The Federal Housing Finance Agency (FHFA) has announced tenant protections that will be imposed on all multifamily properties with financing from the Government Sponsored Entities (GSE’s), Fannie Mae and Freddie Mac. The protections will apply to properties with new loans signed after February 28, 2025.
According to a recent report from the Mortgage Bankers’ Association, the GSE’s held 48.2 percent of outstanding multifamily mortgages in Q1 2024.
Long time coming
The new loan requirements have been in the works since at least May 2023 when the FHFA issued a Request for Input (RFI) covering a number of tenant protections under consideration. The comment period for the RFI closed July 31, 2023.
The tenant protections being put in place are the first to be included as requirements for GSE financing and include:
- 30-day written notice in advance of any rent increase
- 30-day written notice in advance of a lease expiration
- 5-day grace period for late rent payments
The GSE’s are expected to issue detailed descriptions of the new multifamily tenant protections in August 2024. The descriptions will presumably cover the penalties for non-compliance.
“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. 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,” said Sandra L. Thompson, FHFA director.
Protections could expand further
While these new protections are in response to the 2023 RFI, that RFI also asked for input in a number of other areas. Many of the questions in the RFI focused on providing tenants with information and on maintaining multifamily tenant housing stability. These included providing tenants with the reasons for being declined for a lease and with information on eviction actions and the right to cure the cause of a pending eviction. Other areas mentioned in the RFI include having the GSE’s take a position on source of income acceptance and on evaluating housing safety and habitability.
The announcement of the multifamily tenant protections does not mention if the new protections are the full response to the RFI or just the first installment in coming new loan requirements.
