Question from a Blog Reader 

I have a question about the HOTMA HUD asset limitations at our section 202/8 HUD properties. Just FYI, our company has opted not to enforce the asset limitations for existing tenants. I do understand from the HOTMA Hybrid training you conducted that there are three types of assets under HOTMA, necessary personal, non-necessary personal, and real property. What I am not clear about is if the home value is included in the net family assets or not when it is excluded under the asset limitation rules. We have an applicant who owns real property and non-necessary personal property. If the real property qualifies for one of the exceptions under the "suitable for occupancy" asset limitations, is the cash value of the home included or excluded for purposes of the $100,000 asset cap? Also, is it included or excluded in the total net value of assets? 

Answer

Summary Answer: The HUD asset limitations are handled separately from each other and the total net family assets. Real property that is excluded under an exemption for the real property suitable for occupancy limit, or when the owner chooses not to apply the limits at recertification, are still assets to the family and part of net family assets. 

HOTMA implements two asset limitations for properties that receive HUD rental assistance. These limitations deny assistance or occupancy, depending on HUD program, to families with assets that exceed $100,000 or that own real property that is suitable for occupancy. Recent HOTMA guidance has clarified that these HUD asset limitations must be applied for all move-ins once an owner/agent implements HOTMA. For reexaminations of existing residents, however, owners/agents may choose to implement a full or partial non-implementation policy on the asset limitations. The question deals with an incoming applicant, and asset limitations apply. 

Even if real property is exempt under a "suitable for occupancy" exception, the real property will still be added to the family's non-necessary personal property to determine total net assets. This may also affect whether the self-certification when net assets do not exceed $50,000 and if imputed asset income rules apply. In future years, even if an owner/agent uses the discretion granted by HOTMA to disregard either of the asset limitations at recertification, the real property is still counted as an asset toward the $100,000 asset limitation, if an owner is applying that. If an owner is not implementing either of the asset limitations, the assets are still counted toward net family assets.  

Note: one point can be a bit confusing. HOTMA guidance does indicate that the above applies "unless the real property is specifically excluded from net family assets in the definition under § 5.603." This is NOT referring to the "suitability for occupancy" exceptions to the asset limitations at 24 CFR 5.618, but to the 11 excluded assets under HOTMA at 5.603. For example, this includes the value of real property that the family does not have the effective legal authority to sell in the jurisdiction in which the property is located." [24 CFR 5.603(b) Net family assets (3)(iv)]. These are excluded from total net family assets and both asset limitations. However, being exempt under one of the asset limitation rules does not make an asset exempt from other asset rules. 

Additional Reference | Joint HOTMA Asset Notice Attachment A