Buzz about the HOTMA Final Rule has dominated the affordable housing industry this year.
Questions from property owners abound: When will it officially roll out? How will it impact tenants? When do property leasing staff really need to be trained?
HOTMA introduces the most significant set of changes to occupancy requirements that the industry has seen in over a decade, so it makes sense that there is confusion and trepidation. However, it’s important to recognize that HOTMA does bring several welcome changes.
Here are five positive elements of the HOTMA Final Rule:
(1) HOTMA states that owners are no longer required to use EIV to verify tenant employment and income information during an interim reexamination. This is great news! Owners that opt to discontinue the review of the EIV Income Detail and Income Discrepancy Reports during interim recertifications will need to update the EIV Written Policies and any certification forms used internally that reference these are part of the supporting documentation gathered for the interim re-exam.
(2) HOTMA incorporates changes that reduce paperwork redundancy each year. Once implemented, the new HUD Form 9887/9887A (HUD Release and Consent Form) will no longer expire 15 months after the signature. The HOTMA Final Rule clarifies that once an applicant has signed and submitted a new consent form, they are not required to do so again.
(3) HOTMA includes additional asset exclusions, most notably, retirement accounts!
(4) HOTMA establishes the De Minimis Error, eliminating the potential for MOR findings being issued because of an isolated, minor subsidy calculation error. HUD defines a de minimis error as an error that results in a difference in the determination of a family’s adjusted income of $30 or less per month, or $360 per year. When an owner has made a calculation mistake resulting in a de minimis error, the owner will not be penalized for the error on a Management and Occupancy Review, but they do have to correct the certification. In addition, the household will not be liable for any unpaid rent balance resulting from the correction if tenant rent amounts increase, and if the correction yields a lower tenant rent, they must be refunded that balance. This is great news for both owners and tenants.
(5) HOTMA increased the threshold for assets that can be verified through streamlined, tenant self-certification methods from $5,000 to $50,000. Note, HUD still expects owners to attempt traditional verification of the cash value of the asset once every three years. However, this new threshold expands the universe of assets that can now be verified through these optional methods.
“Rule number one is, don’t sweat the small stuff. Rule number two is, it’s all small stuff.”
Overall, HUD’s goal with HOTMA is to minimize administrative burdens associated with (re)certifying households and to ensure limited rental assistance funds are appropriately spent.
There are elements of HOTMA that are prompting clarification requests from industry stakeholders to ensure appropriate interpretation. HUD has indicated that supplemental guidance will be released soon that answers those clarification requests. Be sure to sign up for our email list and we will disseminate information once it becomes available.