On Friday, December 6th, HUD released a new HOTMA Frequently Asked Questions (FAQ) document for stakeholders in the Multifamily Housing Program. The publication provides a bit more insight into how to comply with HOTMA during this transitional period.
One of the biggest challenges to fully implementing HOTMA provisions has been the delayed release of TRACS 203A. Without an updated system to send certifications in a HOTMA-compliant fashion, stakeholders have had limited options to comply with the Act. Most O/As use software that integrates TRACS into its applications, and this requires software providers and HUD to work together so their infrastructure will align.
TRACS 203A is slated to be ready in early 2025 – in time for the July 1, 2025, proposed HOTMA implementation date for HUD MFH programs. A few O/As have chosen to implement HOTMA’s income provisions early by utilizing the rent override feature, and this continues to be an option. The FAQ document confirms that sites that have already implemented HOTMA are responsible for utilizing the new passbook rate and following their updated Tenant Selection Plans. Sites that still operate in a “pre-HOTMA” universe must continue to use the 0.06% passbook rate.
One important clarification from the notice is that all certifications with an effective date of July 1, 2025 will have to be HOTMA-compliant. This clears up questions as to whether July 1, 2025 was when sites needed to start being HOTMA compliant or whether that is the date all new certifications received must be HOTMA-compliant. When O/As are working in March/April to complete their certifications effective in July or later, they need to calculate income according to the new definition.
Earlier communications had confirmed that HUD would not issue findings based on HOTMA-related issues in 2024. This FAQ document extends the grace period to July 2025. Sites are still required to have a HOTMA-compliant TSP and EIV Policies and Procedures on hand at the time of an MOR and the reviewer will scrutinize all certifications according to which plan was in effect at the time. The document also reaffirms that offering the phased-in medical hardship relief is not a discretionary item. All households who had qualified for the medical or disability deduction prior to January 1, 2024 will have their deduction threshold phased in beginning the first time they undergo a HOTMA-compliant certification.
The new HUD model leases and the new HUD-9887/-9887A are still forthcoming; both documents are awaiting OMB approval. Sites must use these new forms as soon as they are available. Any O/A that wishes to utilize HUD’s safe harbor provision for verifying income is free to use it immediately.
As always, NCHM will continue to update its clients of any HOTMA news – keep an eye on your inbox for more information!