In this week’s #TuesdayTip, we explain how to navigate your way to full #HOTMA compliance.

How do I become HOTMA compliant?

The first step to navigating your way to HOTMA compliance is to follow existing plans and policies on property until your software achieves compliance with TRACS 203-A. Once the software is HOTMA compliant, Owners and Agents (O/As) can implement their newly revised policies and procedures. Let’s break down the timeline and key requirements to ensure a smooth transition.

• POLICY & PROCEDURE REVISIONS: By March 31, 2024, Multifamily owners and agents must take proactive steps to revise their Tenant Selection Plans, EIV policies and procedures, and discretionary policies to align with HOTMA rules. The revised TSP must be made publicly available, emphasizing transparency in the process.
  • Owners and Agents must implement these revised plans and procedures to comply with HOTMA regulations for all tenant data submissions.
  • Families must be informed about the new income determination process as per HOTMA guidelines.
  • It is recommended to use the revised Tenant Consent form (form HUD–9887/9887A) and fact sheets.
  • Additionally, notifying applicants on the waiting list of any eligibility changes ensures that applications remain HOTMA compliant.

• LEASE MODIFICATION NOTICE: Tenants must be provided with a written 60 days’ notice of lease modification during the notice period.
  • Owners and agents should start using revised model leases at the end of a family’s lease term, either at the end of the initial one-year lease term or the end of the 60-day month-to-month term. Clear communication with residents is essential, and providing examples, such as the effective date at the end of the one-year, 60-day term, helps in understanding the process better.
• MONITORING COMPLIANCE: HUD’s Oversight does not impose penalties for HOTMA-related tenant file errors during Management and Occupancy Reviews (MORs) before January 1, 2025. Instead, Contract Administrators will issue observations with corrective actions for errors, avoiding punitive measures.

Full #HOTMA Compliance

By January 1, 2025, mandatory full compliance is required. O/As should correct all HOTMA-related observations issued in 2024. Failure to implement HOTMA compliance rules may result in being found in default of business agreements with HUD, underscoring the importance of timely adherence.

Contract Administrators will issue HOTMA-related findings during MORs, expecting compliance with all aspects of HOTMA. Multifamily housing owners must rectify all HOTMA-related observations issued in 2024 to avoid them becoming findings for the 2025 MOR.

• MFH Model Leases Update: Under full #HOTMA compliance, New HUD-approved leases must be used.
  • Owners and Agents must follow specific procedures outlined for renewing families under the revised model lease including:
    • Lease Modification Processes
    • Notice Delivery Methods & Timelines
    • Tenant Response Options
    • Compliance with HUD rules for notice delivery.
  • HOTMA reporting requirements for families under old leases, conditions for interim reexaminations, and prohibition of modifications to Model Leases without HUD approval are crucial aspects to be mindful of.