On January 31, 2023, HUD published the Housing Opportunities Through Modernization Act (HOTMA) Final Rule, in a preview version, as its first step in implementing many sweeping changes to HUD programs. HOTMA was passed on July 29, 2016, and is aimed at modernizing federal affordable housing programs by aligning program rules with one another, simplifying important income-related definitions, and changing outdated, or otherwise ineffective and burdensome, regulations.

With the exception of a few very specific provisions, HOTMA’s changes will be effective January 1, 2024.

HOTMA impacts Project-Based Rental Assistance Programs fulfilled by Section 8, the HOME program, the Housing Trust Fund (HTF), Public Housing programs, Housing Opportunities for Persons With AIDS (HOPWA), the Section 8 Moderate Rehabilitation SRO program, the Housing Choice Voucher program, and the Section 202 and 811 programs. It is important to note that other programs, such as the Low-Income Housing Tax Credit program (LIHTC), borrow heavily from HUD’s guidance regarding income calculation. Therefore it will be necessary to watch for guidance regarding HOTMA from the agencies that administer those programs.

Some highlights of the Final Rule include:

  • Clarifications on the inclusion of income for day laborers, independent contractors, and seasonal employees
  • A revision to the definitions of foster children and foster adults, which will exclude their income and assets from being counted for a household
  • A rule that public housing participants are no longer considered participants of the program once their income exceeds a location-specific amount for twenty-four consecutive months, which may lead to termination of tenancy
  • Changes to interim recertification rules, including policies that greatly favor the resident when it comes to reporting increases in earned income
  • A prohibition on assisting families who own real property in which they could feasibly live
  • The prohibition of residency at assisted properties for households whose net family assets total $100,000 or more
  • An increased cap on the threshold at which point the passbook savings rate must be applied to determine imputed income from assets – from $5,000 to $50,000
  • The right to self-certify net assets for households with less than $50,000 in assets
  • A new asset exclusion for IRAs and other retirement accounts
  • The potential for the dependent deduction amount to change each year to adjust for inflation (this will also impact the income inclusion caps on earned full-time student dependents’ incomes and on adoption assistance payments)
  • Adjustments to the minimum threshold for the inclusion of qualified medical and disability assistance expenses from 3% to 10% of annual income
  • An increase of the elderly family deduction from $400 to $525, which also may change year-over-year
  • Changes to how frequently certain EIV reports must be run
  • Many more, smaller changes

HUD assures its stakeholders that it will keep them informed as new documents emerge, rule changes require further clarification, and TRACS and other programs are updated. Leading up to the official rule change effective date, it’s important that O/As and PHAs keep an eye out for additional helpful information.

NCHM will keep its clients looped in as the changes regarding HOTMA occur. As the effective date of these changes nears, NCHM will offer several webinars on the topic. As always, we will update the content of our existing courses to incorporate the changes on a timely basis.

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