On 7-29-16, HOTMA was signed into law. HUD issued the final rule on 2-14-23 to take effect 1-1-24. While HUD is allowing the implementation of the regulations to be pushed until 1-1-25, Spectrum Compliance has made the decision to implement the HOTMA changes on 1-1-24. This allows for a year of trial and error before all states mandate the changes. We are in contact with all state agencies concerning when they expect to implement HOTMA, and many have reported it will be 1-1-24.
So, what does this mean for you? What will be different about my audits?
- Foster children and adults will not be counted as family members. They will not count towards the income limit determination. Payments from the foster agency, Kinship care payments and other state based foster payments will no longer be counted as income.
- Payments from state agencies for in-home support of disabled members are now excluded when the resident’s client is a member of the household.
- The checking account value is now based on the current balance.
- The asset affidavit can now be used if total household asset value is $50,000.00 or less.
- The imputed income rate is changing from .06% to .4%.
- The imputed income from assets is only used when total asset value is $50,000.01 or more and only when income from assets cannot be verified. Accounts that earn 0% will not be imputed.
- The value of any retirement plan that is recognized as such by the IRS, is now excluded from assets. Any distribution of periodic payments from the account is considered income to the household (RMD).
- In-kind donations for items like toiletries, clothing and personal items are now excluded from income.
- Any household receiving student financial assistance, regardless of subsidy, may need to include all or part of the financial assistance towards annual income.
- Owners are required to obtain a minimum of two current and consecutive pay stubs for determining income when third party verification is not obtained.
These changes will be noted as procedural issues within the audits until 1-1-25. Please note that due to the minimum two current pay stub changes, this may result in a file that is approved but showing as over-income due to the new calculation.
While implementing these changes may be confusing for a time, many of the HOTMA changes are very favorable to the LIHTC program. There will be a learning curve for everyone. This is the biggest change the LIHTC program has ever seen. As always, the Spectrum team is here to help make this a smooth transition, but we strongly suggest that you and your staff attend specialized training on HOTMA sooner, rather than later.
