FHFA Announces New Tenant Protections For GSE-Backed Properties
Multifamily properties financed by Fannie Mae and Freddie Mac must adhere to new tenant protections announced by the Federal Housing Finance Agency.
Housing providers must now provide tenants with 30-day written notices of rent increases and lease expiration, plus a 5-day grace period for rent payments.
This is the first time tenant protections will be a standard component of the GSEs’ financing.
“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 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.”
The GSEs will monitor and enforce these protections, with failure to comply resulting in penalties under the loan agreements.
The new rules will apply to new loans signed on or after February 28, 2025. The FHFA will publish a detailed description of the policies in August 2024.
The FHFA says the rules resulted from a 2023 Request for Input on tenant issues, leading the agency to engage with key stakeholders and market participants on this topic.
FHFA and the Enterprises 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.
The National Apartment Association, National Multifamily Housing Council, and Mortgage Bankers Association released a statement following the announcement.
“We appreciate FHFA’s ongoing, collaborative approach with our members and other industry stakeholders on ways to increase affordable rental housing supply and to adopt common sense practices that better serve tenants… The actions detailed in today’s announcement are generally consistent with practices employed by quality, professionally managed housing providers and we will work diligently with FHFA, the GSEs, and our members to make sure these new initiatives are implemented as efficiently as possible,” it reads.
“Going forward, we urge FHFA to continue to gather information about the impacts of all potential policy proposals and changes, and we are committed to working with them to tackle the affordability crisis.”
Housing groups have been skeptical of some developments under the Biden administration. In the statement, these groups emphasized that more housing is the best way to combat unaffordability. Comments by President Biden around rent caps have put federal housing policy under the microscope in recent weeks.
They added that rent caps – not included in these changes, but a hot political topic in recent weeks– do more harm than good in the housing market.
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