HUD Releases Final Rule Implementing HOTMA

The Department of Housing & Urban Development (HUD) has released a Final Rule implementing the Housing Opportunity Through Modernization Act of 2016 (HOTMA). This final rule has not yet been published in the Federal Register. Publication in the Federal Register will establish the effective dates of the rule.

 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). HOTMA was intended to streamline processes and reduce burdens on housing providers. On September 17, 2019, HUD issued a proposed rule to update its regulations according to HOTMA’s statutory mandate. The final rule, published on January 9, 2023, considers 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 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, Section 8 PBRA programs.

Which Programs will be Affected by the Final Rule?

 The Section 8 PBRA (including RAD), Section 202/811 PRAC, 202/8, 202/162 PAC, Senior Preservation Rental Assistance Contract (SPRAC), and Section 811 Project Rental Assistance (811 PRA) programs will see changes due to HOTMA.

Key Changes to the Multifamily Housing Programs

  • 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 & 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 deduction will be adjusted for inflation on an annual basis.
  • Self-Certification of Assets: HOTMA permits owners to accept self-certification of net assets if estimated to be equal to $50,000 (adjusted for inflation on an annual basis) or less.

Final Rule Effective Date & HOTMA Implementation

 All provisions for Multifamily Housing programs will become effective on January 1, 2024. Owners must implement the revised regulations for all tenant certifications of income effective January 1, 2024, and after. Additional guidance will be forthcoming about the timing of submitting January 1, 2024 certifications to TRACS.

This 303-page final rule is complex and makes sweeping changes to HUD programs, particularly with regard to income calculation and reviews.  In addition to amending rules for HUD’s public housing and Section 8 programs, the final rule revises program regulations for several other HUD programs. HUD did this to align requirements across programs. Affected programs include Community Development Block Grants (CDBG), HOME, Housing Trust Fund, Housing Opportunities for Persons with Aids, Section 202, and Section 811.

Due to the complex nature of this final rule, rather than try to describe the changes in one massive article, I will be publishing a series of articles in the coming weeks – each dealing with a separate section of the final rule.