Each month in our PIH Alert newsletter, our affordable housing experts answer a question from subscribers.
Q: With some HOTMA provisions required to be implemented by July 1, and others on hold, we are confused about which passbook rate we should be using when we calculate imputed income from assets in our public housing and HCV programs. Should we be using the HUD-determined passbook rate of 0.45%, or can we continue to use a PHA-determined number?
A: The short answer is that you are not required to use the HUD-determined amount yet.
The regulations requiring PHAs to use the passbook rate to calculate imputed income are found at 24 CFR 5.609(a)(2). Notice PIH 2024-38 lists the HOTMA regulations PHAs are required to implement by July 1, and the passbook rate regulation is not listed in the notice as one of them.
So, what should PHAs do? Notice PIH 2023-27 on HOTMA says that for reexams that occur before the new passbook rate is required:
PHAs may continue to set their own passbook rates, and MFH Owners must continue to use the 0.06 percent passbook rate. PHAs may also choose to implement the…HUD passbook rate before complying with HOTMA as they have the flexibility to set their own passbook rate.
This means that Notice PIH 2012-29, which allows PHAs to set their own passbook rate based on factors listed in that notice, is still applicable when it comes to setting your passbook rate. The notice says, “PHAs may establish a passbook rate within 75 basis points (plus or minus .75 percent) of the Savings National Rate in effect at the time the PHA establishes the passbook rate.”
Essentially, until this part of HOTMA is implemented, PHAs continue to have flexibility when it comes to setting the passbook rate. Since 0.45% falls within the range listed in Notice PIH 2012-29, you can use 0.45% now if you prefer, or you can continue to use an alternate number established by your PHA in accordance with your PHA’s policies and Notice PIH 2012-29.
However, once this part of HOTMA is implemented at some point in the future, it will supersede Notice PIH 2012-29, and the PHA will be required to use the HUD-determined passbook rate.
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Looking for more on HOTMA? Visit our HOTMA Resource Center.
HOTMA implementation starts July 1st. Prepare your staff for sweeping changes at our upcoming HOTMA Summit, May 7-8 in Las Vegas. Learn more and register
