The Federal Housing Finance Agency (FHFA) has announced a set of required tenant protections for multifamily properties financed by Fannie Mae and Freddie Mac (the GSEs).
These new protections were brought about due to the FHFA’s ongoing engagement with market participants and key stakeholders on tenant issues, and represents the first time that tenant protections will be a standard component of GSE multifamily financing.
The protections will be required for new loans signed on or after the policy effective date, February 28, 2025, and covered housing providers will be required to provide tenants with the following:
- A 30-day written notice of a rent increase: Renters must receive at least 30-days’ notice for any rent increase.
- A 30-day written notice of a lease expiration: Renters will be notified at least 30 days in advance of their lease expiration, whether fixed/scheduled or terminated by the landlord.
- A five-day grace period for rent payments: Renters will be permitted to pay their rent up to five days after their due date, without incurring fees or being subject to eviction or other penalties.
The GSEs will monitor and enforce these tenant protections, and failure to comply could result in penalties under the loan agreement. A detailed description of the tenant protection policies is expected to be published by the GSEs in August 2024. Tenants can see if their property is Enterprise-backed using Fannie Mae’s and Freddie Mac’s multifamily property look-up tools.
Facing challenges in the rental market
“The tenant protections announced today are the culmination of a collaborative effort between FHFA, the Enterprises, tenants, and landlords to address challenges faced in rental housing today,” said FHFA Director Sandra L. Thompson. “These requirements reflect basic best practices to ensure housing providers effectively communicate with tenants and that tenants understand their rights and responsibilities under their leases.”
In 2023, FHFA published a Request for Input (RFI) to gather stakeholders’ perspectives and identify principles and best practices at the federal, state, and local levels that would strengthen tenant protections and increase fairness in the rental market. FHFA published a summary of the input in January 2024.
FHFA and the GSEs will continue to evaluate options for codifying additional tenant protections that advance sustainable housing in a manner that reflects the needs of both tenants and housing providers.
Maxine Waters, the top Democrat on the House Financial Services Committee, commented, “These protections are a direct response to the challenges faced by millions of renters across the nation, ensuring they receive basic protections during one of the worst housing crises in our nation’s history. This proactive approach by the FHFA will ensure renters have adequate time to prepare for changes in rental prices and can make informed decisions about their housing. Additionally, as more and more families are living paycheck to paycheck, these protections ensure that renters are not penalized with massive fees when needing a few extra days to pay their rent. By ensuring that housing providers communicate effectively with tenants and that tenants understand their rights and responsibilities, we are laying the groundwork for a more equitable and transparent rental market.
“At a time when our nation has a shortage of nearly 14 million homes for rent or purchase, homelessness is rising, and median asking rents have increased by 41% since 2020, these protections—and more—are needed now more than ever. Today marks a critical first step and I continue to urge FHFA to further today’s efforts by exploring what additional protections are feasible.”
Latest in renter protections
Earlier this week, the U.S. Department of Housing & Urban Development (HUD) made $40 million in grant funds available to eligible non-profit or governmental entities to provide no cost legal assistance to low-income tenants at risk of or subject to eviction from their homes. To ensure households have access to stable housing, HUD launched the Eviction Protection Grant Program (EPGP), a federal program to stabilize housing and prevent housing evictions through legal assistance, in 2021. HUD funded 21 grantees serving tenants across 19 states with $40 million during the first phase of the program in FY 2021 and 2022. Current grantees, as well as new applicants, will be considered for awards with this new round of funding.
“Each year 7.6 million tenants face the threat of eviction. Black households, especially women and children, are more likely to experience the lasting harms of eviction. Research shows that evictions contribute to increases in homelessness, unemployment and hospital use. And the rippling harms of eviction reach beyond affected households–destabilizing and straining neighborhoods, schools, municipal social services, and regional economies” said Solomon Greene, Principal Deputy Assistant Secretary for Policy Development and Research. “We are excited for the opportunity to expand the program given the tremendous demand for these services. and we commit to sharing what we learn from grantee successes to provide models for communities across the United States.”
