A memorandum from Joaquin Altoro, the Administrator of the Rural Housing Service (RHS), addressed to Multifamily Housing Owners and Management Agents Multifamily Housing Partners, has explained how HOTMA will be implemented by the Rural Housing Service (RHS). All housing programs administered by RHS are affected, but the primary impact will be felt in the Section 515 Program.
The memorandum concerns an Administrator Exception related to implementing the Housing Opportunity Through Modernization Act (HOTMA).
The memorandum explains that the Housing Act of 1949, which governs the RHS, requires the calculation of a tenant’s annual and adjusted household income to be based on the definition provided by the Housing Act of 1937. As a result, RHS must determine income for housing purposes per 24 CFR 5.609, the section of the Code of Federal Regulations governing HUD housing programs.
However, HOTMA directed the U.S. Department of Housing and Urban Development (HUD) to issue a rule changing the income calculation requirements.
HUD published a Final Rule updating 24 CFR 5.609 on February 14, 2023, effective January 1, 2024.
The memorandum states that the Housing Act of 1949 does not incorporate the updates found in 24 CFR 5.609(c), and therefore, the RHS and Multifamily Housing (MFH) will not implement 24 CFR 5.609(c).
The memorandum further explains that under the authority granted in 7 CFR 3560.8, a regulatory waiver has been approved to exclude 24 CFR 5.609(c) from Rural Development’s annual income calculation requirements. The waiver is effective retroactive to January 1, 2024.
The memorandum lists the specific requirements that RD will not implement, including interim tenant income reexaminations where adjusted income is estimated to increase or decrease by 10% or more, using other programs’ income determinations, and allowing de minimis errors resulting in $30 or less per month to remain in compliance.
Concerning recertifications, tenants at RD properties must be income recertified at least annually and whenever household income changes by $100 or more per month or $50 or more per month if the tenant requests such a change be made. This requirement remains in place.
The Administrator’s Exception will be in effect until 7 CFR 3560.153(a) is updated to refer only to 24 CFR 5.609(a) and (b). RD will apply all HOTMA changes regarding the definition of annual income, including all revised inclusions and exclusions from income.
The memorandum also mentions that full compliance with HOTMA is mandatory, effective January 1, 2025, and RD is establishing further guidance and updating handbooks and forms to incorporate the changes.
RD encourages owners and management agents to discuss the implementation with software providers to ensure seamless data transmission.
The memorandum concludes by stating that RD will not penalize owners for HOTMA-related tenant file issues during RD Supervisory reviews conducted before January 1, 2025.