On December 30, 2025, the U.S. Department of Housing and Urban Development (HUD) published a Final Rule in the Federal Register, further extending the compliance deadline for implementing key provisions of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) as they apply to Community Planning and Development (CPD) programs.
This action continues a pattern of delayed implementation and reflects HUD's ongoing operational and system-readiness challenges.
Programs Affected by the Extension
The Final Rule applies to the following CPD programs:
- HOME Investment Partnerships Program (HOME)
- HOME-ARP
- Housing Trust Fund (HTF)
- Housing Opportunities for Persons With AIDS (HOPWA)
- Community Development Block Grant (CDBG)
- Emergency Solutions Grants (ESG)
- Continuum of Care (CoC)
- CPD programs funded through competitive processes
For all of these programs, mandatory compliance with the HOTMA final rule is now extended to January 1, 2027.
Why HUD Issued Another Extension
HUD originally published the HOTMA final rule on February 14, 2023, with an initial compliance date of January 1, 2024. Since then, HUD has issued multiple extensions, citing similar reasons each time.
In this latest rule, HUD explains that:
- HUD's internal systems supporting CPD programs are still undergoing complex programming and testing.
- Additional time is needed to ensure accurate implementation of new income and asset calculation requirements.
- CPD grantees will need additional time to update local policies, software systems, and staff training once HUD guidance and system updates are finalized.
In short, the infrastructure still is not ready—and HUD is acknowledging that reality.
What Grantees May Do During the Extension Period
While full HOTMA compliance is delayed, the rule provides continued flexibility:
- CPD grantees may voluntarily implement HOTMA requirements at any time on or after January 1, 2024, but are not required to do so until January 1, 2027.
- Grantees may continue to use applicable income safe harbors under 24 CFR 5.609(c)(3).
- HOME Participating Jurisdictions (PJs) may implement expanded income safe harbors and flexibilities adopted under the 2025 HOME Final Rule at 24 CFR 92.203, without adopting the remainder of the HOTMA income framework.
This "pick-and-choose" approach remains unusual from a regulatory perspective, but it is HUD's only practical option given uneven readiness across programs and jurisdictions.
What Rules Still Apply Right Now
HUD emphasizes that, even during the extension period:
- Grantees must continue complying with existing program regulations.
- Income determinations must follow the most recent Federally Mandated Exclusions from Income, published January 31, 2024.
- Pre-HOTMA income regulations at 24 CFR 5.603, 5.609, 5.611, and 5.617 remain in effect until a grantee fully transitions to HOTMA.
In other words, this is not a regulatory "pause"—it is a delayed transition.
Practical Takeaways for Owners, PJs, and Administrators
- Do not assume HOTMA applies yet to CPD programs unless your jurisdiction has formally adopted it.
- Avoid accidental partial implementation, especially when software vendors are rolling out HOTMA-based calculations ahead of HUD deadlines.
- Document your compliance framework clearly—auditors will expect to see which income rules you are applying and why.
- Plan now for 2027. This extension should be treated as borrowed time, not free time.
Bottom Line
HUD has now extended HOTMA compliance for CPD programs multiple times, underscoring the agency's ongoing difficulty operationalizing its own regulations. While the extension provides welcome breathing room for grantees, it also prolongs uncertainty and heightens the risk of inconsistent implementation across jurisdictions.
Owners and administrators should use this period strategically: stabilize current compliance practices, monitor HUD guidance closely, and prepare for the now firm transition date of January 1, 2027.
When HOTMA finally arrives for CPD programs, it should arrive cleanly—because cleaning up a messy rollout later is far more expensive.