HUD Revises HOTMA Interim Reexamination Standards- Changes in Household Composition Now Trigger Reexaminations
By A.J. Johnson
On April 13, 2026, the U.S. Department of Housing and Urban Development (HUD) issued Notice PIH 2026-09 / Notice H 2026-05, revising the standards under which Public Housing Agencies (PHAs) and Multifamily Housing (MFH) Owners must conduct interim reexaminations of income and household composition under Sections 102 and 104 of the Housing Opportunity Through Modernization Act (HOTMA). The Notice amends Attachment I of Notice H 2023-10/PIH 2023-27 and supersedes the prior version of Attachment I (Revision 2) published on February 2, 2024. HUD has republished the underlying notice with the new Attachment I as Revision 3.
HOTMA, enacted in 2016, made significant changes to the income and rent provisions governing federally assisted housing programs. HUD's implementing regulations, published February 14, 2023 (88 FR 9600), required PHAs and MFH Owners to conduct interim reexaminations under specific circumstances, including changes in household income and family composition. Since the original implementation guidance was issued, the housing industry has raised practical concerns about the administrative burden and operational impact of the interim reexamination triggers, particularly regarding changes in household composition. The April 13, 2026 Notice addresses those concerns by clarifying — and in important respects, modifying — the standard PHAs and MFH Owners must apply.
The Notice has broad applicability across HUD's rental assistance programs. On the PIH side, it applies to:
On the Multifamily side, it applies to:
Owners and agents administering any of these programs should review their existing interim reexamination policies in light of the revised standard.
Under the revised Attachment I, PHAs and MFH Owners must conduct an interim reexamination whenever a household adds or removes a household member. The Notice expressly identifies the following as triggering events:
The reexamination requirement applies regardless of whether the change in household composition results in a decrease, an increase, or no change in the family's annual adjusted income. This is a meaningful departure from prior practice. Under earlier guidance, the trigger for an interim reexamination was generally tied to the financial impact of a change. Under the revised standard, the change in household composition itself — without regard to its income effect — is the operative event requiring reexamination.
This change reflects HUD's view that household composition is itself a foundational determination affecting subsidy eligibility, unit size, and accurate program administration, and that reexaminations should be conducted whenever the composition of the assisted household changes, even if the resulting income calculation is unchanged.
The revised Attachment I preserves an important administrative accommodation for owners and PHAs that have adopted a written policy not to conduct interim reexaminations for increases in annual adjusted income during the last three months of a recertification period. Under the new standard, a PHA or MFH Owner with such a written policy is not required to conduct an interim reexamination solely because of the addition or removal of a household member during those final three months. Instead, the change in household composition will be reported and processed at the next annual reexamination.
This exception is significant for several reasons. First, it prevents the duplication of effort that would otherwise occur when a composition change happens shortly before a scheduled annual recertification. Second, it aligns the treatment of late-cycle composition changes with the existing late-cycle treatment of income increases. Third, it provides PHAs and MFH Owners with a meaningful administrative tool — but only if they have, in fact, adopted a written policy. Owners and agents who have not yet adopted such a policy should consider whether doing so makes operational sense in light of the new requirement.
The Notice also reiterates an important rule: when conducting an interim reexamination, PHAs and MFH Owners must not consider any increases in earned income outside of the exceptions specified in Revision 3. This continues HUD's policy of generally disregarding increases in earned income between annual reexaminations, subject to specified exceptions, to encourage, rather than penalize, residents who improve their employment circumstances. Owners and agents should confirm that their software systems, file documentation, and tenant communications properly reflect this rule when processing interim reexaminations triggered by household composition changes.
The revised standard creates several practical compliance issues that owners, agents, and PHAs should address promptly.
First, policies and procedures should be updated. Tenant Selection Plans, Admissions and Continued Occupancy Policies (ACOPs), Administrative Plans, EIV Policies, and any standalone interim reexamination procedures should be reviewed and revised as needed to reflect the new triggering events and the optional last-three-months exception. Where an owner or PHA wants to take advantage of the last-three-months exception, the policy must be in writing.
Second, staff training is essential. Site staff, occupancy specialists, and compliance personnel need to understand that the addition or removal of any household member — including foster placements and live-in aides — now triggers an interim reexamination, even when there is no change in income. This represents a meaningful workflow change for many properties.
Third, resident communication should be reviewed. Move-in packets, lease addenda, and resident notices regarding the obligation to report household composition changes should be reviewed for clarity. Residents should understand that the addition of a child, a foster placement, a live-in aide, or any other household member must be reported, and that such reports will result in an interim reexamination.
Fourth, file documentation must be tightened. Each interim reexamination triggered by a composition change should clearly document the nature of the change, the date reported, the date of the reexamination, the resulting determination, and any rent change (or lack of rent change) flowing from the reexamination. Where the last-three-months exception is invoked, the file should document the exception and reference the written policy authorizing it.
Fifth, software configuration may require attention. Property management and compliance software should be configured to flag household composition changes as interim reexamination triggers and to correctly handle the last-three-months exception when the owner or PHA has adopted that policy.
PHAs with questions about the Notice are directed to their local field office or to HOTMAQuestions@hud.gov. MFH Owners with questions are directed to their local field office or to MFH_HOTMA@hud.gov.
Notice PIH 2026-09 / H 2026-05 represents a meaningful refinement of HOTMA's interim reexamination requirements. By treating household composition changes as a stand-alone trigger — independent of any associated income change — HUD has emphasized the importance of accurate household composition records in federally assisted properties. At the same time, by preserving the optional last-three-months exception, HUD has provided owners and PHAs with a measure of administrative flexibility, contingent on the adoption of a written policy.
Owners, agents, and PHAs should review their current policies, train staff on the revised standard, and ensure that resident communications and file documentation align with the new requirements. Firms with questions about integrating the revised standard into existing compliance frameworks are encouraged to consult experienced affordable housing compliance counsel.
A.J. Johnson Consulting Services, Inc. provides compliance consulting, training, and file-review services to participants in HUD multifamily, LIHTC, HOME, and USDA Rural Development programs. For more information about the firm's services, please visit our website or contact A.J. Johnson directly.
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