HUD provided supplemental Implementation Guidance for the (Housing Opportunity Through Modernization Act of 2016 (HOTMA) in Housing Notice 2023-10 released on September 29, 2023. With this Final Rule, implementation guidance on HOTMA regulations will become effective on January 1, 2024, with ongoing implementation throughout calendar year 2024. Compliance dates of March 31, 2024, have been established by HUD to address the required updates of policies and procedures to include Tenant Selection Plans and EIV Policies and Procedures to reflect these changes; along with specific guidelines to address the implementation of HOTMA and TRACS 203A.

HUD Housing Notice H 2023-10 addresses Sections 102 and 104 of HOTMA with both sections making sweeping changes to the United States Housing Act of 1937, especially those surrounding income calculation and household reviews. Section 102 changes requirements related to income reviews while Section 104 sets maximum asset limits for both HUD Public Housing and Multifamily Section 8 Housing programs. Some highlights include applicant eligibility restrictions when a family owns real property that is suitable for occupancy by the family as a residence or has assets in excess of $100,000; calculating anticipated income vs using prior year income at recertification, higher threshold (3% to 10%) of family income to determine Medical/Disability Expense deductions, changes in amounts for dependent deductions and elderly/disabled family deductions and corresponding hardship exemptions, household composition changes; and changes to income and asset inclusions/exclusions.

Once the HUD Compliance Software package is updated to be HOTMA compliant (TRACS 203A system requirements have been fully implemented), Owners/Agents must:

1. Provide tenants with sixty (60) days’ notice that their lease will be modified at the end of the lease term, after expiration of the sixty (60) day notice and implement new HUD approved lease formats.
2. Implement revised Tenant Selection Plans and EIV Policies and Procedures.
3. Use the revised Tenant Consent Form (HUD 9887/9887A) and Fact Sheets (How Your Rent Is Determined).
4. All tenant data must comply with HOTMA regulations.

Management and Occupancy Reviews (MORS) completed during calendar year 2024 will identify and record HOTMA related deficiencies as observations with corrective actions included in the MOR report. By January 1, 2025, full compliance with the HOTMA final rule will be mandatory and any MORs completed during calendar year 2025 or after will identify and record HOTMA related deficiencies as findings in the MOR report requiring corrective action. All revised forms must be completed with all households at time of annual reviews to include model leases, 9887/A, and Race & Ethnicity.

While this supplemental guidance on the Final Rule does provide extended timing for implementation of HOTMA throughout 2024, there are many moving parts that we are reviewing closely to provide continued quality service to our clients and customers. We will be reaching out directly to provide updated policies & procedures and assistance with any questions you may have during this process.