News | RD Proposes Changes to Regulations for HOTMA

The proposed changes can be found HERE.

The Rural Housing Service (RHS), part of the Rural Development (RD) agency of the United States Department of Agriculture (USDA), proposes to amend its regulation to implement changes related to income calculation and net family assets for properties that receive funding from the Multi-Family Housing (MFH) Section 515 Rural Rental Housing and the Section 514/516 Farm Labor Housing Direct Loan and Grant programs. These proposed changes are intended to align the Agency’s income certification requirements with the Housing Opportunity Through Modernization Act of 2016 (HOTMA). The proposed changes are already included in principle in the RD guidance regarding HOTMA and Chapter 6 of HB-2-3560. The proposed changes will simply embed HOTMA provisions in RD regulations.

RD notes in the comments to the proposed changes that HUD finalized its implementation of HOTMA guidance and published a final rule on February 14, 2023, which included significant changes to how HUD calculates annual income and net family assets. As a result, RD MFH is proposing to amend its regulation at 7 CFR 3560 to align itself with HUD and comply with HOTMA.

Under the RD program, 7 CFR 3560.153(a) currently requires that annual income be calculated following HUD’s regulation at 24 CFR 5.609. MFH intends to continue to reference HUD’s regulation in 7 CFR 3560.153(a) and will incorporate HUD’s revised definition of “annual income” found at 24 CFR 5.609(a) and (b). The Agency also intends to add new language to 7 CFR 3560.153 to clarify that “net family assets” will be calculated following HUD’s regulation at 24 CFR 5.603(b).

Note that (a) and (b) of the HUD regulation are being incorporated by RD, but NOT part (c), which includes a different definition of income at recertification, the use of other means-tested program determinations of income, and de minimis error rules.  

Comments are solicited and due no later than 60 days after the publication of the regulations. Instructions for submitting comments are found in the Notice. 

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