VAWA Emergency Transfer, Documentation, and Lease Bifurcation Requirements

person A.J. Johnson today 12/23/2016

The most detailed and complex part of the HUD Final Rule on VAWA deals with the emergency transfer requirements. This article focuses primarily on those requirements. I am also covering basic documentation and verification requirements, as well as final rule elements relating to lease bifurcation.   Emergency Transfer Documentation Requirements The VAWA statute does not apply documentation requirements to emergency transfers. The HUD final rule works to clearly outline these requirements. The final rule allows housing providers, at their discretion, to require that tenants requesting transfers submit a written request before a transfer occurs certifying that they meet the criteria for an emergency transfer. To make this process easier on owners, HUD has created a model emergency transfer request, and has recently made that model document available. Housing providers may accept third party documentation if that documentation is offered by tenants, but are not permitted to require any third party documentation in order to determine whether a tenant is eligible for an emergency transfer. HUD clarifies in this final rule that housing providers may require tenants seeking emergency transfers to document an occurrence of domestic violence, dating violence, sexual assault, or stalking, in addition to documenting eligibility for an emergency transfer, if the individual has not already provided documentation of that occurrence. Housing providers must keep in mind that individuals may provide self-certification in lieu of any other documentation do document an occurrence of a VAWA-protected incident. The final rule allows housing providers to require that tenants seeking emergency transfers provide documentation - which could be a written request - that they meet the requirements for a transfer. Those requirements are that the individual expressly request the transfer and either reasonably believe that there is a threat of imminent harm from further violence if the tenant remains in the same dwelling unit that the tenant is currently occupying, or, in the case of a tenant who is a victim of sexual assault, the tenant also qualifies for a transfer if the assault occurred on the premises during the 90-calendar-day period preceding the date of request for the transfer. The final rule makes clear that while housing providers may require that tenants submit a written request for a transfer and certify the need for a transfer, they may not require third-party documentation for an emergency transfer. This is a change from the proposed rule. In the final rule, HUD acknowledges that some tenants may request an emergency transfer for the purpose of obtaining a superior housing unit or to break their lease. However, HUD does not believe this justifies a third party documentation requirement. Therefore, housing providers are not permitted to require that tenants requesting an emergency transfer under VAWA submit third party documentation to qualify for an emergency transfer. The final rule also states that housing providers must keep a record of all emergency transfer requests and the outcome of such requests. These records must be retained for a minimum of three years.   Emergency Transfer Costs Under the final rule, housing providers will not be required to bear moving costs that tenants and their household members generally pay, including application fees and deposits, in addition to costs to physically move households and their belongings. HUD understands that moving costs may be prohibitive for some victims and encourages housing providers to bear these costs where possible, or to work with victims to identify potential sources for funding the cost of transfers. However, there is no requirement that housing providers bear or assist in payment of these costs.   Model Transfer Requests The model transfer request form that HUD has developed and made available is only a model and housing providers are not required to use it. However, the model form may serve as documentation of the need for a transfer and owners should give serious consideration to using the model form.   Transfer Plans HUD’s emergency transfer plan contains specific elements that must be adopted by all housing providers, regardless of the HUD housing program in which they participate. In terms of time periods, in the final rule HUD does not mandate specific time periods for responding to emergency transfer requests. However, HUD may consider establishing timeframes in the future. HUD does include language in the model emergency transfer plan requiring that the housing provider maintain confidentiality with regard to any information a tenant provides when requesting an emergency transfer. Unless the tenant gives the housing provider written permission to release the information, or disclosure is required by law or required for use in an eviction proceeding or hearing regarding termination of assistance from the covered housing program.   Transfer Eligibility The issue was raised during the comment period for the proposed rule regarding whether or not minors would be eligible for emergency transfers. The final rule states that un-emancipated minors are not eligible to sign leases under HUD programs. For this reason, housing providers should consider contacting child welfare or child protective services, or law enforcement when a minor claims to be the victim of domestic violence, dating violence, sexual assault, or stalking. Owners are reminded that the provisions in VAWA relative to emergency transfer requests do not supersede eligibility requirements for any housing program - HUD or otherwise.   Effectiveness of Transfers HUD notes in the final regulation that a transfer to a unit within the same project in which the perpetrator resides may not be safe for victims. However, if the unit in the same development is the only one available, the victim should be given the choice of whether or not to transfer to the unit. So, HUD does not prohibit emergency transfers within the same property, but encourages housing providers to endeavor to identify an available unit in another property.   Emergency Transfers for Sexual Assault HUD has revised the final rule to clarify that in the case of a tenant who is a victim of sexual assault, the tenant qualifies for a transfer if either (1) the tenant reasonably believes that there is a threat of imminent harm from further violence if the tenant remains within the same unit that the tenant currently occupies, or (2) the sexual assault occurred on the premises during the 90-calendar-day period preceding the date of request for transfer.   The Scope of the Transfer Provision The final rule has been revised to state that any emergency transfer plan must allow tenants who are victims of domestic violence, dating violence, sexual assault, or stalking to make an internal emergency transfer under VAWA when a safe unit is immediately available. The proposed rule regarding transfers to a unit in another covered housing program if such transfer is permissible under applicable program regulations has been removed from the final rule. In a very good provision to the final rule, HUD has declined to require housing providers to keep units vacant for a period of time after a victim has moved from a unit. Some commenters on the proposed rule felt that filling a unit too soon after the move-out of a victim would alert the perpetrator that the victim had moved. HUD will allow housing providers to leave units vacant if they believe that this action will be in the best interest of the property’s residents, but HUD is not requiring that housing providers take this action.   Recommendations While HUD does not require the use of its Model Transfer Plan, it does require that any transfer plan include the components of the HUD model. For this reason, using the HUD model makes sense and I recommend doing so. There is no reason for owners of covered properties to reinvent the wheel and the HUD Model Transfer Plan is well written and pretty easy to understand. I also recommend use of the model for non-HUD properties that are also subject to VAWA 2013, such as the Low-Income Housing Tax Credit program.   VAWA Documentation & Verification Requirements Part of the final VAWA rule outlines the forms that are required for implementation of VAWA. HUD makes it clear that except for documentation of emergency transfers, the victim has discretion over what form of documentation will be submitted to show that the individual is a victim of domestic violence, dating violence, sexual assault, or stalking. In order to reduce confusion between programs, HUD has created a certification form that will be used for all covered programs. That certification form may be downloaded from HUDClips. HUD also recognizes that some VAWA victims may not be able to acquire third party documentation to resolve conflicting evidence within 14 business days, as was contained in the proposed rule. For this reason, the rule has been revised and tenants will have 30-days to submit third party documentation in cases of conflicting evidence. Housing providers may grant extensions to this 30-day period. Based on available information, it is apparent that some owners and Public Housing Agencies (PHAs) are demanding Orders of Protection, Harassment Orders, Trespass orders, or police reports prior to providing the VAWA required protections. Some are even requiring multiple forms of proof. As a result, the final rule states clearly that applicants or tenants may submit - at their discretion - any one of the listed forms of documentation. Except in cases involving conflicting evidence, housing providers are required to accept self-certifications. To reiterate, it is the victim who may choose whether to submit self-certifications or third party documentation.   VAWA Lease Bifurcation Provisions VAWA 2013 allows (but does not require) owners to "bifurcate" leases in order to protect victims of domestic violence, dating violence, sexual assault, or stalking. The purpose of a lease bifurcation is to remove the perpetrator from a unit without evicting, removing, terminating assistance to, or otherwise penalizing a victim who seeks to remain in the unit. In the final VAWA rule, HUD has included provisions relating to lease bifurcation. One of the major issues addressed in the final rule is what happens if the perpetrator who is removed from a unit due to bifurcation is the family member whose characteristics qualified the rest of the family to live in the unit or receive assistance. This final rule maintains the provisions in the proposed rule that housing providers must give victims a 90-day time period for establishing eligibility for a program and finding new housing, and that extensions for up to 60-days may be provided. However, statutory requirements of various programs are not superseded by VAWA 2013. For example, the Section 236, public housing, and Section 8 programs allow pro-ration of rent or assistance for certain families where eligibility has not been established for all members. In these cases, remaining tenants following a lease bifurcation may still need to establish their eligibility for the covered housing program if they have not provided documentation of satisfactory immigration status. Under the Section 202 and Section 811 statutes, HUD cannot continue to subsidize a unit for remaining family members after a lease has been bifurcated if at least one of the remaining family members has not established eligibility for the program. Although this regulation provides that if a landlord chooses to bifurcate a lease under VAWA for a unit with a Project Rental Assistance Contract (PRAC) under the Section 202 or 811 programs, and the remaining family members have not established eligibility for the program, the landlord must provide a reasonable time period of 90-days for the remaining family members to remain in the unit. However, HUD will no longer be able to provide a subsidy to that unit during the time when it has not been established that an eligible individual is residing in the unit. For this reason, the final rule has been revised to state that this 90-day calendar period will not be available to a remaining household member if statutory requirements of the covered program prohibit it, and that the 90-day calendar period also will not apply beyond the expiration of a lease, unless program regulations provide for a longer time period. For example, where an individual is ineligible because of immigration status, HUD is statutorily prohibited from permitting that family member to stay in the unit beyond 30 days if satisfactory immigration status cannot be proven.   Bifurcation Logistics The definition of bifurcation in the regulations explains that if a VAWA act occurs, "certain tenants or lawful occupants" can be evicted while the remaining "tenants or lawful occupants" can continue to reside in the unit. This final rule clarifies that the terms "tenants or lawful occupants" does not include " affiliated individual." Affiliated individuals are neither tenants nor lawful occupants. Affiliated individuals are not protected under VAWA 2013 or HUD’s VAWA regulations. However, a tenant may be entitled to VAWA protections and remedies because an affiliated individual of that tenant is or was a victim of domestic violence, dating violence, sexual assault, or stalking. In no case may an affiliated individual themselves seek remedies from the housing provider. State and local laws may address lease bifurcation and, where they do, covered housing providers must follow these laws.  

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Historic Housing Expansion in Reconciliation Act

Since being signed into law on July 4, I have read the "One Big Beautiful Bill twice, in an effort to determine its impact on housing - especially affordable housing. What follows is my take on the impact of the bill on affordable housing in the United States. The "One Big Beautiful Bill Reconciliation Act marks the most significant expansion of affordable housing programs in over twenty years, permanently transforming the Low-Income Housing Tax Credit program and delivering the largest housing investment in its 39-year history. Signed into law by President Trump on July 4, 2025, the legislation will fund an estimated 1.22 million additional affordable rental homes over the next decade through improved tax credit provisions and streamlined financing methods. This expansion comes at a critical time when the nation faces a serious affordable housing shortage, with the changes taking effect on January 1, 2026, and offering unprecedented long-term stability for developers and investors. The legislation narrowly passed along party lines 218-214 in the House and 51-50 in the Senate, with Vice President Vance casting the deciding vote as part of a massive $3.4 trillion reconciliation package that reshapes federal fiscal policy across multiple sectors. While the broader bill includes controversial provisions like significant tax cuts and reductions to safety net programs, the housing provisions have received bipartisan praise from industry stakeholders who see them as vital for addressing America s housing crisis. Legislative details and comprehensive scope The One Big Beautiful Bill Act (H.R. 1, P.L. 119-21) originated from the budget reconciliation process as a lengthy 870-1,000 page package that includes broad tax cuts, targeted spending hikes, and social program adjustments. The legislation is estimated to have a fiscal impact of $3.4 trillion over a decade, with housing provisions accounting for $15.7 billion in tax credit expansions. The bill s path through Congress highlighted strong partisan divides, with Democrats consistently opposing the legislation despite backing many of its housing provisions. The reconciliation process allowed Republicans to bypass the Senate filibuster, making it possible to pass the bill with a simple majority. The legislation includes provisions from 11 House committees and 10 Senate committees, showing its wide-ranging scope across federal policy areas. Beyond housing, the act makes the 2017 Tax Cuts and Jobs Act individual tax rates permanent, eliminates taxes on tips and overtime pay, raises the state and local tax deduction cap to $40,000 for earners under $500,000, and allocates $350 billion for border security. However, these benefits come with significant cuts to Medicaid and SNAP programs, creating a complex policy landscape that impacts housing affordability in conflicting ways. Transformative LIHTC program enhancements The legislation provides the most significant Low-Income Housing Tax Credit expansion since the program started in 1986. The main feature is a permanent 12% increase in 9% LIHTC allocations, raising the per-capita allocation from $3.00 to about $3.36 beginning in 2026. Although this percentage increase appears small, it results in an extra $132 million per year in tax credit authority across the country, with proportional increases for the eight states, D.C., and four territories that get small-state minimum allocations. The second major LIHTC change permanently lowers the private activity bond financing threshold from 50% to 25% of total project costs for 4% credit deals. This change fundamentally shifts the economics of affordable housing development by making projects eligible for non-competitive 4% credits with much less bond financing. According to a Novogradac analysis, this single change will enable 1.14 million more affordable rental homes between 2026 and 2035, forming the majority of the legislation s housing production impact. The Congressional Budget Office estimates these LIHTC changes will cost $15.7 billion over 2026-2035, making them highly cost-effective compared to other federal housing programs. The permanent nature of these provisions sets this expansion apart from previous temporary measures, offering unmatched certainty for the affordable housing sector s long-term planning and investments. The legislation initially included extra provisions for rural and tribal communities, but these were removed in the final version. The House bill would have provided an automatic 30% basis boost for properties in rural areas and tribal lands, but these enhancements did not make it through the reconciliation process, marking a significant narrowing of the original scope. Broader affordable housing provisions and opportunity zones Beyond LIHTC, the legislation includes several other housing-related provisions that expand development incentives and homeownership opportunities. The act makes the Opportunity Zones program permanent with enhanced incentives, allowing investors to defer taxation of capital gains from qualified opportunity zone investments until December 31, 2033, and providing a 10% basis increase for investments held five or more years. The legislation requires that 33% of newly designated opportunity zones be in rural areas, with automatic qualification for rural and tribal regions. This geographic focus addresses previous criticisms that opportunity zones mainly benefited already-developing urban areas while overlooking rural communities that could gain the most from investment incentives. The New Markets Tax Credit program has received permanent reauthorization with $5 billion allocated annually, ensuring stability for community development financial institutions and community development entities that fund affordable housing and commercial projects in low-income areas. This permanent setup removes the uncertainty caused by repeated short-term extensions. For homeownership, the legislation reestablishes the tax deduction for mortgage insurance premiums and makes permanent the 20% deduction for qualified business income, which specifically benefits real estate professionals. The act also raises the child tax credit to $2,500 per qualifying child through 2028 and offers various other tax incentives that could indirectly boost homeownership capacity. Market dynamics and development impacts The legislation s housing provisions will fundamentally change affordable housing development patterns and market dynamics. Lowering private activity bond requirements from 50% to 25% for 4% LIHTC deals will shift significant development activity from the competitive 9% credit market to the non-competitive 4% market. This change provides developers with greater certainty and faster project timelines, as 4% credits don t need the lengthy competitive allocation process that characterizes 9% credits. State housing finance agencies will need to modify their allocation strategies to handle increased demand while overseeing their private activity bond capacity. States with oversubscribed multifamily bond programs will benefit most from the 25% threshold reduction, as more projects will become feasible with lower bond financing requirements. The ongoing 12% increase in 9% LIHTC allocations will strengthen states ability to fund competitive projects, potentially lowering the oversubscription ratios that make 9% credits highly competitive. However, the effectiveness of these changes depends largely on the availability of gap financing sources, since LIHTC generally covers only 60-70% of development costs. This could become a critical issue since the Administration s 2026 budget proposal calls for the elimination of the HOME and CDBG programs. Construction capacity and workforce availability pose significant challenges to implementation. The U.S. construction industry faces major labor shortages, and the possibility of adding over one million new housing units could strain existing resources. Material costs might also increase due to new tariffs announced by the administration, potentially reducing some of the financial advantages of the increased tax credit provisions. Stakeholder reactions reveal sharp divisions The housing provisions have received enthusiastic support from industry groups despite opposition to the broader legislation. The National Association of Home Builders described the act as "the first time in a long time that housing has been prioritized, while the National Association of Realtors commended the achievement of their "top 5 priorities, including permanent lower tax rates and improved business income deductions. The Mortgage Bankers Association emphasized that the legislation preserves "pro-housing and pro-economic growth tax provisions, especially highlighting the permanent mortgage interest deduction and the reestablished mortgage insurance premium deduction. These industry groups see the legislation as offering crucial long-term certainty for housing investment and development. However, housing advocacy organizations offer a more nuanced view. The National Low Income Housing Coalition supports expanding the LIHTC but strongly opposes the broader legislation s cuts to Medicaid and SNAP programs. Executive Director Kim Johnson stated that "while LIHTC is an important program, LIHTC units are rarely affordable enough for households with the lowest incomes, who will be most affected by safety net reductions. The National Housing Conference praised the legislation, with President David Dworkin calling the housing provisions "the most consequential and positive housing legislation in decades. This highlights the industry s focus on production capacity rather than broader affordability issues. Implementation timeline and administrative challenges The legislation s housing provisions take effect on January 1, 2026, with state housing agencies already preparing for implementation. States will receive their enhanced LIHTC allocations starting with the 2026 allocation year, requiring updates to Qualified Allocation Plans and application processes to handle the increased volume. The Treasury Department and IRS need to develop regulatory guidance for the new private activity bond threshold calculations and basis boost provisions. State housing finance agencies are updating their technology systems and training staff for the expected increase in application volume, with some smaller states worrying about their ability to handle the expanded program scale. The Congressional Budget Office estimates that the housing provisions will cut the primary deficit by $85 billion through economic growth effects, indicating that increased housing production will generate enough economic activity to partly offset the legislation s fiscal costs. However, this estimate relies on successful implementation and full use of the expanded credit authority. Rural and tribal communities face specific implementation challenges because these areas often lack the developer capacity and technical expertise needed to fully utilize LIHTC programs. The legislation provides for enhanced technical assistance, but successful implementation will require ongoing efforts to build local capacity and expertise. Comparison to previous housing policy initiatives The One Big Beautiful Bill Act represents the largest federal housing investment since the Housing and Economic Recovery Act of 2008, but it has fundamentally different characteristics. While HERA provided temporary expansions in response to the financial crisis, the current legislation implements permanent program improvements that offer long-term stability. The 2008 legislation included a temporary 10% increase in LIHTC allocations and established the 9% minimum credit rate, but these provisions were meant as crisis response measures. The permanent nature of the current expansion sets it apart from earlier temporary initiatives and offers unmatched certainty for industry planning. Compared to Obama-era housing initiatives, the current legislation adopts a supply-side approach that emphasizes tax incentives rather than direct spending programs. The Obama administration focused on foreclosure prevention, GSE reform, and crisis response, while the current strategy prioritizes increasing production capacity through enhanced tax credits and development incentives. The 2018 Consolidated Appropriations Act increased LIHTC allocations by 12.5% for 2018-2021, but this temporary boost expired and required yearly congressional approval. The current legislation s permanent structure removes this uncertainty and allows the industry to plan for the long term. Conclusion and long-term implications The One Big Beautiful Bill Act s housing provisions mark a historic expansion of federal affordable housing programs, with the potential to significantly increase housing production over the next decade. The legislation s permanent improvements to the LIHTC program offer unprecedented stability and certainty for the affordable housing industry, while the enhanced financing mechanisms are expected to streamline development processes and shorten project timelines. However, the overall impact of the legislation on housing affordability remains complex and potentially contradictory. While the supply-side provisions are expected to increase the production of affordable housing, the simultaneous cuts to Medicaid and SNAP programs could lower housing purchasing power for the lowest-income households. The Congressional Budget Office estimates that the lowest-income households will lose an average of $1,600 per year, while higher-income households will gain $12,000 annually, indicating that the benefits may mainly go to higher-income groups. The success of these provisions ultimately depends on effective implementation, sufficient construction capacity, and the availability of additional financing sources. The legislation sets the framework for significant increases in housing production, but turning this potential into actual affordable housing units will require coordinated efforts from federal agencies, state housing finance agencies, and private sector developers. For housing policy analysts and practitioners, the legislation presents both significant opportunities and notable challenges. The permanence of key provisions offers stability for long-term planning, while the scale of potential production increases demands substantial capacity building and system adaptation. The coming years will reveal whether this historic expansion leads to meaningful progress on America s affordable housing crisis.

USDA Proposes Mandatory Market Studies for Section 538 Projects

The U.S. Department of Agriculture s Rural Housing Service (RHS) is tightening requirements for project feasibility under its Section 538 Guaranteed Rural Rental Housing Program (GRRHP). In a newly proposed rule, RHS will require all applicants seeking loan guarantees for new construction to submit a formal market study as part of a complete application. This may sound like a bureaucratic tweak, but it has real implications for lenders, developers, and rural communities. What s the Section 538 Program? Section 538 is the USDA s flagship loan guarantee program for rural multifamily housing. It backs up to 90% of loans made by private lenders for the construction or rehab of rental housing serving low- and moderate-income households in USDA-defined rural areas. It s a public-private partnership model that has delivered thousands of affordable units to small towns that are often overlooked. What s Changing and Why? Up to now, the rules under 7 CFR part 3565 have encouraged applicants to "demonstrate market feasibility, but have not required any specific documentation to prove it. Some lenders submitted comprehensive market studies; others relied on summaries, broker letters, or hastily compiled spreadsheets. That inconsistency is what the USDA wants to eliminate. Under the proposed rule, all new construction applications must include a comprehensive market study. This will: Ensure projects are built in markets with demonstrated need; Avoid oversaturation and risk to the existing affordable housing stock; Align USDA requirements with industry norms (e.g., LIHTC, HUD programs); Improve efficiency and uniformity in loan guarantee underwriting. What s a Market Study, Exactly? A professional market study typically includes: A demographic and economic profile of the market area; Rent comparables and absorption trends; An analysis of supply and demand for affordable units; Impact projections on existing housing stock; Supportable rent and unit mix recommendations. In short, it s the backbone of a smart housing investment and USDA wants it in every file. Who s Affected? Lenders & Developers: Must budget time and cost for a market study before the USDA will consider a loan guarantee for new construction. Property Managers: May see less risk of oversupplied markets hurting occupancy. USDA & Taxpayers: Benefit from better quality control and reduced risk of supporting white elephants in underserved areas. Comments Wanted Speak Now or Forever Hold Your Feasibility USDA is inviting public comments through August 30, 2025 (60 days from publication). Visit regulations.gov and search Docket No. RHS-24-MFH-0024 or RIN 0575-AD42. If you have a stake in affordable rural housing, this is your shot to weigh in. Bottom Line Requiring a market study isn t red tape it s a reality check. The move helps ensure scarce affordable housing dollars are spent where demand is real and sustainable. For lenders and developers, it s one more hoop, but also a safeguard. For rural communities, it s a sign that USDA wants housing investments to be grounded in facts, not optimism. Smart growth starts with smart data. This rule aims to make sure rural housing does just that. For more updates on affordable housing policy and compliance, stay connected with A. J. Johnson Consulting Services.

RD to Implement HOTMA Income and Certification Rules on July 1, 2025

Although HUD has postponed implementation of HOTMA for its Multifamily Housing Programs until January 1, 2026, the USDA Rural Housing Service (RHS) Office of Multifamily Housing has announced that the Housing Opportunity Through Modernization Act (HOTMA) will take effect on July 1, 2025, bringing significant changes to income calculation rules for multifamily housing programs. Key Implementation Details To accommodate the federally mandated HOTMA requirements, Rural Development published comprehensive updates to Chapter 6 of Handbook 2-3560 on June 13, 2025. All multifamily housing tenant certifications effective on or after July 1, 2025, must comply with the new HOTMA requirements. Recognizing the challenges of the transition period, Rural Development has announced a six-month grace period. Between July 1, 2025, and January 1, 2026, the agency will not penalize multifamily housing owners for HOTMA-related tenant file errors discovered during supervisory reviews. Legislative Background HOTMA was signed into law on July 29, 2016, directing the Department of Housing and Urban Development (HUD) to modernize income calculation rules established initially under the Housing Act of 1937. After years of development, HUD published the Final Rule on February 14, 2023, updating critical regulations found in 24 CFR Part 5, Subpart A, Sections 5.609 and 5.611. The HOTMA changes specifically affecting the RHS Multifamily Housing portfolio are contained in 24 CFR 5.609(a) and (b) and 24 CFR 5.611, which standardize income calculation methods across federal housing programs. Notable Policy Changes Unborn Child Consideration One of the most significant changes involves how unborn children are counted for household eligibility purposes. Under the new rules, pregnant women will be considered as part of two-person households for income qualification purposes, aligning Rural Development policies with other affordable housing programs, including HUD and the Low-Income Housing Tax Credit (LIHTC) programs. However, the household will not receive the $480 dependent deduction until after the child is born, maintaining consistency in benefit distribution timing. Updated Certification Forms Rural Development has released an updated Form RD 3560-8 Tenant Certification, which was initially published on December 6, 2024, and revised on April 18, 2025. The form is available on the eForms Website for immediate use. The previous version of the form has been renumbered as RD 3560-8A and should be used for all tenant certifications effective before July 1, 2025. Implementation Timeline The HOTMA implementation has experienced some delays. Originally scheduled to take effect on January 1, 2025, the Rural Housing Service announced on October 3, 2024, that implementation would be postponed to July 1, 2025, to allow additional time for property owners and managers to prepare. Rural Development initially implemented HOTMA through an unnumbered letter dated August 19, 2024, which outlined the overview and projected timeline for implementation. Industry Impact The HOTMA changes represent the most significant update to federal housing income calculation rules in decades, affecting thousands of multifamily housing properties across rural America. Property owners and managers have been working to update their systems and train staff on the new requirements. The six-month penalty-free transition period demonstrates Rural Development s commitment to supporting property owners through this complex regulatory change while ensuring long-term compliance with federal requirements. Moving Forward Multifamily housing stakeholders are encouraged to review the updated Chapter 6 of Handbook 2-3560 and ensure their staff is adequately trained on the new HOTMA requirements. Property owners should also verify they have access to the updated Form RD 3560-8 and understand the timing requirements for its use. For ongoing updates and additional resources, stakeholders can subscribe to USDA Rural Development updates through the GovDelivery subscriber page. The implementation of HOTMA represents a significant step toward modernizing and standardizing income calculation methods across federal housing programs, ultimately improving consistency and fairness in affordable housing administration.

HUD’s Proposed Rule to Eliminate Affirmative Fair Housing Marketing Plans: A Critical Analysis

Introduction The Department of Housing and Urban Development (HUD) has proposed eliminating the requirement for Affirmative Fair Housing Marketing Plans (AFHMPs), a cornerstone of fair housing enforcement for decades. This proposed rule, published on June 3, 2025, represents a significant departure from established fair housing practices and raises serious concerns about the federal government s commitment to ensuring equal housing opportunities for all Americans. HUD s justification for this elimination rests on six primary arguments, each of which fails to withstand careful scrutiny and analysis. Background on Affirmative Fair Housing Marketing Plans AFHMPs have long served as essential tools in combating housing discrimination by requiring property owners and managers to actively market housing opportunities to groups that are least likely to apply. These plans ensure that information about available housing reaches all segments of the community, not just those who traditionally have had better access to housing information networks. Analysis of HUD s Justifications 1. Claims of Inconsistency with Fair Housing Act Authority HUD argues that its authority under the Fair Housing Act and Executive Order 11063 is limited to the "prevention of discrimination, claiming that AFHM regulations go beyond this scope by requiring outreach to minority communities through targeted publications and outlets. The agency characterizes this as impermissible "racial sorting. This argument fundamentally misunderstands both the nature of discrimination and the historical context of fair housing enforcement. Information disparities have long been one of the most prevalent and effective forms of housing discrimination. When certain groups systematically lack access to information about housing opportunities, the discriminatory effect is equivalent to being explicitly excluded. The failure to provide equal access to housing information is, in itself, a discriminatory act, not merely a neutral information gap. AFHMPs address this reality by ensuring that housing information reaches all communities, particularly those that have been historically excluded from traditional marketing channels. 2. Constitutional Challenges Under Equal Protection HUD contends that AFHM regulations violate the Equal Protection Clause by requiring applicants to favor some racial groups over others. This characterization is both inaccurate and misleading. AFHMPs do not create preferences or favor any particular group. Instead, they ensure equitable access to information by targeting outreach to communities that are "least likely to apply for specific housing opportunities. This principle applies regardless of the racial or ethnic composition of those communities. For instance, housing developments located in predominantly minority neighborhoods are required to conduct affirmative marketing in white communities since white residents would be least likely to apply for housing in those areas. The regulation is race-neutral in its application it focuses on reaching underrepresented groups regardless of their racial identity. This approach promotes inclusion rather than exclusion and advances the constitutional principle of equal protection under the law. 3. Delegation of Legislative Power Concerns HUD s third argument that the Fair Housing Act s authorization of AFHM regulations constitutes an unconstitutional delegation of legislative power represents perhaps the weakest aspect of their legal reasoning. Congress explicitly mandated that affirmative efforts be made to eliminate housing discrimination. As the administrative agency responsible for implementing congressional intent in this area, HUD possesses both the authority and the responsibility to determine the most effective means of carrying out this mandate. The development of specific regulatory mechanisms to achieve Congress s stated goals falls squarely within HUD s legitimate administrative authority and represents appropriate implementation of legislative intent rather than overreach. 4. The "Color Blind Policy Justification HUD frames its opposition to AFHMPs as part of a "color-blind policy approach, arguing that it is "immoral to treat racial groups differently and that the agency should not engage in "racial sorting. This argument mischaracterizes the function and operation of AFHMPs. These plans do not sort individuals by race or treat different racial groups unequally. Rather, they ensure that all groups have equal access to housing information by specifically reaching out to those who are least likely to receive such information through conventional marketing channels. Critically, AFHMPs require marketing to the general community in addition to targeted outreach. This comprehensive approach ensures broad access to housing information while addressing historical information disparities that have contributed to ongoing patterns of segregation. 5. Burden Reduction for Property Owners HUD argues that "innocent private actors should not bear the economic burden of preparing marketing plans unless they have actively engaged in discrimination. This position suggests that property owners should be exempt from fair housing obligations unless they can prove intentional discriminatory conduct. This reasoning effectively provides cover for property owners who prefer that certain groups remain unaware of housing opportunities. The "burden of creating inclusive marketing strategies is minimal compared to the societal cost of perpetuating information disparities that maintain segregated housing patterns. The characterization of comprehensive marketing as an undue burden ignores the fundamental principle that equal housing opportunity requires proactive effort, not merely passive non-discrimination. This represents a retreat to a "wink and nod approach to fair housing enforcement that falls far short of the Fair Housing Act s aspirational goals. 6. Prevention vs. Equal Outcomes HUD s final argument contends that AFHM regulations improperly focus on equalizing statistical outcomes rather than preventing discrimination. This argument creates a false dichotomy between prevention and opportunity creation. AFHMPs exist not to guarantee equal outcomes but to ensure equal opportunity by providing equal access to housing information. When information about housing opportunities is not equally available to all segments of the community, the opportunity for fair housing choice is compromised from the outset. True prevention of discrimination requires addressing the structural barriers that limit housing choices, including information disparities. The Broader Implications HUD s proposed elimination of AFHMP requirements represents a concerning retreat from decades of progress in fair housing enforcement. The proposal effectively returns to an era when discrimination, while technically prohibited, was facilitated through information control and selective marketing practices. The reality of housing markets is that access to information varies significantly across communities. Property owners and managers possess considerable discretion in how they market available units. Without regulatory requirements for inclusive outreach, there are few incentives to ensure that information reaches all potential applicants. Anyone with experience in affordable housing development and management understands that information flow can be deliberately targeted and shaped. This targeting can either expand housing opportunities for underserved communities or systematically exclude them. Marketing strategies can be designed to minimize applications from certain groups while maintaining technical compliance with non-discrimination requirements. Conclusion The six justifications offered by HUD for eliminating AFHMP requirements fail to provide compelling reasons for abandoning this critical fair housing tool. The arguments reflect a fundamental misunderstanding of how housing discrimination operates in practice and ignore the crucial role that information access plays in maintaining or dismantling segregated housing patterns. Rather than advancing fair housing goals, the proposed rule exacerbates existing disparities by removing a key mechanism for ensuring that all communities have equal access to housing information. The elimination of AFHMPs would represent a significant step backward in the ongoing effort to achieve the Fair Housing Act s vision of integrated communities and equal housing opportunities for all Americans. The current proposal suggests an agency leadership more committed to reducing the regulatory burden on property owners than to expanding housing opportunities for underserved communities. This represents a troubling departure from HUD s mission and responsibilities under federal fair housing law. Moving forward, policymakers, housing advocates, and community leaders must carefully consider whether this proposed rule serves the public interest or merely provides cover for practices that perpetuate housing segregation through more subtle but equally effective means.

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