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Fannie Mae and Freddie Mac have jointly announced plans to add tenant protections for multifamily properties they finance beginning in 2025.
Under the policy, which is effective beginning Feb. 28, 2025, all new loans backed by the two government-supported mortgage-buyers will require borrowers to include various protections for tenants who lease within the property: A 30-day notice to tenants of rent increases, a 30-day notice of lease expiration and a five-day grace period for late rent payments. Within 24 months of loan closing, all residential leases must contain these standards, Fannie and Freddie said in an announcement this week.
“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,” Michele Evans, executive vice president and head of multifamily at Fannie Mae, said in a statement. “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.”
Manufactured Housing Communities (MHCs), which fall under a separate tenant protection policy, existing credit facilities including loans funded through credit facility agreements that predate Feb. 28, 2025, loans for cooperative housing corporations and loans that were originated using form loan documents not provided by Fannie Mae or Freddie Mac are excluded from this policy. The 30-day notice of scheduled lease expiration is not required if the existing term of the lease is two months or less.
Borrowers who have been determined to be non-compliant will be provided at least 30 days to become compliant, Fannie and Freddie said. If the borrower continues to be non-compliant, the borrower will be assessed a penalty of 0.20 percent of the original loan amount.
In 2023, Fannie Mae alone financed approximately 482,000 units of multifamily rental housing, a significant majority of which were affordable to households earning at or below 120 percent of area median income.
