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OHFA HOTMA Implementation Guidance (UPDATE)
Last month, OHFA issued an Industry Message on HOTMA implementation that stated:
“On September 20, 2024, HUD issued a notice delaying HOTMA for multifamily programs pending the release of TRACS 203A. The previous deadline to be in compliance with HOTMA was January 1, 2025. The new deadline for HUD-assisted multifamily projects is July 1, 2025.”
While HUD has delayed implementation, OHFA will implement the HOTMA Final Rule as outlined in PIH 2023-27 HOTMA-HUD for all OHFA-funded projects effective January 1, 2025.
Since OHFA published this information, it has received several inquiries from owners/management agents of LIHTC projects layered with RD or HUD subsidies about the impact of implementing HOTMA before July 1, 2025. Because HUD and RD have not updated their software systems to be HOTMA compliant, owners of LIHTC projects with subsidies will be forced to conduct two sets of calculations for tenant certifications since OHFA plans to implement HOTMA before July 1, 2025.
As such, OHFA is updating its HOTMA implementation guidance as follows:
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Updated guidance — OHFA will implement HOTMA on January 1, 2025, which is in line with many other housing finance agencies (HFAs) across the country. However, mandatory use of HOTMA rules will only be applicable for initial tenant certifications and recertifications effective May 1, 2025, onward. Because all verifications must be dated within 120 days of the effective dates of household certifications, those effective between January 1 and April 30, 2025, may use “pre-HOTMA” rules. For example, if a certification is due in April 2025, the paperwork should be started in December 2024 and can use pre-HOTMA rules. For a certification effective May 1, 2025, the paperwork should be started February 1, 2025, and must use HOTMA rules. | |
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Importantly, OHFA will not take enforcement actions (i.e., issuance of an 8823) for any HOTMA file deficiencies prior to July 1, 2025. This includes initial tenant certifications and recertifications effective between January 1 and June 30, 2025. However, any HOTMA file deficiencies found prior to July 1, 2025, will be noted as general comments on the first page of OHFA’s Compliance Audit Report (CAR). OHFA will not require owners/management agents to correct deficiencies found prior to July 1, 2025.
OHFA recognizes LIHTC owners with RD or HUD subsidies will need to do two sets of calculations (e.g., one using HUD and RD software and the other using DevCo) for initial tenant certifications and recertifications effective between May 1 and June 30, 2025. However, OHFA believes this balances with the fact that no enforcement actions will occur for HOTMA file deficiencies until on/after July 1, 2025.
Note: This updated guidance is also applicable to LIHTC projects without HUD or RD subsidies.
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OHFA Forms — Additional Guidance
Owners/management agents are reminded all forms currently listed on OHFA’s website as Suggested Compliance Forms regarding income and asset verifications become mandatory with initial tenant certifications and recertificaitons effective May 1, 2025, onward. Mandatory use of the verification forms is only required if they are used to verify tenant qualifications.
For example, OHFA’s policy is to follow HUD’s new verification hierarchy, which allows an applicant/tenant to provide two paystubs to verify employment. If a tenant provides two paystubs, OHFA does not require owners/management agents to also use OHFA’s Employment Verification form. However, if a tenant cannot provide appropriate supportive verification documents and owners/management agents have to use third-party verifications, then OHFA’s Income Verification and Asset Verification forms (under Suggested Compliance Forms) must be used. Owners/management agents cannot use their own versions of OHFA verification forms.
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Updated guidance — There is one exception to the aforementioned forms requirement. If an LIHTC project is layered with HUD subsidies or RD funding, HUD and RD programs use more restrictive income and asset verification forms, which contain a non-discrimination statement for RD and Title 18 language for HUD. OHFA will not revise its verification forms to include this language. As such, non-EIV HUD and RD verification forms will be accepted in lieu of OHFA’s required income and asset verification forms. To reduce burdensome and duplicative paperwork, management agents will not need to complete two sets of asset and income verification forms if an LIHTC project is layered with HUD or RD subsidies. However, if non-EIV HUD and RD verification forms are used in place of OHFA’s verification forms, management agents must place an OHFA Clarification Record in a tenant’s file explaining why OHFA’s income and asset verification forms were not used. | |
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Year-to-Date Income Calculation
OHFA has received many inquiries on the use of year-to-date (YTD) income calculations. OHFA will not allow YTD calculations as the sole eligibility determinant of income, because they may not be indicative of anticipated income for the next 12 months. Technically, annualizing YTD earnings does not calculate anticipated earnings because the information is historical. Paystubs are also historical but usually more current (i.e., don’t go as far back as YTD). If owners or management agents mandate YTD calculations, OHFA requires two calculations be conducted, and the higher amount must be used.
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2025 Cost-of-Living Adjustment Increase Announced
On October 10, 2024, the Social Security Administration announced a 2.5% cost-of-living adjustment (COLA) for 2025. Click here to read the official press release.
The 2.5% COLA will begin with benefits payable to Social Security and Supplemental Security Income (SSI) beneficiaries in January 2025. Increased payments to SSI beneficiaries will begin on December 31, 2024.
LIHTC and HOME programs are strictly concerned with determining if a household is income eligible, and the COLA is generally incorporated for new move-ins after it becomes known and verifiable. Verification letters received so far in 2024 will not reflect the 2025 COLA. Income certifications that include SSI income in 2024, but had it verified before the COLA announcement will need to include the COLA by doing an extra calculation.
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Example 1
A Social Security recipient is anticipated to move into an affordable housing unit on November 1, 2024. In September, owners/management agents verified that she had a 2024 monthly Social Security benefit income of $940. The 2.5% COLA was announced on October 10, 2024.
Annual Income Calculation:
Step 1: Calculate 2024 income.
$940 x 2 = $1,880 (income for November and December 2024)
Step 2: Calculate the 2025 monthly income with COLA.
$940 x .025 = $963.50 (2025 monthly benefit)
Step 3: Calculate total 2025 income.
$963.50 x 10 = $9,635 (income for January through October 2025)
Step 4: Add 2024 and 2025 benefit incomes.
$1,880 + $9,635 = $11,515 annual benefit income
Example 2
A Social Security recipient is anticipated to move into an affordable housing unit on November 1, 2024. In September, owners/management agents verified that she had a 2024 monthly Social Security benefit income of $940. The 2.5% COLA was announced on October 10, 2024.
Annual Income Calculation:
No calculation is necessary as the COLA is included in the letter.
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NSPIRE
OHFA will implement NSPIRE standards after January 1, 2025. It is currently exploring a suitable NSPIRE compliant software, and began testing a package this month for several projects. OHFA asks for patience from its partners while it transitions to NSPIRE. Further information will be issued on exact implementation timelines and when 8823s will be issued for NSPIRE deficiencies. Until guidance is issued, OHFA will continue using UPCS standards during on-site audits and issue 8823s for deficiencies in accordance with the standards.
Importantly, as issued in last month’s Industry Message, a federal mandate on smoke detectors must be implemented by December 29, 2024. All smoke detectors will be required to be hardwired OR of the sealed 10-year-battery type. Additionally, HUD issued recent guidance on two specific elements of the smoke alarm standard. Further information may be found here.
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Stay Informed!
Subscribe to OHFA’s email distribution list, which allows you to receive important notifications concerning regulatory and policy changes, development updates, and much more. Please forward the subscription link to all your staff who may benefit from this type of information.
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