The Housing Opportunity Through Modernization Act (“HOTMA”) was signed into law on July 29, 2016, amending many aspects of multifamily housing programs (as well as programs administered through the Offices of Public and Indian Housing and Community Planning and Development). The U.S. Department of Housing and Urban Development (“HUD”) did this in the interest of aligning its requirements across its programs or because the underlying program statute required HUD to make the revisions.
HOTMA was intended to streamline processes and reduce burdens on housing providers. The final rule, published on February 14, 2023, considered public comment received on the proposed rule and provides additional guidance for implementing Sections 102, 103, and 104 of HOTMA.
- Section 102: Changes requirements related to income calculation and reviews for the Public Housing, Housing Choice Voucher (“HCV”), and Section 8 Project-Based Rental Assistance (“PBRA”) programs.
- Section 103: Modifies the continued occupancy standards of public housing residents (does not apply to multifamily housing programs).
- Section 104: Sets maximum asset limits for eligibility and continued assistance in the Public Housing, HCV, and PBRA programs.
When Are Owners Required To Be Compliant With HOTMA?
Full compliance with the HOTMA final rule is mandatory effective January 1, 2025.
Programs Affected
The PBRA (including Rental Assistance Demonstration), Section 202/811 Project Rental Assistance Contracts, 202/8, 202/162 Project Assistance Contracts, Senior Preservation Rental Assistance Contract (SPRAC), and Section 811 Project Rental Assistance Demonstration (811 PRA) programs saw changes due to HOTMA.
HOTMA also includes regulations for HUD’s Community Development Block Grants, HOME Investment Partnerships, Housing Trust Fund, Housing Opportunities for Persons With AIDS, Supportive Housing for the Elderly (Section 202), and Supportive Housing for Persons with Disabilities (Section 811) programs. Since HUD and other federal agencies may use the regulations revised as part of this rulemaking in the calculation of income for other programs or activities, the public should be aware that the effects of this rulemaking are not limited to the programs listed above.
Key Changes – Overview
- Definitions – HOTMA amends the definitions of family and earned income.
- Enterprise Income Verification (“EIV”) – HOTMA states that owners are no longer required to use EIV to verify tenant employment and income information during an interim reexamination.
- Hardship Relief – HOTMA creates hardship relief provisions for childcare, health and medical care, and attendant care and auxiliary apparatus expense deductions.
- Imputed Asset Income - HOTMA raises the imputed asset threshold from $5,000 to $50,000 (adjusted annually for inflation).
- Income and Asset Exclusions – HOTMA codifies additional income and asset exclusions.
- Income Reviews – HOTMA creates a 10% adjusted income increase/decrease threshold for conducting interim reexaminations.
- Mandatory Deductions – HOTMA increases the elderly/disabled family deduction to $525. The dependent deduction and the elderly/disabled family deduction will be adjusted for inflation on an annual basis.
- Self-certification of Assets – HOTMA permits owners to accept self-certification of net family assets if estimated to be equal to $50,000 (adjusted for inflation on an annual basis) or less.
Forms and Systems Changes
- HUD is updating forms HUD–50059, HUD–50059A, HUD–9887, HUD–9834, and the HUD Model Leases. Updated forms will be published to HUDCLIPS
- Tenant Rental Assistance Certification System (“TRACS”) specifications are being finalized and will be published to the Multi-Family Housing (“MFH”) TRACS web page
- MFH plans to update HUD’s Occupancy Handbook (HUD Handbook 4350.3) to reflect changes required due to HOTMA.
Implementation Resources
The following are links to relevant publications and guidance to assist with the implementation of the HOTMA changes.
- MFH HOTMA Web page: The web page will be updated with new resources, including trainings and written materials, as they become available.
- Joint PIH/MFH HOTMA Implementation Notice published on 9/29/2023: HUD will publish more information about the Asset Limitation (Attachment A) and the technical amendments to the 202/162 PAC program in subsequent updates to the Notice.
- Owner Tenant Selection Plan (TSP) and Enterprise Income Verification (EIV) Discretionary Policies guide published on 10/2/2023
Author: Samantha Hoyte, CPA | [email protected]
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