The U.S. Department of Housing and Urban Development (HUD) has released updated guidance on implementing the Housing Opportunity Through Modernization Act of 2016 (HOTMA). This comprehensive overview highlights essential deadlines and requirements for Multifamily Housing (MFH) owners, as outlined in the updated HOTMA FAQ.
- July 1, 2025: Mandatory compliance date for HOTMA provisions.
- May 31, 2024: Deadline for updating Tenant Selection Plan (TSP) and EIV Policies.
- Early 2025: Expected release of TRACS 203A system.
- January 1, 2024: Phased-in medical hardship relief application date. The HOTMA final rule requires the phased-in medical hardship relief to be applied only to families who received the medical deduction based on their most recent income review before January 1, 2024. However, MFH Owners may, at their discretion, utilize the general hardship provision as outlined on pages 43-45 of Notice H 2023-10 to assist affected families, including those who receive a medical deduction but are ineligible for phased-in relief and will otherwise see their deduction drop significantly. HUD reserves the right to permit medical hardship relief waivers on a case-by-case basis.
Interim Implementation Options
MFH owners can begin implementing HOTMA provisions before the mandatory compliance date. During this transition period:
- Owners may calculate family incomes and tenant rents manually.
- The current TRACS 202D system can be used with the rent override function.
- Both pre-HOTMA and HOTMA-compliant TSPs will be reviewed during Management and Occupancy Reviews (MORs).
Management and Occupancy Reviews
Contract Administrators will handle HOTMA-related issues during MORs as follows:
- Before July 1, 2025: HOTMA-related tenant file errors will result in observations rather than penalties.
- TSP compliance with Notice H 2024-04 was mandatory by May 31, 2024; non-compliance will result in findings.
- Minor HOTMA-related errors unrelated to Notice H 2024-04 will only receive observations until the TRACS 203A release.
New HUD-approved model leases will be released before the mandatory compliance date. When implementing new leases:
- Families must receive copies 60 days before the lease term ends.
- A clear explanation letter must be provided.
- Families have 30 days to accept or refuse modifications.
- Non-response within 30 days may lead to tenancy termination procedures.
- Properties implementing HOTMA must use adjusted values for the calendar year 2025.
- Pre-HOTMA amounts remain valid until July 1, 2025, for non-implementing properties.
- The rate of 0.06% (effective February 1, 2015) may be used by owners who still need to implement HOTMA. Owners making manual adjustments will not be penalized for using the current imputed rate of 0.40%.
- HOTMA 2025 rate: 0.45%
Medical Hardship Provisions
- Phased-in medical hardship relief applies only to families with medical deductions reviewed before January 1, 2024.
- General hardship provisions may be utilized for affected families.
- HUD may permit case-by-case medical hardship relief waivers.
- Subscribe to the MFH mailing list for updates.
- Monitor for TRACS 203A release.
- Prepare for full compliance by July 1, 2025.
- Review and implement necessary policy updates.
- Stay informed about new form releases and system changes.
This guidance represents a significant transition in multifamily housing administration. Property owners and managers should carefully review all requirements and prepare for full implementation while taking advantage of available flexibility during the transition period.
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