HUD Handbook 7465.1 § 4-3

a.   POLICY

            (1)   If a PHA receives unfavorable information about an
                  applicant, it must consider the possibility of
                  more favorable future conduct. This would be
                  especially important in evaluating applicants who
                  are borderline in the PHA's evaluation process.
                  These families may have a mixed credit record,
                  some housekeeping problems, a police record, or a
                  good and a bad report from previous landlords.

       b.   DISCUSSION

            (1)   Some mitigating circumstances which a PHA could
                  consider in evaluating applicants who do not fully
                  meet its standards for admission are:

                  (a)   That the applicant shows evidence of
                        rehabilitation as indicated by a report from
                        a parole officer or social worker.

                  (b)   That the family is aware of the-problem they
                        have been having and is taking steps to
                        improve the situation, such as getting
                        counseling or participating in an alcohol or
                        drug treatment program.

                  (c)   That the family is likely to improve its
                        financial situation because:

                        o   its rent will be lower once the family
                            is admitted to public housing; or

                        o   participation in a job training program
                            or improved employment prospects will
                            probably result in higher family income.

                  (d)   That the family would be able to receive
                        vendor payments.

            (2)   Vendor payments

                  (a)   Vendor payments involve the direct payment of
                        the rent from a welfare agency or other
                        source to the PHA. PHAs may want to consider
                        accepting vendor payments for families which
                        have been delinquent in paying rent.

                  (b)   Vendor payments are a departure from the
                        landlord-tenant relationship and should be
                        considered only on a case-by-case basis.
                        They should not

be applied to an entire group of tenants such
                        as to all families receiving AFDC benefits.

                  (c)   Vendor payments are permitted in the Aid to
                        Families with Dependent Children (AFDC)
                        program if the state welfare plan provides
                        for them and:

                        o   the family has misused funds as
                            evidenced by nonpayment of bills. (In
                            this case the payments, usually referred
                            to as protective payments, cannot be
                            continued for more than two years and
                            are usually for a shorter period.)
                            or
                        o   the welfare recipient requests the
                            vendor payments. (In this case the
                            payments continue until the recipient
                            requests that they be stopped.)

                  (d)   It may be possible for a family to arrange
                        for vendor payments to be made by an
                        employer.

            (3)   In deciding whether to admit applicants who are
                  borderline in the PHA's evaluation process, the
                  PHA should recognize that for every marginal
                  applicant it admits, it is not admitting another
                  applicant who clearly meets the PHA's evaluation
                  standards.

       c.   REFERENCES

            24 CFR 960.205(d)

            45 CFR 234 (vendor payments-AFDC)