What's Going On with HOTMA? A HUD Q&A with Compliance Expert Jenny DeSilva

HOTMA is still the hot topic of Affordable Housing and, with the upcoming deadline for rollout, many are left wondering what to do without the guidelines from HUD. We sat down with Jenny DeSilva, President of DeSilva Housing Group, to ask some questions regarding HOTMA and HUD properties’ preparation in the meantime.

Hi Jenny! With a fast-approaching timeline for HOTMA roll out, enforced by HUD, what would you say is the #1 priority for HUD properties to prepare for this?

Comprehensive HOTMA training is paramount for housing operators to successfully and accurately implement HOTMA changes at their properties.  The need for thorough training is present in various areas of operation- from front line office staff with direct interactions with households to back-office compliance team members reviewing eligibility and certification actions.  In order to not only fully incorporate these changes into the everyday leasing and occupancy duties, but to clearly communicate how these changes impact both applicants and in-place households, staff must really understand the regulatory changes themselves.  

Training is the first step in a series of preparatory tasks to be completed before full implementation.  Issuing tenant notifications, revising written policies, and updating tenant file forms are also required.  Establishing a realistic to-do list with target completion dates for these tasks will help owners achieve compliance, while helping to alleviate the anxiety these sweeping changes has created, particularly for tenured managers now tasked with learning new ways of calculating income, verifying financial data, and determining appropriate certification actions.

What are some of the things properties could do more of to prepare for HOTMA roll out? 

To prepare for roll out, there are two categories of updates that must be coordinated simultaneously- software vendor tasks and owner policy and procedural tasks.  The software changes related to HOTMA implementation are significant and widespread.  Make sure you are in contact with your software vendor who can provide you with more specifics regarding their product enhancements and their unique release plans for users.

While the selected software vendor is busy making enhancements to how you create certifications and monthly vouchers, Owners are tasked with spearheading various written policy updates (Tenant Selection Plans, House Rules, Hardship Policies, etc.) and form revisions (applications and recertification questionnaires, verification forms, etc.) in advance of implementation.  To accomplish these updates, owners must review and decide on various discretionary policies that will dictate these revisions.

Because these tasks are in addition to ongoing day-to-day activities at the site, owners must decide if they will accomplish these updates internally, using staff resources, or if it is advantageous to outsource these updates to an outside entity, like DeSilva Housing Group, to complete on their behalf.

There is a lot of confusion on the timing of HOTMA and TRACS 203A and when HUD is expected to require all owner/agents to adhere to the new guidelines – January 1/1/2025 is what we were told but HUD has not released a final spec or approved forms. Do we have any new information about the timing of this? 

As of today, there is no final TRACS 203A Specification published by HUD.  Each day we progress further and further into the second half of calendar year 2024, the likelihood that full implementation could be accomplished by the industry by December 31, 2024 appears unrealistic and unlikely.  While there is no official announcement from HUD that the current compliance deadline of January 1, 2025 has been changed, we do anticipate such an announcement being issued in the near future.  

What else is important to consider regarding Q3 preparations?   

Q3 of 2024 is here!  The number one question posed to DHG staff regarding HOTMA implementation right now is “How do I initiate my January 2025 Annual Recertification processing that kicks off by September 1, 2024 via the issuance of the First Reminder Notice (120-Day Notice)”.  Our answer- as of right now, with no defined implementation schedule for TRACS 203A released, owners should proceed with January 2025 Annual Recertifications using current procedures, calculation methodologies, and forms.  In other words, “stay the course”, and do these reexaminations just like you always would.

Will there be a transition period for owner/agents to submit under the new HOTMA rules for HUD properties? Some Tax Credit state agencies have already released their HOTMA TICs  - How is that impacting owner/agents that are multi-layered subsidy programs? 

When the final TRACS 203 Specification is published, HUD will likely publish an implementation timeline that will include a specified period of time allocated for software vendor testing.  This will be followed by a set period of time wherein TRACS/Contract Administrators/PRA 811 Grantees must accept both old 202D formatted files and new 203A formatted files while the industry implements TRACS 203A and HOTMA on a property-by-property basis within their portfolios.  At the end of that concurrent acceptance period, all HUD owners would be required to submit files in the TRACS 203A format.

As we have already confirmed in some states, HUD’s implementation schedule for HOTMA will not necessarily align with the implementation schedule established within that state by the housing agencies issuing the Low-Income Tax Credit Program.  In instances where the tax credit agency has a more aggressive implementation timeframe (thus resulting in full HOTMA compliance for the program by an earlier date), owners may be tasked with making frequent adjustments in their software setting.  These settings may require adjustment, depending on whether it is a HUD 50059 being created using pre-HOTMA logic or a LIHTC Tenant Income Certification (TIC) using HOTMA logic.

To keep up to date on HUD announcements and other information about HOTMA, visit desilvahousinggroup.com

About Jenny: Jenny DeSilva is the President and CEO of DeSilva Housing Group and has 25 years of experience in affordable housing. She is a recognized industry compliance expert, with extensive consulting and training knowledge in HUD's Multifamily Housing programs.  

Ms. DeSilva began her career as a Director for Southwest Housing Compliance Corporation, HUD’s Project-Based Section 8 Contract Administrator for Texas and Arkansas. She then served as the Director of Training for PMCS, Inc, a Syracuse-based training and consulting agency, before returning to her home state of Texas to serve as the Director of Blueprint Housing Solutions, a consulting and training subsidiary of the Austin Housing Authority.

When not training, Ms. DeSilva serves as a HUD technical assistance subcontractor providing nationwide TRACS and Secure Systems technical assistance to owners completing Rental Assistance Demonstration (RAD) PBRA conversions, as well to participating state level grantees and participating owners of HUD’s PRA 811 Program.

‍

‍