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GSE Loan Agreements Will Require Notices and Grace Period

July 16, 2024

The Federal Housing Finance Agency on July 12 (FHFA) announced mandatory tenant protections, via loan agreements, for multifamily properties financed by Fannie Mae and Freddie Mac (the Enterprises).

The regulator’s press release notes this is “the first time that tenant protections will be a standard component of Enterprise multifamily financing.”

Effective February 28, 2025, covered housing providers will be required to provide tenants with the following

• 30-day written notice of a rent increase;
• 30-day written notice of a lease expiration; and
• Five-day grace period for rent payments.

What's next. The Enterprises will monitor and enforce these protections, and failure to comply could result in penalties under the loan agreement. They are also expected to publish a detailed description of the tenant protection policies in August 2024.

Background. In 2023, FHFA published a Request for Input (RFI) regarding potential tenant protections. CREFC and several other real estate trades responded to the RFI with a joint trade letter that advised the FHFA to:

“Refrain from placing new or expanded federal obligations on private rental housing providers and instead focus on leveraging federal resources in the form of incentives to bolster new affordable housing.”

Why it matters. We expect this is the first tenant protection-related policy measure; additional tenant protections could arrive under a second Biden administration. As FHFA states in its press release and accompanying blog:

“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.”

CREFC meets with FHFA on a quarterly basis to discuss developments in the multifamily sector, including relevant data trends and policy concerns.

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