to the consumer that cannot be avoided and the benefits to competition.
The CFPB has issued one final rule using its UDAAP authority—its regulation on Payday, Vehicle Title, and Certain High-Cost Installment Loans—which occurred under Director Cordray.227 However, before the rule went into effect (the rule had been stayed pending the outcome of litigation228), the CFPB, under Director Kraninger, rescinded most of the rule, leaving just the pre-authorized payment provisions intact.