HUD’s Office of Multifamily Housing Programs (Multifamily) distributed an email on February 6 announcing the publication of a revised version of joint Notice H 2023-10/PIH 2023-27 (issued on February 2). The revised Notice updates guidance for implementing Section 102 (concerning tenant income reviews) and Section 104 (concerning maximum asset limits) of the “Housing Opportunity Through Modernization Act” (HOTMA). Attachment A (page 17) is greatly expanded, providing detailed guidance regarding the implementation of HOTMA’s asset limits provision. Especially notable for advocates, Attachment A adds clear and specific guidance regarding the discretion not to enforce the asset limits provision provided to public housing agencies (PHAs) and owners of private properties assisted with Section 8 Project-Based Rental Assistance (PBRA). In addition, the revised Notice makes many technical corrections and clarifications, which are summarized in Section 2.1 (pages 3-5).
The Multifamily email also includes a link to a revised List of Discretionary Policies to Implement HOTMA specific to Multifamily properties. (A revised list of discretionary policies applying to public housing and Housing Choice Vouchers (HCVs) was not issued prior to publication of this issue of Memo.) Multifamily has revised HOTMA Talking Points and Q&A for Multifamily Programs as well as Federally Mandated Exclusions from Income.
Section 104 of HOTMA established asset limits for households seeking or retaining federal rental assistance. In short, those limits are $100,000 in net household assets and/or ownership of real property that is suitable for occupancy by a household as a residence. Final HOTMA regulations (see Memo, 2/27/23) include a list of required exclusions from the calculation of net household assets, as well as exclusions of necessary and non-necessary personal property. Importantly, the final HOTMA rule also provides Multifamily owners and PHAs the discretion not to enforce the asset limits provisions at the time that a household’s income undergoes a periodic income reexamination or an interim income reexamination. It is important to note that a new applicant for rental assistance must meet the asset limits test: Multifamily owners and PHAs do not have the discretion to waive the HOTMA asset limits for households seeking rental assistance for the first time.
The greatly expanded Attachment A is part of HUD’s new guidance promised by Multifamily to national organizations after reports from some residents that property owners were planning to evict them due to HOTMA’s asset limit provisions – despite the regulatory provision offering property owners the discretion not to enforce the asset limit provision for existing residents. Multifamily officials met with national advocates and provided assurances that – as one official put it – “[t]here should not be any need to evict someone on the basis of the HOTMA asset limitation right now. We don’t want anyone to be displaced unnecessarily” (see Memo, 12/4/23). This message was reinforced by an email distributed by HUD’s Multifamily Asset Management office to Multifamily owners and operators on November 29 that declared that “[u]ntil new guidance is released, please be aware of the following: MFH Owners must not enforce the asset limitation or the real property exemption until both the owner’s software is HOTMA compliant (with TRACS 203A), and the family has signed a model lease detailing the new HOTMA provisions” [bold in original].
Highlights of Attachment A
Attachment A was expanded from three sentences to more than 10 pages that are divided into six sections, some with subsections. Section A.3 (page 19), “PHA/MFH Owner Discretion at Annual and Interim Reexamination,” provides detailed guidance regarding a Multifamily owner’s (MFH Owner) or PHA’s discretion to apply HOTMA’s asset limits during a resident’s annual or interim reexamination. Attachment A now offers four options regarding the application of HOTMA’s asset limits: total non-enforcement, full enforcement, limited enforcement, or exception policies along with limited or total non-enforcement. Whatever an MFH Owner or PHA decides, the policy must be included in an MFH Owner’s Tenant Selection Plan (TSP) or a PHA’s Administrative Plan for HCVs or Admissions and Continued Occupancy Policy (ACOP) for public housing.
Subsection A.3.a (page 19) describes the “Total Non-Enforcement” option, which clearly states that a MFH Owner or PHA has the discretion to choose not to enforce HOTMA’s asset limits, meaning that an MFH Owner or PHA will not initiate termination of housing assistance or initiate eviction proceedings if a household is found to be in non-compliance with the asset limits during the household’s annual (or interim) reexamination. If a total non-enforcement policy is chosen, it must be applied to all households.
Subsection A.3.b (page 20) describes the “Enforcement” option, which requires an MFH Owner or PHA to initiate termination of housing assistance or initiate eviction proceedings within six months of the reexamination that determined a household was out of compliance with the asset limits. An MFH Owner or PHA may delay initiation of termination or eviction proceedings for up to but no longer than six months.
Subsection A.3.c (page 20) describes the “Limited Enforcement: Option to Cure” choice. Under this option, all households out of compliance with HOTMA’s asset limits at reexamination would be provided an opportunity to return to compliance – to “cure” their non-compliance, as it were. Households would have up to six months to cure non-compliance; an MFH Owner or PHA may choose a cure period shorter than six months but cannot extend the time beyond six months. However, if a household can demonstrate that, due to the existence of disability, it needs more time, an MFH Owner or PHA may offer the household more than six months. A.3.c provides several examples of how a household can return to compliance with HOTMA’s asset limits.
Subsection A.3.d (page 22) describes “Exception Policies” for household categories specified in an MFH Owner’s Tenant Selection Plan or a PHA’s ACOP or Administrative Plan. Exception policies may be based on household type and may take into consideration factors such as age, disability, income, the ability of a household to find suitable alternative housing, and whether supportive services are being provided. MFH Owners and PHAs may choose to combine a limited enforcement policy or total non-enforcement policy (both of which would apply to all households) with an exception policy for households in the specified exception categories.
Summary of Other Sections of Attachment A
Section A.1, “Asset Limitation” (page 17), restates the two basic components of the HOTMA asset limits provision in the final HOTMA rule for Section 104 (see Memo, 2/6/23): net household assets greater than $100,000 (adjusted for inflation) and ownership of real property suitable for occupation. Attachment A reminds readers that an MFH Owner or PHA may accept a declaration from a household (“self-certification”) that their net assets do not exceed $50,000 (adjusted for inflation) without needing to further verify that declaration. Households are out of compliance if they have an ownership interest in, a legal right to reside in, and legal authority to sell a property that is suitable for occupancy by the household as a residence. MFH Owners and PHAs may rely upon a household’s self-certification that they do not own real property suitable for occupancy.
Section A.4, “Real Property Determination” (page 23), requires an MFH Owner or PHA to determine whether a household has an ownership interest in real property. If the household does have such an interest, then the MFH Owner or PHA must determine whether either the property qualifies for an exemption (as detailed at Subsection A.4.a); or the household lacks a legal right to reside in the property (as described at Subsection A.4.b); or the household lacks legal authority to sell the property (as described at Subsection A.4.c); or the property is unsuitable for occupancy (as listed at Subsection A.4.d). If any one of these four conditions is satisfied, then the household’s ownership interest in the real property does not in itself mean that the household is out of compliance with the asset limits. (The household might still be out of compliance if it has net assets greater than $100,000 (adjusted for inflation).)
Section A.2, “Compliance at Admission” (page 18), restates the final rule’s provision that MFH Owners and PHAs do not have discretion not to enforce or provide limited enforcement of the HOTMA asset limit when a household first applies for housing assistance. Assistance must be denied if the household does not pass the HOTMA maximum asset limits test. This section does include a policy specific to MFH Owners who must enforce the asset limitation at initial certification for households who lost their assistance because they failed to recertify in time or who began to pay market rent, remained in their unit, and then lost income, thus requiring assistance again as a result. Section A.2 clarifies that public housing residents whose development converted to Project-Based Rental Assistance (PBRA) or Project-Based Vouchers (PBVs) due to the Rental Assistance Demonstration (RAD) are not subject to asset limits at the time their public housing converted to RAD. However, at a RAD household’s next annual (or interim) reexamination, the household will be subject to the MFH Owner’s or PHA’s discretionary asset limits policy.
Section A.5, “Special Considerations for Terminating Assistance or Evicting Families for Non-Compliance with the Asset Limitation” (page 25), reiterates that MFH Owners and PHAs may delay for a period of up to six months the initiation of termination of assistance or eviction proceedings. They are not required to initiate termination or eviction immediately upon determining that a household is out of compliance with the asset limitation, nor are they required to begin the proceedings during the six-month period in order to have a termination of assistance or eviction completed at the six-month mark. MFH Owners and PHAs are encouraged to set policies for the initiation of termination or eviction that provide households adequate opportunity to find new housing.
Section A.6, “Required Updates to Administrative Plans, ACOPs, and Tenant Selection Plans” (page 27), merely reiterates that PHAs and MFH Owners must have written screening policies that prohibit admission of applicants to a program who do not meet the HOTMA asset limits test, and that PHAs’ and MFH Owners’ written policies must be updated to reflect their decision to adopt a total non-enforcement, limited enforcement, exception, or total enforcement policy.
Other Information in Multifamily’s Email
Multifamily’s email also includes the following additional information:
- MFH Owner enforcement of the asset limits is permitted only to the extent that tenants have signed a new HUD-approved Model Lease. The Multifamily email indicates that a Model Lease will be available “as soon as possible.” NLIHC wonders how long this might take because in a separate proposed rule to require owners to provide residents a notice 30 days prior to initiating formal eviction proceedings for nonpayment of rent (see Memo, 1/22), Multifamily states that it would need 12 months to devise a Model Lease reflecting a 30-day notice requirement.
- Multifamily strongly recommends that MFH Owners align their HOTMA implementation timeframe with the release of TRACS version 203(A), anticipated sometime during the summer of 2024.
- MFH Owners must update their Tenant Selection Plan and Enterprise Income Verification policies and procedures no later than March 31, 2024.
Read the Office of Multifamily Housing Program email at: http://tinyurl.com/yra9hx94
Find the February 4, 2024, revised version of joint Notice H 2023-10/PIH 2023-27 at: http://tinyurl.com/yrrepm45
Find Multifamily’s revised List of Discretionary Policies to Implement HOTMA at: http://tinyurl.com/mua4fe68
HUD’s Office of Public and Indian Housing (PIH) has posted the February 4, 2024 revised version of joint Notice H 2023-10/PIH 2023-27 on its HOTMA Resources page.
Multifamily also has a HOTMA Resources page, but the page had not been updated as Memo went to press.
Read more about the HUD programs covered by HOTMA in chapter 4 of NLIHC’s 2023 Advocates’ Guide.