The Housing Opportunity Through Modernization Act of 2016 (HOTMA) was signed into law on July 29, 2016. It is a piece of legislative reform aimed at modernizing and streamlining various aspects of housing policies in the U.S. by amending sections of the United States Housing Act of 1937. Overall, it seeks to make affordable housing more accessible, efficient, and responsive to the needs of both residents and housing authorities.

The U.S. Department of Housing and Urban Development’s (HUD’s) final rule plays a crucial role in translating the objectives of HOTMA into actionable policies. It ultimately contributes to the improvement of affordable housing programs and services.

What Is HOTMA?

The Housing Opportunity Through Modernization Act of 2016 amends several sections of the United States Housing Act of 1937, bringing forward substantial changes and reforms to several federal housing programs. This includes other HUD programs like Section 8 Housing Choice Voucher Program (HCV) and Section 9 Public Housing Program.

HOTMA provisions have been released in phases over the last few years because the law was so expansive. View the law in full here. The overall goal of The Housing Opportunity Through Modernization Act is to streamline administration, ensure consistency and alignment, improve accessibility, encourage asset building, and prepare for future challenges.

In 2023, HUD finalized rulemaking for implementation of sections 102, 103, and 104, which impacted the regulations found in 24 CFR Part 5 and 24 CFR Part 891 and focused on income calculation, net family assets, and income reviews.

More specifically, section 102 focuses on income reviews, encompassing the frequency of these reviews and refining the definitions of income and assets. Section 103 does not pertain to multifamily housing programs. Section 104 establishes asset limits for both Section 8 Project-Based Rental Assistance Programs and 202/8 programs.

On this page, you’ll find information on the latest changes implemented on January 1, 2024, resulting from the May 2023 Final Rule Summary.

Income Verification Changes

• Applicants for HUD programs like Section 8 Vouchers and Section 9 Public Housing can now utilize income eligibility from other means-tested programs to prove their qualification for rental assistance programs.
• Public Housing Authorities (PHAs) are no longer required to use HUD’s digital verification system, EIV when verifying significant changes in residents’ income levels.

Income Calculation Changes

• Public Housing Authorities (PHAs) must now base income calculations for annual reviews on the previous year’s income instead of projecting future income for public housing families and residents.
• Public housing families deemed “over income” for 24 consecutive months are no longer eligible to stay in public housing. However, it’s up to PHA’s discretion on whether or not they can remain in their current unit.
• Most disability payments intended to support a disabled family member residing at home are excluded from income calculations.
• HUD offers clarification on “non-recurring income,” which is exempt from inclusion in a family’s annual income assessment for determining eligibility or rent.
• Student Aid is not included when assessing public housing residents’ income for eligibility and rent calculation purposes.
• Retirement account funds are not considered income until they are withdrawn.

Family Definition Changes

• Public housing and Section 8 can now be utilized by foster children and homeless or at-risk youth.
• HUD provides clear definitions for foster children and adults.

Asset Changes

• Personal property and participation in Family Self-Sufficiency (FSS) programs are exempt from consideration when assessing a family’s assets.

Key Changes in the HOTMA Final Rule

HUD plays a crucial role in enforcing the Housing Opportunity Through Modernization Act of 2016 (HOTMA) by providing implementation guidance and overseeing compliance with regulations in the following manner:

HUD issued supplemental guidance for HOTMA through Housing Notice 2023-10, released on September 29, 2023. This guidance outlines specific requirements and procedures for implementing HOTMA provisions.

The Final Rule for HOTMA regulations took effect on January 1, 2024, marking the beginning of the implementation process. Ongoing efforts will continue throughout the calendar year to ensure clarity and compliance

Management and Occupancy Reviews (MORs) will be conducted throughout 2024 to assess compliance. Any deficiencies related to HOTMA will first be recorded as observations in the MOR report, along with suggested corrective actions to address them.

Full compliance with the HOTMA final rule is mandatory by July 1, 2025. Any MORs conducted during 2025 or later will identify and record HOTMA-related deficiencies as findings in the report and require corrective action.

HUD Videos

HUD has published several videos on HOTMA. Visit their channel by clicking the button on the left.

PHA Owned Units and PBV HOTMA Provisions Playlist

HOTMA Income & Assets Rule Briefing for PHAs

How HOTMA Affects You

HOTMA’s impact extends to residents, housing authorities, and landlords by influencing various aspects of their roles and interactions within public housing.

Impact on Residents

HOTMA aims to simplify income calculations and eligibility determinations for residents so that they can more easily navigate the application process for housing assistance programs like Section 8 and public housing.

The Act also provides residents with increased flexibility when reporting changes in their income and household to reduce bureaucratic hurdles and make it easier to maintain eligibility for assistance.

Lastly, HOTMA encourages residents to build their assets by excluding certain forms of income and assets from eligibility calculations, potentially allowing residents to retain more of their earnings and increase their savings.

Impact on Housing Authorities

It can be hard to make any real change when there’s a mountain of paperwork to get through. HOTMA streamlines administrative processes for housing authorities, reducing paperwork and administrative burdens associated with income verification and eligibility determination.

Additionally, the Act promotes consistency in standards across housing programs. This helps align rules and regulations for public housing and Section 8 programs to ensure fairness among residents.

Lastly, by clarifying definitions and procedures, HOTMA increases efficiency in program administration, thereby allowing housing authorities to allocate resources more effectively and efficiently serve residents.

Impact on Landlords

HOTMA’S provisions for income verification and rent calculation increase landlord confidence in rental income stability, which reduces the financial risks associated with fluctuating resident incomes.

Furthermore, the Act ensures consistency and transparency in rent calculations and lease agreements by providing clearer guidelines for landlords participating in housing assistance programs.

Finally, HOTMA may provide incentives for landlords to participate in housing assistance programs by simplifying administrative processes and offering more predictable rental income streams.

Get HOTMA Help with Navigate Affordable Housing Partners

If you need assistance or guidance regarding compliance with HOTMA, we have resources available to help you navigate the complexities of the law! Navigate Affordable Housing Partners is here to support you with expert advice and assistance for public housing residents and landlords.

See below for more helpful articles, guides, videos, and tools related to HOTMA compliance and policy updates. You can also contact our team directly for direct assistance and support. We’re here to answer your questions, address your concerns, and provide detailed guidance every step of the way.

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