Article | Five Reasons We Love HOTMA...and You Will Too!

HOTMA is not a HOT MESS. There, we said it!

Read on for a somewhat informal discussion about aspects that we like about HOTMA.

Rolling out anything as ambitious as the Housing Opportunities Through Modernization Act's overhaul of HUD's archaic way of doing things is bound to meet some challenges. Don't give up, though. We feel that the result will, on the whole, be worth the work. In this article, we cover five reasons, among others in HOTMA and related guidance, that we think HOTMA will be beneficial. 

1. Retirement accounts...GONE! The amount of time we spent trying to figure out how to determine income from retirement accounts, with no clear guidance from HUD, was significant. Industry leaders had different opinions. Some counted changes in values as income, a theory that HUD guidance now clearly indicates is false. Others counted dividends, but not other income, and others counted both. It is hard to fault the different approaches, as HUD had not provided detailed enough guidance. Now, retirement accounts that are recognized as such by the IRS will never be counted as assets. We will never need to determine, or even ask about, the values of these accounts. The verification forms (if statements brought in by applicants/residents aren't enough) will contain one question: "is the account owner taking periodic withdrawals?" If they are, that will be income. Otherwise, retirement accounts are out of our lives. Yay! 
2. Child support and alimony court orders are no longer a factor! Another huge time-suck was putting applicants/residents through hoops proving that they were trying to get court-ordered amounts owed to them. This often did not sit well with these individuals. Where child support was involved, it was unclear why so much time and effort was directed at families with children, leaving the impression of fair housing discrimination. It wasn't discriminatory as long as the owner was consistent, but we noted many owners who asked several questions about child support in the application process but failed to apply the same rigor to alimony. At that point, actual discrimination appeared to be involved. We are very happy to say goodbye to all of this, and look forward to only asking about and counting what child support and alimony a household is receiving (not entitled to receive), consistent with all other income sources.  
3.  Current balance on checking! Less work for applicants/residents to track down and less calculating. It is a win-win to remove the 6-month average policy. It also minimizes the exposure owners/agents have by limiting the personal information in a file relating to a household's finances. As we no longer have any federal rule to point to, we are happy to let the 6-month average policy go (and 5 or 6 statements)!
4. Determinations of income shared among housing programs. The flexibility built into HOTMA for LIHTC, HUD PBRA, HOME, NHTF, PHAs, and other HUD programs to share determinations of income to eliminate the need for multiple verifications has a ton of beneficial possibilities. Additionally, other means-tested programs may also provide relief for households from the multiple income certifications that they are subject to for multiple types of assistance. We will watch carefully to see how all of this will shake out, but sharing determinations among housing programs to start with is a common sense move that will save us or another housing administrator work, and the applicants/residents also win. Nice!
5.  Many fewer interim certifications for HUD properties. OK, this one is for HUD properties only, but it is a big one on that side of the fence. HOTMA eliminates the need to do an interim certification for most instances of increased earned income. The owner/agent even has the authority to put a policy in place to avoid earned-income-based interims altogether. Additionally, no interim will need to be done in the last three months of a certification year. The upcoming annual recert will be soon enough. As a nice bonus, the policy rewards households seeking and gaining employment with a possible grace period until they receive a rent increase at their next annual reexamination. This is not a bug, but a feature, and one that we welcome.  

As we face inevitable challenges as we enter the HOTMA era, let's keep our eyes on the long-run benefits that are coming! 

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