The government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac on Wednesday announced new minimum standards to be included in tenant leases on GSE-backed multifamily properties, following up on a policy announced last month by the Federal Housing Finance Agency (FHFA).
The new lease standards will require a five-day grace period for rent payments, a 30-day notice for rent increases and a 30-day notice of a lease expiration, the GSEs explained. The policy takes effect with new loans under application starting in February 2025.
“The new enterprise multifamily lease standards align with our mission to expand access to housing that is both affordable and sustainable,” Michele Evans, executive vice president and head of multifamily at Fannie Mae, said in a statement. “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.”
The GSEs published supplemental materials that include identical FAQs about the new standards and an initial policy grid that outlines factors such as the “policy, applicability, updates to loan documents, implementation requirements for borrowers, and monitoring and enforcement details,” Fannie Mae said.
“Fannie Mae and Freddie Mac’s (the Enterprises) announcements today of new multifamily tenant protections mark an important milestone by increasing transparency and improving communication between housing providers and tenants,” FHFA Director Sandra Thompson said in a statement. “These announcements provide additional details on how the Enterprises will work with housing providers to implement these protections at Enterprise-backed multifamily properties.”
Thompson and the GSEs also specified that additional guidance and stakeholder engagement — for tenants and housing providers alike — will be ongoing between now and the February 2025 implementation date.
“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.”
