The passbook rate is a small number that generates outsized findings, because HOTMA changed when it applies and staff keep applying the old logic — or an old rate.
What the rate does
When imputation applies, HUD's passbook rate is multiplied against net family assets to produce imputed asset income — the income assets are assumed to generate regardless of what they actually earned. It exists so families can't park wealth in non-earning forms to lower rent.
HOTMA rewired the trigger
Under HOTMA, actual asset income is used when it can be determined; imputation applies when it can't, and the threshold structure around when assets require full verification versus self-certification changed. The classic pre-HOTMA reflex — "assets over the old threshold, compare actual vs. imputed, take the greater" — is retired logic. Files still showing greater-of comparisons under the old framework are among the most recognizable post-HOTMA findings.
The rate itself moves
HUD publishes and updates the passbook rate; using last cycle's rate on this cycle's certification is a math finding waiting to be written. The rate in your software, your worksheets, and your policy should trace to the current published figure with a date.
The self-audit
Pull five files with assets: confirm (1) the HOTMA framework was applied, not greater-of; (2) the rate used matches the current published rate; (3) the worksheet shows the calculation path. Five files predicts the portfolio.
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FAQ
Does imputation apply to retirement accounts? HOTMA excluded most retirement accounts from net family assets entirely — assets outside the calculation generate no imputed income.
Where is the rate published? HUD issues it through official notices/guidance — verify against the current publication rather than a vendor summary.
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