HOTMA FAQ

These are the most frequently asked questions from our HOTMA Compliance training program. This page is updated weekly, so check back often to see the latest questions and answers.

Last Updated: May 22, 2024

Presentation Changelog

Question: As HUD issues further guidance, is NCHM going to be updating the course presentation?

Answer: Yes, NCHM is dedicated to providing our participants with the most up-to-date and reliable information available, especially during the lead-up to HOTMA going into effect. HUD will likely clarify some lingering questions and issue guidance, and NCHM is ready to modify our materials to reflect this new information. NCHM has launched the HOTMA Compliance Changelog, tracking all important changes to the HOTMA Compliance presentation.

Question: I see the newest changes, and they impacted a session I attended. Can I get an updated presentation for future reference?

Answer: NCHM will provide past participants with updated presentations as they are completed. These will be disseminated via email, so please be on the lookout for HOTMA update emails containing these updated files.

HUD Guidance and Notices

Document: Implementation Guidance: Sections 102 and 104 of the Housing Opportunity Through Modernization Act of 2016 (HOTMA)

PDF Download Link

Implementation Deadlines

Question: Is it true that the HOTMA compliance deadline has changed to 1/1/2025?

Answer: All programs are required to implement HOTMA no later than 1/1/25. PIH programs must choose a compliance date based upon their Annual Plan due date and Fiscal Year start. Multifamily programs must have their Tenant Selection Plans and EIV Policies and Procedures updated by no later than May 31, 2024. Until their software is fully compliant with TRACS 203A, the new leases have been executed, and their TSP and EIV Policies & Procedures have been updated, MFH Owners must continue to follow their existing plans and procedures.

Question: If we have already processed ARs effective in 2024 and we have not yet implemented HOTMA, will we have to correct them?

Answer: HUD will not penalize sites for HOTMA-related discrepancies in 2024.

Family Composition

Question: Are foster children and foster adults listed on the certification?

Answer: Yes. Foster adults and foster children are members of the household. They will be considered when determining appropriate unit size and utility allowance. Under HOTMA, HUD clarifies that foster adults and foster children are no longer considered members of the assisted family and as such, their income and assets are excluded.

Income

Question: Is it true that HUD now requires only 2 paystubs to calculate annual income from employment?

Answer: Yes, but if 2 paystubs do not reflect an accurate accounting of the member’s annual income, you may request more.

Question: Are car payments or car insurance paid by someone outside of the household considered “in-kind” donations?

Answer: No, those are examples of bills paid on behalf of a family member and would continue to be counted as income. In-kind donations are things like personal items, toiletries, clothing, etc. The value of these recurring contributions will be excluded from income if the items were donated by food banks or similar organizations.

Question: Our property is layered with HUD Section 8 and LIHTC. If the way we determine income changes due to Section 8 allowing a “look-back” at the previous year, would that change also apply to LIHTC?

Answer: Not necessarily; it is important to know how your state housing finance agency is implementing HOTMA for LIHTC. Keep in mind that looking back at last year’s income is only as good as the current circumstances. If something has changed or there is a known anticipated change, you must take that into consideration.

Question: How should income be calculated for someone that works for the school system and then gets unemployment in the summertime? Should we process IRs?

Answer: The correct approach is to pro-rate the income. Include the employment income for the school year and unemployment for the summer in one certification. This is also the correct approach for other forms of known seasonal employment.

Question: HOTMA’s new Safe Harbor provision allows for the use of “means-tested verifications.” Are we required to accept these, or can we continue to obtain traditional third-party verifications?

Answer: The language used is that sites “may” accept means-tested verifications (LIHTC, WIC, SNAP, etc.). Sites are allowed to continue verifying using traditional third-party verifications. NCHM recommends that you do your own work and include acceptable forms and methods of verification in written policies and procedures.

Question: When is the last day a HOME or Public Housing participant can begin utilizing the Earned Income Disregard (EID)?

Answer: The last day a participant can begin an EID is 12/31/2023. They will still receive 24 months of the benefit; that is why the EID program officially sunsets on 1/1/2026.

Assets

Question: Is it true that we must evict households that have assets worth more than $100,000 upon Annual Recertification?

Answer: No. O/A’s have the discretion to choose whether or how to implement the new asset limitations upon Annual Recertification.

Question: My software will not allow me to use the new 0.40% Passbook Savings Rate at this time. What are my options?

You may continue to use 0.06% as the Passbook Savings Rate until your software is compliant. You will not be penalized for this.

Question: Is it true that we will not be required to obtain a six-month average balance for each checking account on a certification?

Answer: Yes, the cash value of a checking account will now be its current balance.

Question: What is the Passbook Rate for 2024?

Answer: It has been revised from 0.06% to 0.40%.

Question: If a Section 8 applicant household has assets that amount to $50,000 or less in total cash value, do we allow a self-certification of assets for the move-in certification?

Answer: Assets must be verified at least every three years. You may allow self-certifications in the intervening years when the total cash value is $50,000 or less. NCHM recommends obtaining verifications at move-in to establish a baseline.

Question: Do sites have to allow self-certification of assets, or can they continue to require third-party verification?

Answer: The language says tenants “may” self-certify.  If a site wants to continue to conduct third-part verification of all assets, it is important to treat everyone the same way. The verification procedures should be addressed in the written policies and procedures.

Question: Does the $50,000 asset self-certification threshold apply to the LIHTC program?

Answer: The IRS considers the HOTMA final rule to supersede Rev Proc 94-65 and will allow for self-certification of assets when the cash value does not exceed $50,000. NCHM recommends consulting with the applicable State Housing Finance Agency, as they may have more restrictive requirements in place.

Question: If someone owns real property that is physically unsafe and is cost-prohibitive to render safe, what kind of verification should we use to prove this?

Answer: There are many options to verify such information, and HUD requires O/As and PHAs to determine what would be sufficient verification of such circumstances, and to outline this in their policies.

Question: If a household’s assets exceed $50,000 in cash value, for which of those assets must we impute asset income?

Answer: Calculate imputed asset income for each asset that has an undeterminable amount of asset income (e.g.: homes, land, collections, recreational vehicles).

Question: What exactly do we need to verify to determine whether someone owns real property?

Answer: Ultimately, sites will need to determine a) whether the family has any interest in real property, as defined by state/local law; b) whether the family may legally occupy the real property, per state/local law; and c) whether the family has the legal authority to sell the real property under their state/local laws. You may also need to verify whether the property falls under one of HUD’s or the site’s own exceptions to these ownership rules when it comes to eligibility for assistance.

$100,000 Asset Threshold/Disposed Assets

Question: What programs are subject to the $100,000 asset cap?

Answer: The new rule is specific to HUD Section 8 PBRA and programs administered by PHAs, such as Housing Choice Vouchers. This includes Section 202/8 programs, and excludes PRAC programs.

Question: Are there restrictions on how a household may get rid of their assets in excess of $100,000 in order to qualify for subsidy?

Answer: No, but keep in mind that applicants and tenants are still subject to the existing guidance regarding disposing assets for less than their fair market value. HUD offers ideas such as purchasing a piece of necessary property (such as a vehicle to be used for everyday transport), or placing it into an excluded asset under the household’s control (such as an IRS-regulated retirement savings plan or an irrevocable trust).

Question: When a household has assets that exceed the $100,000 threshold, can we allow them to self-certify that assets have dropped below $100,000, or do we need to third-party verify?

Answer: HUD allows families to self-certify this, however, NCHM recommends third-party verification to certify that a household’s assets now total $100,000 or less.

Question: If a tenant spends down their assets on something like an elaborate vacation, what documentation does the file need to verify it was spent?

Answer: HUD does not require verification of purchases made from assets. Your policies and procedures may include verification standards that are stricter than HUD’s.

Question: Our site is Section 8 PBRA layered with LIHTC. Does the $100,000 threshold apply to LIHTC?

Answer: Section 42 regulations have not been updated with regard to asset caps. When a site is layered, you must follow the most restrictive guidance; your site’s Section 8 PBRA layer would be subject to the cap. Please consult your state housing finance agency for LIHTC guidance.

Question: Our site is electing to implement limited enforcement of the asset limitations upon recertification; we will grant affected households six months to cure their ineligibility. Will TRACS 203A have a method of monitoring these households so we can keep track of how far they are into their six-month period?

Answer: TRACS 203A updates are still in the works. For now, it will be your responsibility to track it.

Question: If we opt to delay termination of subsidy for six months for a household whose assets exceed the $100,000 cap upon Annual Recertification, how much rent does that household pay during that time?

Answer: They continue to receive subsidy for the 6-month period.

Certifications, Leases, and Forms

Question: With the changes under HOTMA, sites will need new forms and leases. When will these be available?

Answer: We are patiently awaiting updated forms and leases from HUD. At this point in time, the only form that has been updated for HOTMA is the HUD-50058 and the 9886 for PIH programs. NCHM will update this page as soon as items become available.​

Question: Is it true that the HUD forms 9887 and 9886 will only need to be signed once after HOTMA is effective?

Answer: Yes, starting in 2024 with the new version of the forms, tenants will only be required to sign once per issuance of subsidy instead of annually.

Question: Will all tenants need to sign the new HOTMA-compliant lease, or is their original lease still valid?

Answer: All tenants will need to sign a HOTMA-compliant lease. Once the model leases have been finalized and released, NCHM will update this page.

Question: Do we still need to have a 9887 signed when a dependent turns 18 years old?

Answer: Yes.

Question: If a change triggers an IR under the new rules, must we continue to verify and incorporate ALL changes that have occurred since the last certification?

Answer: You must still VERIFY all changes whenever an IR is executed. Only incorporate the changes that warrant an IR in the new certification. For example, if a household experiences a 10% increase in earned income AND a 10% increase in unearned income, verify both changes, but only adjust the unearned income source.

Deductions

Question: Is there a cut-off on how many times a family can receive the 90-day hardship exemption for the child care deduction?

Answer: There is no HUD-imposed limitation on how many times a family may benefit from this hardship exemption, but sites should address how they evaluate whether hardships exist in their written policies and procedures.

Question: Since the definition of the health and medical care deduction has expanded, would things like vitamins be deductible?

Answer: The new language states it includes any costs incurred in the diagnosis, cure, mitigation, treatment, or prevention of disease or payments for treatments affecting any structure or function of the body. NCHM recommends verifying with a doctor that items like vitamins are necessary to mitigate, treat, or prevent a condition. HUD has clarified that Exhibit 5-3 of the Handbook 4350.3 REV-1 is out-of-date and that they will be updating it.

Question: Who qualifies to have their disability and health and medical care expense threshold phased-in to 10% over three years?

Answer: The phase-in is only for existing tenants who are currently receiving assistance and taking the deduction(s) under the current 3% threshold. It does not apply to new move-ins, or to households who are not benefiting from the deduction as of 12/31/2023.

EIV

Question: How do the new rules impact the use of the Income Discrepancy Report in EIV?

Answer: HUD intends to update the discrepancy logic within EIV to conform to the requirements of the final rule. Owners are still required to generate the reports but are not required to investigate discrepancies resulting from the Income Discrepancy Reports until HUD updates the discrepancy logic.

Question: Does HOTMA change how we should be running our master EIV reports?

Answer: Please see Table J1 on pages 114-118 of Notice H 2023-10 (Rev. 2/2/2024) for revised guidance on EIV master reports.

Question: HOTMA indicates we do not need to run the EIV Income Report during IRs. Do we still need to run it no later than 90 days after a household begins receiving subsidy through a MI or IC in our HUD Multifamily Housing program?

Answer: Yes. HOTMA only removes the obligation to run EIV during IRs – the other instances during which you would run the reports have not changed.

General Questions

Question: How will HUD communicate new limitations, restrictions, and deduction amounts that are subject to annual inflationary adjustments?

Answer: They will be posted to HUDUser.gov by no later than September 1 of the year prior to their effective date.

Question: When does HOTMA go into effect?

Answer: HOTMA was technically effective January 1, 2024, but sites may implement the changes by no later than January 1, 2025

Question: So when do I have to be prepared for HOTMA?

Answer: You should start now by absorbing information about HOTMA and getting your plans in place. HOTMA will be mandatory starting January 1, 2025. HUD has stated that any HOTMA-related errors noted during an audit found in 2024, will be noted as observations with corrective actions.

Question: What programs does HOTMA impact?

Answer: HOTMA impacts the following:

  • Public Housing programs, including the Housing Choice Voucher (HCV) Program
  • Moving to Work (MTW) Agencies
  • Section 8 Project-Based Rental Assistance (PBRA) programs
  • Rental Assistance Demonstration programs (RAD)
  • Section 202/811 Project Rental Assistance Contracts (PRACs)
  • Section 202/162 Project Assistance Contracts (PACs)
  • Senior Preservation Rental Assistance Contracts (SPRACs)
  • Section 811 Project Rental Assistance programs (PRAs)
  • HOME Investment Partnerships programs
  • Housing Trust Fund programs (HTF)
  • Housing Opportunities for Persons With AIDS programs (HOPWA)
  • Section 8 SRO Moderate Rehabilitation programs (Mod Rehab)
  • Rural Housing Services*
  • The Low Income Housing Tax Credit (LIHTC) program*

*To the extent that the respective governing agency uses the Section 8 definition of income.

Question: How does HOTMA impact LIHTC?

Answer: Since the LIHTC program borrows from HUD guidance, the IRS has confirmed that HOTMA will impact the LIHTC program. We anticipate that further guidance from the IRS in the coming months will provide some clarity to those impacts.

Question: So HOTMA’s Final Rule is final…right?

Answer: Since the publication of the Final Rule, we have received additional guidance pertaining to implementation during this transition period. We anticipate further changes, guidance, and more in the coming months from HUD. As more information is released, we will be your partner in understanding how these changes impact your organization.

Question: Will NCHM be offering HOTMA-specific training?

Answer: Yes, our first HOTMA training session ran on August 17-18, 2023 and we plan to have sessions at least monthly in 2024.

Additionally, NCHM will provide updates on HOTMA news via blog posts, FAQ entries, and generally updating the HOTMA HQ page, so check in frequently.

Question: How do we handle applicants on our waiting list who will be ineligible due to new asset restrictions?

Answer: The O/A or PHA must decide how to communicate the new asset restrictions to applicants on the waiting list. There is no option to grandfather in these applicants.

Question: Will HOTMA changes be included in the next revision of the HUD Handbook 4350.3?

Answer: For now, changes under HOTMA are will be communicated through HUD and PIH Notices. The HUD Handbook 4350.3 will be undergoing extensive revision to incorporate all changes that have happened since 2013 – this will take some time.

Supporting Documents

HOTMA’s Fluctuating Factors

 

Upcoming HOTMA Training Sessions

A two-day, eight-hour comprehensive training course to get you ready for HOTMA in 2024.

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