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HUD HOME Program Updates

Important HUD HOME Program Changes

It's finally spring in the Northeast, and with the change in temperatures, inevitably you'll take some time to do some spring-cleaning. With that in mind, this month we'll discuss getting your HOME in order – HOME-assisted units that is. There are a number of recent changes to the HOME Program and it's important to review your practices.

Recent Changes and Updates to Compliance with the HOME Program

It's finally spring in the Northeast, and with the change in temperatures, inevitably you'll take some time to do some spring-cleaning. With that in mind, this month we'll discuss getting your HOME in order – HOME-assisted units that is.

Q&A About HOME

Where can I find HOME regulations? In July 2013 HUD published the HOME final rule with a number of changes for both existing and newly funded HOME projects. The Final Rule and charts indicating applicability can be found here: https://www.hudexchange.info/home/home-final-rule/

Who monitors compliance of my HOME-assisted units? Your Participating Jurisdiction (PJ) is responsible for overseeing compliance. This is frequently the HFA, but may be another government entity.

Do HOME regulations apply to all of my units? HOME requirements apply to HOME-assisted units only.

How do I know which units are HOME-assisted? Every assisted project will have a HOME agreement, it's important that you know what's contained in yours. Though agreements vary, the document should outline how many total HOME units, whether they are low or high, fixed or floating and your period of affordability.

Do I need to certify residents in HOME-assisted units annually? Yes. At move-in and every sixth year during the affordability period, full certification including third party verifications is required. Self-certification of income is acceptable in between full certs. However, some states require full certification annually for properties with home funds – before allowing self certification – check with your PJ. HOME does not have specific requirements regarding the effective date of certification, only that they are performed within the year. NOTE that subsequent full certifications are based on the period of affordability only (and not the MI date for the resident). For example, a property whose affordability period began in 2005 would fully certify all HOME-assisted residents at MI and years 2010, 2016, 2022, etc .

Common mistakes/misconceptions in HOME-assisted units:

Rent

HUD publishes income/rent limits annually (most recently May 2014). While the rent limits published will show current High/Low HOME maximums – there are several important factors to consider regarding rent:

Published rent includes utilities. Managers must subtract appropriate Utility allowances (if applicable) to determine tenant rent.

Rent increases must be approved by the PJ.

  • Owners are never required to lower the rents below initial rents approved by the PJ. However, if rent limits decrease during the period of affordability (but not below initial approved rents), you must lower your rents charged.
  • For tenants with tenant-based vouchers, the maximum rent is always the applicable Low/High HOME rent (even if the tenant portion does not exceed the max).
  • For tenants in units with project-based assistance, only Low HOME units can be charged the maximum allowed by the subsidy program (i.e. contract rent). This is allowable only if the tenant pays no more than 30% of his/her adjusted income toward rent. High HOME units with Project-based assistance are limited the lesser of High HOME rent or contract rent.
Some other housecleaning tips:

The HOME program requires third party verification of all assets (the Under $5k form is not applicable). This is a basic requirement of the program, and cannot be waived by the PJ.

Evictions

HOME requires that all HOME-assisted units receive a minimum 30-day notice to vacate – regardless of whether your state allows a shorter period (i.e. 7 days for non-payment of rent). Ensure that your lease for HOME units meets this requirement.

Over Income Households

Treatment of households who have exceeded their applicable (Low/High) income limits depends on both the restriction level and whether the unit is fixed or floating. A household is considered Over Income when income exceeds 50% AMI for Low HOME and 80% AMI for High HOME.

There is a common misconception that the definition of Over Income for HOME units follows the definition for LIHTC (140%) – this is simply not true. Each source defines Over Income differently, and HOME does not defer to LIHTC for treatment. Depending on status, redesignation of units is likely, and redetermination of rent is necessary. There are too many variables to detail each scenario here, but if you discover you have Over Income residents in your HOME units, and need some guidance to "fix the mix" – give us a call, we'd be happy to point you in the right direction.

Students

As of the 2013 HOME final Rule, the HOME program adopts the Section 8 Housing Choice Voucher (HCV) program restrictions on student participation found at 24 CFR 5.612, which exclude any student that:

  1. Is enrolled in a higher education institution
  2. Is under age 24
  3. Is not a Veteran of the U.S. Military
  4. Is not married
  5. Does not have a dependent child(ren)
  6. Is not a person with disabilities
  7. Is not otherwise individually eligible, or has parents who, individually or jointly, are not eligible on the basis of income
  8. Student Rules apply to all HOME-assisted units at move-in AND recertification. Make sure you have adequate forms to verify student status in this manner (not the same as LIHTC student status).
  9. Source documentation: The 2013 Rule amends §92.203(a)(1)(i) and (a)(2) to require PJs to examine at least two months of source documentation (e.g., wage statements, interest statements, or unemployment compensation documentation) when determining household income for all potential HOME beneficiaries. This applies to all new move-ins and recertifications.


Please feel free to let us know if ever have questions about compliance with your HOME program contract. We can also provide pay-as-you-go file approval/review service to ensure that your household tenant certifications are correct before the tenant's move in. 

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