The Housing Opportunity Through Modernization Act of 2016 (HOTMA) has introduced significant changes to enhance housing opportunities and streamline compliance processes. HUD’s Office of Multifamily Programs recently updated the HOTMA FAQs (December 2024), providing essential guidance on implementing the act. Here’s an overview of what Multifamily Housing (MFH) Owners need to know about transitioning to HOTMA compliance by the deadline of July 1, 2025.

1. Early Adoption and Transition Period

Navigate recommends you do not implement HOTMA provisions manually. We suggest you wait until the software is up-to-date!

Before the release of TRACS 203A, MFH Owners can implement HOTMA provisions manually:

• Manual Calculations: Using the rent override function, family incomes and tenant rents can be calculated manually and entered into TRACS 202D. Detailed instructions are available in HUD’s one-pager on this topic here.

Again, we suggest you wait until the software is up-to-date! Please watch the video below to learn why we recommend patience.

2. Tenant Selection Plans (TSPs)

During Management and Occupancy Reviews (MORs), both pre-HOTMA and HOTMA-compliant TSPs must be reviewed. Key points:

• No penalties for HOTMA-related tenant file errors will be issued before the July 1, 2025 compliance date.
• Owners must update and publicize their TSPs and EIV Policies by May 31, 2024, to avoid findings during MORs.

Recommendation: Redline your pre-HOTMA TSPs to align with HOTMA changes for smoother MOR processes.

3. HOTMA Model Leases and Forms

HUD will provide updated model leases and forms that are compliant with HOTMA. Until the compliance date:

• Owners who adopt HOTMA provisions must use the new forms as they become available.
• Families must receive at least 60 days’ notice about lease modifications, with clear instructions on accepting or refusing changes.

4. Inflationary Adjustments and Passbook Savings Rate

HOTMA introduces adjustments tied to inflation:

• Adjusted rates for 2025 can be found here.
• The Passbook Savings Rate is updated to 0.45% under HOTMA but remains at 0.06% for non-HOTMA properties until compliance is mandatory.

5. Safe Harbor and Hardship Provisions

MFH Owners can apply safe harbor provisions for income determinations based on means-tested federal assistance programs. Additionally:

• Medical hardship relief applies to families with deductions before January 1, 2024.
• General hardship provisions allow discretion in addressing significant deduction drops.

6. Key Dates to Remember

• May 31, 2024: Deadline for updating and publicizing TSPs and EIV Policies.
• Early 2025: Expected release of TRACS 203A for comprehensive HOTMA compliance.
• July 1, 2025: Final compliance date for implementing HOTMA provisions.

7. Additional Resources and Next Steps

MFH Owners are encouraged to:

• Subscribe to HUD’s Multifamily Housing mailing list for updates here.
• Review notices such as Notice H 2023-10 and Notice H 2024-04 for detailed guidance.