News | "How To Implement HOTMA Early" - HUD

See the HUD instructions HERE.

In a recent publication, HUD instructs that an owner/agent who implements HOTMA before the release of TRACS version 203A must utilize the “rent override” function in TRACS if a family’s HOTMA-calculated tenant rent differs from what it would have been before HOTMA.

An owner/agent employing the rent override function must:

1. Submit accurate information in the Summary (Sections B) and Household Information (Section C)  of the 50059. Section C must accurately reflect the household's circumstances so that HUD can continue income data-matching with other agencies that is reflected in EIV reports.
2. Enter the data in the remaining Income Information, Asset Information, and Allowances & Rent Calculations (Section D, R & F., respectively) of the 50059 from the family’s most recent annual or interim reexamination. 
3. Submit non-interim transactions as interim reexaminations, when applicable. Subtopic I.4 in Attachment I of Notice H 2023–10 provides further information on the non-interim transaction process.

Using the rent override function may result in specific, limited discrepancy codes in TRACS,
which owners may disregard. HUD has instructed Contract Administrators to process vouchers despite these specific discrepancy codes, after ensuring that all other information is correct. HUD strongly encourages owners to provide notice to their Contract Administrators if they intend to use the rent override function.
 

Documentation in Tenant Files
Owners/Agents who implement HOTMA before the release of TRACS version 203A must annotate tenant files with the following information:

1. Which HOTMA and other Notice H 2023–10 provisions were implemented, regardless of
   whether they resulted in a different tenant rent than would have resulted from pre-HOTMA
   rules. Owners/Agents are cautioned that many aspects of HOTMA are interrelated. Implementing some without others may not be feasible and/or may affect tenant rents).
2. How the family’s income, assets, and mandatory deductions were determined under the
   implemented HOTMA provisions.
3. If applicable, what the tenant rent would have been under the pre-HOTMA rules, and the
   HOTMA tenant rent amount that was entered using the “rent override” function.

MOR Reviews in 2024

Per paragraph 6.2 of Notice H 2023–10, before January 1, 2025, MFH Owners/Agents will not be penalized for HOTMA-related tenant file errors during Management and Occupancy Reviews (MORs). Instead, the Contract Administrator will issue observations with corrective actions. Contract Administrators will, however, issue a finding if an owner’s TSP and EIV Policies and Procedures were not appropriately updated or made publicly available by May 31, 2024, as required. 

Although the option to implement early is available, most owners/agents will likely to wait until 203A to pull the trigger on HOTMA. They will likely avoid known and unknown difficulties this way. A prominent exception may be properties with LIHTCs in states where the state LIHTC Agency implements HOTMA.

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