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Rural Development

Rural Housing Service

1400 Independence Ave, SW 

Room 5014-S 

Washington, D.C. 20250 

Telephone: (202) 692-0268

MEMORANDUM

DATE: February 29, 2024 

TO: Multifamily Housing Owners and Management Agents

 Multifamily Housing Partners

FROM: Joaquin Altoro 

 Administrator

 Rural Housing Service 

SUBJECT: Administrator Exception - Housing Opportunity Through 

Modernization Act (HOTMA) Implementation 

The purpose of this memorandum is to notify Multifamily Housing (MFH) 

Stakeholders of an Administrators Exception related to an upcoming regulation 

change resulting from the Housing Opportunity Through Modernization Act

(HOTMA).

The Housing Act of 1949, which is the Rural Housing Service (RHS) governing 

statute, requires the calculation of tenant’s annual and adjusted household 

income be taken from the definition provided by the Housing Act of 1937 (42 

USC 1471; 42 USC 1437a). Furthermore this requirement is reflected in 7 CFR 

3560.153(a) which requires annual and adjusted income to be conducted in 

accordance with 24 CFR 5.609. 

HOTMA, signed into law on July 29, 2016, directed The U.S. Department of 

Housing and Urban Development (HUD) to issue a rule, making changes to the 

requirements related to income calculations found in the Housing Act of 1937’s 

definitions of “annual” income and “adjusted” income. To incorporate the 

changes made by HOTMA, HUD published a Final Rule updating the existing 

24 CFR 5.609 on February 14, 2023, with an effective date of January 1, 2024. 

The Housing Act of 1949 does not incorporate the updates found in 24 CFR 

5.609(c) and accordingly RHS and MFH will not implement 24 CFR 5.609(c). 

Therefore, under the authority granted in 7 CFR 3560.8 (Administrators 

Exception Authority), a regulatory waiver that excludes 24 CFR 5.609(c) 

from Rural Development’s annual income calculation requirements has 

been approved.

Effective retroactive to January 1, 2024, the requirements found in the new 

subsection (c) of 24 CFR 5.609 will NOT be required by Rural Development 

(RD). RD will NOT be implementing the following: 
• Interim tenant income reexaminations where adjusted income is estimated to increase or 

decrease by 10%. 

o Reference: 7 CFR 3560.152(e). Tenants at RD properties must be income 

recertified at least annually and whenever household income changes by $100 or 

more per month, or changes of $50 or more per month if the tenant requests that 

such a change be made. 

• Use of other programs’ determination of income. 

o RD does not currently allow other programs’ determination of income for 

verification purposes. 

• HUD will allow owners with de minimis errors resulting in $30 or less per month to 

remain in compliance. 

o Reference: 7 CFR 3560 Subpart O. RD owners will continue to follow 7 CFR 

3560 Subpart O for Unauthorized Assistance. 

The Administrator’s Exception will be in effect until 7 CFR 3560.153(a) is updated to refer only 

to 24 CFR 5.609(a) and (b). 

Full compliance with the Housing Opportunities Through Modernization Act is mandatory 

effective January 1, 2025. Rural Development is in the process of establishing further guidance 

and handbook updates are underway to incorporate the changes made in 24 CFR 5.609(a) and 

(b). Additionally, RD is in the process of updating Form RD 3560-8 and the Management 

Interactive Network Connection (MINC) system. Changes to MINC will impact user interface. 

RD encourages owners and management agents to discuss this with software providers to ensure 

a seamless implementation and transmission of data. 

During calendar year 2024, RD will not penalize owners for HOTMA-related tenant file

issues during RD Supervisory reviews conducted prior to January 1, 2025. 

If you have any questions regarding the implementation of HOTMA, please contact Julie 

Felhofer, Policy & Budget Branch Chief, Asset Management Division at 

Julie.felhofer@usda.gov.