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Housing Opportunity Through Modernization Act (HOTMA)

On July 29, 2016, President Obama signed into law the Housing Opportunity Through Modernization Act (Pub.L. 114-201, 130 Stat.782) of 2016,(HOTMA) or affectionately known as “hotmess”.

This new statute provides updates and improvements to statutes that authorize and prescribe requirements for multiple HUD programs and the department of agriculture’s single-family housing guaranteed loan program.

Significant amendments include setting a maximum income level for continued occupancy in public housing, expanding the availability of Family Unification Program vouchers for children aging out of foster care, changes to the housing quality standards for Section 8 voucher units, multiple changes to the Project-Based Voucher program, modifying requirements for mortgage insurance for condominiums under the federal Housing Administration, creating a Special Assistant for Veterans Affairs in HUD, and changing the allocation formula for the Housing Opportunities for Persons With Aids program.

Below is a summary of certain statutory provisions that are effective immediately and those provisions that will require further action by HUD to become effective or to be used by HUD program participants.

Provisions of HOTMA Effective Upon Enactment

  • Reasonable Accommodation Payment Standards
    • Allows Public Housing Authorities (PHAs) to establish payment standards of up to 120 percent of FMR as a reasonable accommodation for a person with a disability without HUD approval.
  • Establishment of Fair Market Rent
    • PHAs may choose, but are no longer required, to reduce the payment standard for a family who remains under HAP contract at the family’s second annual reexamination.
  • Family Unification Program for Children Aging Out of Foster Care
    • The law revises the length of the term that a FUP-eligible youth may receive FUP assistance from 18 months to 36 months.
  • Formula and Terms for Allocations to Prevent Homelessness for Individuals Living With HIV or AIDS
    • These changes include alterations to the allocation formula, continued eligibility of Fiscal Year 2016 grantees and authorization to award funds to alternative grantees.

Provisions that Require Rulemaking or Guidance by HUD

  • Initial Inspections in Section 8 Voucher Units
    • Authorizes assistance payments for up to 30 days if an initial inspection reveals non-life-threatening defects and authorizes occupancy of units before an inspection by the PHA if the alternate inspection requirements have been met.
  • Enforcement of Housing Quality Standards for Section 8 Voucher Units
    • Requires time frames for correcting deficiencies discovered by inspections.
  • Income Reviews
    • Revises the frequency of family income reviews and the calculation of income.
    • Changes the definitions for public housing and Section 8 programs of income, adjusted income, and unearned income.
    • Eliminates the requirements that reviews of family income shall be made no less frequently than annually.
  • Limitation on Public Housing Tenancy for Over-Income Families
  • Limitation on Eligibility for Assistance Based on Assets
  • Units owned by Public Housing Agencies
  • PHA Project-Based Assistance
  • Public Housing Capital Operating Funds
  • Use of Vouchers for Manufactured Housing
  • Modification of FHA Requirements for Mortgage Insurance for Condominiums
  • Definition of Area for Continuum of Care Program

(Download Video Transcript)

While not all-inclusive, the items noted above are intended to make HUD program participants aware of the new requirements and result in successful implementation.

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Biz Tip Topic Expert: Sheri Springer, CPA

Sheri Springer, CPA

Sheri is a Principal with SVA Certified Public Accountants. In her role, she oversees and performs audits for owners of affordable multifamily housing units receiving Section 42 Low-Income Housing Tax Credits.

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