The Department of Housing and Urban Development (HUD) published an implementation notice for the Housing Opportunity Through Modernization Act (HOTMA), a major affordable housing rule change, on September 29. The notice acts on strong advocacy by LeadingAge urging HUD to delay HOTMA compliance dates for multifamily housing providers, and to give owners more discretion in enforcing certain HOTMA rules related to asset limits for currently served residents.

Updated Compliance Dates for Multifamily Housing Programs

HUD originally required multifamily housing providers to comply with HOTMA beginning January 1, 2024. In a September 12, 2023, letter to HUD, LeadingAge urged HUD to delay the compliance dates because HUD had not given providers the tools, systems, or guidance needed to set up compliance processes at affordable housing providers.

In some cases—including resident recertifications—those systems would have needed to be in place by September in order to be effective January 1. In other cases, providers would have needed to implement new community policies, a lengthy process impacted by tenant notification timeframes. HUD also had not made any resident-facing material available to help providers work with tenants to adjust to the new HOTMA rules, which impact rent calculations and basic eligibility for HUD housing.

“We therefore urge HUD to delay the compliance date of certain aspects of HOTMA; this will allow enough time for software updates to TRACS, new forms, and further guidance for housing providers, as well as communication with residents about the coming changes,” we stated in the letter.

HUD acknowledges these challenges in the HOTMA implementation notice published September 29. HUD’s new guidance gives owners until March 31, 2024, to implement certain new policies, and until January 1, 2025, to reach full compliance with HOTMA.

Notice H 2023–10, which applies to multifamily housing programs subject to HOTMA Section 102 and 104, states:

“HUD recognizes … that HOTMA includes significant program and systems changes and that PHAs/MFH Owners and families need time to understand the changes and implement them. HUD understands that the system development timeframes for the Housing Information Portal (HIP) and Tenant Rental Assistance Certification System (TRACS) make full implementation and compliance with the final rule by the January 1, 2024, deadline unlikely. Additionally, because these HOTMA changes apply to all current participants and new admissions, implementation of the HOTMA final rule cannot be achieved immediately on a universal basis but rather is an ongoing process that will happen over the course of a year as routine program activities occur.”

Compliance Dates and Required Actions for MFH Owners

By March 31, 2024:

• By March 31, 2024, MFH Owners must update their Tenant Selection Plans and EIV policies and procedures to reflect HOTMA rules and discretionary policies.
• MFH Owners must make the revised Tenant Selection Plan publicly available. Note: MFH Owners must continue to follow their existing Tenant Selection Plans and EIV policies & procedures until the MFH Owner’s software is compliant with TRACS 203A.

Once a MFH Owner’s software is HOTMA compliant (i.e., TRACS 203A system requirements have been fully implemented), the following things must happen:

• MFH Owners must provide tenants at least 60 days’ notice that their lease will be modified at the end of the lease term after the expiration of the 60 days notice. Once proper notice is given, MFH Owners must begin using the revised Model Leases at the expiration of a family’s lease term.
• MFH Owners must implement their revised Tenant Selection Plans and EIV policies and procedures.
• All tenant data submissions must comply with the HOTMA regulations. Prior to their first reexaminations under HOTMA, MFH Owners must inform families that their income determinations will be conducted in accordance with the HOTMA final rule. As a best practice, HUD recommends that MFH Owners describe to families how their income determinations will change with the implementation of the final rule.
• MFH Owners must use the revised Tenant Consent form (form HUD–9887/9887A) and Fact Sheets (“How Your Rent is Determined”).

How HUD will monitor MFH Owner compliance prior to January 1, 2025:

• Prior to January 1, 2025, MFH 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 January 1, 2025:

• Full compliance with the HOTMA final rule is mandatory effective January 1, 2025.

How HUD will monitor owner compliance on or after January 1, 2025:

• Contract Administrators will issue HOTMA-related findings during MORs.
• MFH Owners must correct all HOTMA-related observations that were issued by Contract Administrators during 2024.
• MFH Owners who fail to implement HOTMA may be found in default of their business agreements with HUD.

As part of implementation, HUD is also issuing new model leases, forms, and handbook updates. TRACS, the system used by housing providers to report occupancy and to voucher for monthly subsidy through HUD, is also being updated to be compatible with new requirements.

Discretionary Enforcement of Asset Limits

We also urged HUD to correct its implementation of new asset limits for multifamily housing residents. HOTMA creates a restriction on the eligibility of a family to receive assistance if the family owns real property that is suitable for occupancy by the family as a residence or has assets in excess of $100,000, as adjusted annually for inflation.

The HOTMA statute, and HUD’s final HOTMA rule from February 2023, indicate that enforcement of the new asset limits should be discretionary for currently served residents. However, in HUD’s talking points and initial implementation materials, it indicated that it would not allow for discretionary enforcement.

LeadingAge urged HUD to reconsider its implementation approach because of potential evictions of HUD-assisted older adults, who are more likely to have accrued assets or to own real property, even if they cannot utilize those assets to age in community.

In addition to urging HUD for discretionary enforcement, LeadingAge’s letter to HUD stated: “In many cases, owned property, while technically habitable, may be located far from the older adult’s support systems, including caregivers or supportive services. In addition, the older adult may no longer be able to drive certain distances or manage the upkeep of the yard or house. In other words, while an older adult resident’s property may be ‘suitable’ for a resident without certain limitations, the house may not be appropriate for aging. HUD’s implementation guidance for HOTMA should clarify that aging-related limitations be accepted as exceptions to the new asset limitations related to real property.”

HUD Confirms Discretionary Enforcement of Asset Limits at Recertification

HUD agreed with LeadingAge that currently served residents should only be impacted by the asset limits at the property’s discretion, allowing the property to establish protections for currently served residents.

HUD’s Implementation Notice states: “MFH Owners are given discretion at reexamination in enforcing the asset limitation on eligibility for assistance…HUD will issue additional guidance on the use of this discretionary authority.”

The new asset limits apply to project-based Section 8 properties and Section 202/8s, but not to Section 202 PRACs.

Continued LeadingAge Advocacy and Support

LeadingAge applauds HUD for making the right decision to delay HOTMA implementation and to allow for discretion in enforcing asset limits for currently served residents. We will continue to work with housing providers and HUD to ensure a smooth transition to HOTMA rules.

LeadingAge has made two trainings available for download by LeadingAge members, and a third training is planned for later in the fall. Members can access affordable housing training recordings here.

Resources are also available for LeadingAge members to understand and implement new requirements under HOTMA, including new exclusions to income calculations, forthcoming changes to forms and systems, and community policies that providers need to update or adopt. Members can access affordable housing tools and resources here.