HUD Delays HOTMA Compliance Date

The U.S. Department of Housing and Urban Development (“HUD”) recently released Notice H 2024-09 which delays the deadline for complying with the Housing Opportunity Through Modernization Act of 2016 (“HOTMA”) for Section 8 Multifamily from January 1, 2025, to July 1, 2025.

HOTMA was signed into law in July of 2016 and makes significant changes to certain sections of the United States Housing Act of 1937. The goal of HOTMA is to streamline and modernize various federal housing programs and make income and asset verification easier to perform. In February of 2023, HUD published long-awaited guidance which was to be effective January 1, 2024. In July of 2023 HUD stated that properties must be compliant with HOTMA as early as possible but no later than January 1, 2025. In September of 2023, HUD released additional guidance in Notice H 2023-10 which provided specific information for implementing HOTMA. In February 2024, a revised Notice H 2023-10 was released which provided additional guidance and technical clarifications. The recent guidance mentioned in the first paragraph above extends the date on which Section 8 Multi-family properties must be fully compliant to July 1, 2025.

On August 18, 2024, USDA Rural Development (“RD”) issued an Unnumbered Letter (UL) “Notification of Administrators Exception related to 7 CFR 3560.153 and 24 CFR 5.609(c)” notifying RD multifamily housing staff of RD’s exceptions for HOTMA implementation and their plan to implement HOTMA on January 1, 2025. The purpose of this UL was to provide additional guidance and timeframes on RD’s implementation of changes related to HOTMA.

HOTMA makes many changes to affordable housing compliance rules regarding tenant qualification. For example, what is considered an asset and how to calculate income from assets has changed.  The calculation of income from an asset now includes both the actual income and imputed income from an asset be combined when the net family assets exceed $50,000, also known as the Imputed Income Limitation which will be updated annually by HUD, (previously assets were imputed only when total assets exceeded $5,000 and then the greater of the imputed income or actual income was used as income from the assets). Effective January 1, 2025, the passbook percentage rate used to determine imputed income on assets has also changed from .40% to .45%.  HUD has released the Annual Adjustment Factors for 2025.

Some other significant changes due to HOTMA are how student financial aid is handled and what should be used in determining income from child support and alimony.

In the months between now and July 1, 2025, owners should be sure they are clear which affordable housing programs are affected by HOTMA, make sure their staff are trained on and understand the new HOTMA regulations, and ensure that their compliance software is updated for the new HOTMA regulations.

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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, LLC or McKonly & Asbury, LLP.

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