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HOME Program Tenant Compliance Rule Updates

HOME Adds New Requirements on Tenant Compliance

The 2013 Final Rule for HUD’s HOME program was released on July 24, 2013. Though many of the changes are applicable to the underwriting and development phases of a project, there are several changes outlined in the Final Rule that will have an impact on compliance for projects awarded HOME funds on or after the effective date of August 23, 2013. Some highlights include:

HOME Student Rule

The HOME program adopts the Section 8 program restrictions on Student participation found at 24 CFR 5.612, which exclude any student that is:

  1. Enrolled in a higher education institute
  2. Under the age of 24
  3. Not a veteran of the US Military
  4. Not married
  5. Does not have dependent children
  6. Not a person with disabilities
  7. Not otherwise individually eligible, or has parents who, individually or jointly, are not eligible on the basis of income.

Source Documentation for Income Determination

This new 2013 Rule includes a provision that will require at least 2 months of source documentation for income sources (pay stubs, interest statements, unemployment compensation, etc.).

Lease-Up

HOME units must be occupied within 6 months of project completion. If a unit remains unoccupied after 6 months, current marketing efforts (and if appropriate, an enhanced marketing plan) must be sent to HUD. If all HOME units are not occupied within 18 months of the date of project completion, HUD will require the repayment of HOME funds invested in the unit.

Utility Allowances

A new provision in the 2013 Rule requires Participating Jurisdictions (or your State Agency) to determine an individual utility allowance for each HOME rental project, either by using the HUD utility schedule model or by otherwise determining the allowance based on specific utilities used at the project. PJ’s are no longer permitted to use a single utility allowance (such as that established by the local PHA) for every home assisted rental project.

Annual Rent Review

The 2013 Rule requires that PJ’s must review and approve the rents for HOME-assisted rental projects each year to ensure they comply with the HOME limits and do not result in undue increases from the previous year.

In the coming weeks, we expect HUD to issue additional guidance on the Rule, as well as FAQ’s and webinars. In our next issue, we’ll highlight some of the changes in the 2013 Rule surrounding inspection standards for HOME-assisted properties.

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