HOTMA Annual Adjustment Factors
The Housing Opportunities Through Modernization Act (HOTMA) of 2016, became a Final Rule published on February 14, 2023, and it delivers important benefits to tenants and is to reduce the administrative burden on Owners/Agents. All affordable housing programs are impacted in some manner by the HOTMA Final Rule.
Per HOTMA, several factors will be adjusted annually for inflation or other factors. There will be a total of nine items that will change annually, including the annual passbook savings rate.
This article includes a summary of the eight HOTMA Annual Adjustment Factors and the annual passbook savings rate provided in HUD Notice H 2023-10/PIH 2023-27 (HOTMA Implementation Notice), that was issued on September 29, 2023.
According to the HOTMA Implementation Notice, “HUD will annually publish the eight inflation-adjusted items below and the annual savings passbook rate no later than September 1 every year, updated values will be shared online at the HUD User Web site. The publication will apply to both Public and Indian Housing (PIH) and Multifamily Housing (MFH) programs. The revised amounts will be effective on January 1 of the following year. The first set of adjustments for inflation will be made effective January 1, 2025”, with a Notice published no later than September 1, 2024.
HOTMA Annual Adjustment Factor changes that were effective January 1, 2024, are as follows:
Annual Passbook Rate
The 2024 passbook savings rate is 0.40 % and will change every year. This will apply to both PIH and MFH programs.
PHAs/MFH Owners must use the HUD-published passbook rate when calculating imputed asset income for net family assets that exceed $50,000 (a figure that is annually adjusted for inflation). The HUD-published passbook rate will be posted to a dataset on the HUD User Web site, alongside the annual inflationary adjustments.
Eligibility Restriction on Net Family Assets*
Public housing units may not be rented and assistance under Section 8 (tenant-based and project-based); programs may not be provided to persons if they have the assets listed below. Note: The asset limitations do not apply to HOME, HTF, or LIHTC households.
- The household’s net assets exceed $100,000 (2024 amount adjusted for inflation in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers); OR
- The household has a present ownership interest in real property. The property must be suitable for occupancy by the family as a residence. They must have a legal right to reside in, and the legal authority to sell based on State or local laws where the property is located.
*HUD is working on further guidance about the discretion owners have relating to the limitation on assets exceeding $100,000 and real property suitable for occupancy for HUD-assisted households.
Threshold Above Which Imputed Income Must Be Calculated on Net Family Assets
Imputed asset income is only calculated if the total of net family assets exceeds $50,000. When this is the case, income is imputed only on individual assets when income cannot be calculated for the specific asset.
In the past, income was imputed on assets when the total cash value of all assets exceeded $5,000. Then the imputed income was calculated based on the total of all assets. The greater of that total imputed income amount or total actual income would be used. According to the new Implementation Notice H2023/-10/PIH 2023-27, F.6.b., HUD says that “imputed income from assets is no longer determined based on the greater of actual or imputed income from the assets. Instead, imputed asset income must be calculated for specific assets when three conditions are met:
- The value of net family assets exceeds $50,000 (as adjusted for inflation);
- The specific asset is included in net family assets; and
- Actual asset income cannot be calculated for the specific asset.”
The Threshold Above Which the Total Value of Non-Necessary Personal Property is Included in Net Family Assets
Items of personal property that do not qualify as necessary personal property will be classified as non-necessary personal property. Non-necessary personal property is excluded if total non-necessary personal property does not exceed $50,000. If total non-necessary personal property exceeds the threshold, the items of property are counted as assets. In either case, any income earned by the assets is counted. A final implication of exceeding the $50,000 threshold is that if any item of personal property has income that cannot be determined that asset will have asset income imputed at the current passbook savings rate of 0.40%.
The Amount of Net Assets the PHA/MFH Owner May Accept Self-Certification by The Family
When the combined value of all net family assets has a total value of $50,000 or less, the Owner may allow the family to self-certify that their family net assets do not exceed $50,000. The amount of actual income the family expects to receive from assets must be listed on the self-certification, and this amount is to be included in the family’s income.
Note: HOME and HTF require two (2) months of source documentation for verification of income at move-in and at every 6-year full recertification, except for TBRA and PBRA units, in which the PHA / Administrator income determination is utilized.
Mandatory Deduction for Elderly and Disabled Families
The elderly/disabled family deduction increased from $400 to $525. Note: Not applicable to the LIHTC and HTF programs.
Mandatory Deduction for a Dependent
The dependent deduction remained $480. Note: Not applicable to the LIHTC and HTF programs.
Income Exclusion for Earned Income of Dependent Full-Time Students
The dependent full-time student deduction remained $480.
Income Exclusion for Adoption Assistance Payments
The deduction remained $480.
Owners and Management Agents should be well trained in understanding the HOTMA requirements as they relate to maintaining compliance in affordable housing. MLCM offers consulting services regarding the various affordable housing programs impacted by the implementation of HOTMA. For more information on these services be sure to visit our Property Compliance page and don’t hesitate to contact us. The information presented in this post is intended solely for informational purposes and should not be construed as consulting advice from M&L Compliance or McKonly & Asbury, LLP.
About the Author
Susie joined MLCM, McKonly & Asbury’s affiliate property compliance company, as a Compliance Manager in December 2022. A veteran in her field, Susie has more than 20 years of experience in the industry.
