Under the new imputing rules prescribed by HOTMA, applicants and tenants of affordable housing programs will have to keep even better track of their disposed assets going forward.
In nearly all income-based housing projects, there are rules designed to prevent people from getting rid of their assets in order to qualify for housing or to benefit from a lower rent. The HUD Handbook 4350.3 Chg. 4 REV-1 indicates “applicants and tenants must declare whether an asset has been disposed of for less than fair market value at each certification and recertification. The amount counted as an asset is the difference between the cash value and the amount actually received.” (Par. 5-7G8, pg. 5-38).
Residents and applicants dispose of assets when they put an asset in a non-family member’s name, give away cash or other assets to someone else, or sell something for less than it is worth. When this is disclosed, the O/A or PHA must count the amount disposed as an imputed asset on the certification for two years from the date of its disposal.
In consideration of small transactions, such as tithing, donating, or gifting, HUD also made it clear that there must be some kind of threshold at which disposing an asset actually counts “against” the resident. In HUD Multifamily Housing, that threshold was $1,000. PHAs in HUD’s Public and Indian Housing programs were allowed to set their own thresholds. The Low Income Tax Credit (LIHTC) program, the HOME program, and many others followed the HUD Multifamily threshold.
According to the HOTMA Implementation Guidance, Notice H 2023-10 / PIH Notice 2023-27, there is no longer a threshold at all. All assets disposed for less than their fair market value must be counted on the certification for two years from the date of their disposal – regardless of how much was disposed.
It was widely assumed that this matter was an oversight, but in February, NCHM felt it prudent to consult HUD directly. In September of 2024, NCHM received confirmation of the lack of a threshold. We shared the information with the National Council of State Housing Agencies (NCSHA), as well as other industry partners who have created sample form packages that still contain the $1,000 threshold.
For more information on the ever-evolving Housing Opportunity Through Modernization Act, we encourage all stakeholders to attend our HOTMA Compliance course, which we offer monthly. Attendees receive updated materials each time HUD issues a clarification (such as this one) and receive direction as to these updates in our HOTMA Changelog.