Fannie Mae and Freddie Mac have both released additional information regarding new protections for tenants in multifamily properties with mortgages backed by the Government-Sponsored Enterprises (GSEs). The protections are included in the Enterprise Multifamily Lease Standards Policy for multifamily housing providers (borrowers), announced by the Federal Housing Finance Agency (FHFA).
Under the policy, effective February 28, 2025, all new GSE-backed loans will require multifamily borrowers to include the following three minimum standards within tenant leases:
- Thirty-Day Notice of Rent Increases: Renters will receive written notice of a rent increase at least 30 calendar days prior to said increase.
- Thirty-Day Notice of Lease Expiration: Renters will receive written notice of the scheduled expiration of the residential lease at least 30 calendar days prior to said expiration.
- Five-Day Grace Period for Late Rent Payments: Renters will receive a minimum five calendar day period from the rent due date before late fees or other penalties can be charged.
“Fannie Mae and Freddie Mac’s (GSEs) announcements today of new multifamily tenant protections mark an important milestone by increasing transparency and improving communication between housing providers and tenants,” said FHFA Director Sandra L. Thompson. “These announcements provide additional details on how the Enterprises will work with housing providers to implement these protections at Enterprise-backed multifamily properties. FHFA and the Enterprises will continue to engage with stakeholders to support both tenants and housing providers as these policies take effect in February 2025.”
The policy requirement will apply to all multifamily properties for which new loan applications with the GSEs signed on or after February 28, 2025, with the following exceptions: Manufactured Housing Communities, which fall under a separate tenant protections policy established by Duty to Serve; existing credit facilities including loans funded through credit facility agreements that pre-date February 28, 2025; loans for cooperative housing corporations; and loans that were originated using third-party (i.e., non-GSE) form loan documents.
“Fannie Mae is committed to implementing protections that support housing stability for the individuals and families who live in the multifamily rental properties we back. The new Enterprise Multifamily Lease Standards align with our mission to expand access to housing that is both affordable and sustainable. They reflect our comprehensive Renter Needs Research and methodical approach to analyzing renter obstacles and outcomes and will provide the industry with consistent expectations regarding tenant notification and grace period practices,” said Michele Evans, Fannie Mae’s EVP and Head of Multifamily. “We look forward to continuing to work closely with FHFA, Freddie Mac, our lenders and borrowers, and other multifamily housing stakeholders on these and other important solutions to address the challenges faced by renter households across the country.”
To provide additional transparency to tenants and to help lenders and borrowers implement the new requirements, the GSEs published FAQs related to the standards and an initial policy grid that outlines the policy, applicability, updates to loan documents, implementation requirements for borrowers, and monitoring and enforcement details.
“These lease standards seek to extend the reach of common baseline tenant protections,” said Kevin Palmer, Head of Multifamily for Freddie Mac. “Although many borrowers already exceed these minimum standards, all will be required to meet the standards to obtain GSE financing in the future. The details we released today are intended to give lenders, borrowers, and other market participants clearer expectations with regard to how we will implement, monitor, and enforce the new requirement.”
In 2023, Fannie Mae financed approximately 482,000 units of multifamily rental housing, a significant majority of which were affordable to households earning at or below 120% of area median income. Tenants can use Fannie Mae’s Renters Resource Finder online look-up tool to help determine if they live in a multifamily property with a mortgage backed by Fannie Mae.
Historically, more than 90% of the eligible rental units Freddie Mac Multifamily funds are affordable to families with low-to-moderate incomes earning up to 120% of area median income. Freddie Mac securitizes about 90% of the multifamily loans it purchases, thus transferring the majority of the expected credit risk from taxpayers to private investors.
