HUD issues Housing Notice (2023-10) affecting HOTMA compliance dates

HUD issues Housing Notice (2023-10) affecting HOTMA compliance dates 

 HUD released guidance, issued Sept. 29, 2023, to Public Housing Agencies (PHAs) and Multifamily Housing (MFH) Owners on implementing the many program changes brought about by the Housing Opportunity Through Modernization Act of 2016 (HOTMA). The guidance addresses Sections 102 and 104, which affect income calculations and reviews.  

The effective date for the final rule is Jan. 1, 2024, but HUD recognizes that compliance with this deadline due to software implementation is unlikely and, therefore, expects an ongoing process over the course of a year as routine activities occur. Items of note in this guidance relate to the timing of implementation.  

HUD expects that by March 31, 2024: 

  • Owners must update their Tenant Selection Plans (TSPs) and Enterprise Income Verification (EIV) policies and procedures to reflect HOTMA rules and discretionary policies. 
  • Owners must make the revised TSPs publicly available. 

When Owners have software that is HOTMA compliant (i.e., TRACS 203A system requirements have been fully implemented): 

  • Owners must provide tenants at least 60 days’ notice that their lease will be modified at the end of the lease term. Once the notice is given, the Owners must begin using the revised Model Leases at the expiration of a family’s lease term. 
  • Owners must implement their revised TSPs and EIV policies and procedures. 
  • All tenant data submissions must comply with the HOTMA regulations. Prior to their first reexaminations under HOTMA, Owners must inform families that their income determinations will be conducted in accordance with the HOTMA final rule. 
  • Owners must use the revised Tenant Consent Form (9887) and Fact Sheets 

HUD will monitor MFH Owner compliance prior to Jan. 1, 2025, but Owners will not be penalized for HOTMA-related tenant file errors during Management and Occupancy Reviews (MORS). Instead, the contract administrator will issue observations with corrective actions. 

By Jan. 1, 2025:  

  • Full compliance with the HOTMA final rule is mandatory. 
  • Contract Administrators will issue HOTMA-related findings during MORS. 
  • Owners must correct all HOTMA-related observations that were issued by contract administrators during 2024. 
  • Owners who fail to implement HOTMA may be found in default of their business agreements with HUD. 

This notice (Attachments A-J) details changes to asset and income determinations and verification, and it supersedes relevant portions of HUD’s guidance as provided in the HCV Guidebook, the Public Housing Occupancy Program Guidebook, and the HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs. HUD will update and replace all affected sections and chapters. 

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The information contained in this article is for informative purposes only and should not be relied on when making any business, legal, or other decisions. This information may be updated without notice and/or may not contain the most current information that is available related to this topic. Please consult with your advisor to determine how this information applies to your specific facts and circumstances.