The Federal Housing Finance Agency (FHFA) is announcing three new tenant protections, establishing the first tenant protection policy applicable to all multifamily properties financed with mortgages backed by Fannie Mae and Freddie Mac (the Enterprises). Under the new policy, which will be effective February 28, 2025, multifamily housing providers with Enterprise-backed financing must provide tenants: 1) a 30-day notice of a rent increase, 2) a 30-day notice of a lease term’s expiration, and 3) a minimum 5-day grace period for late rent payments.
Over 44 million households, or roughly 35 percent of the U.S. population, live in rental housing, and more than 16 million renters live in properties with Enterprise-backed mortgages. Today's historic announcement ensures that, over time, a significant share of tenants across the country will benefit from common-sense policies related to their leases and rent payments.
Research and Outreach
FHFA’s decision to evaluate the Enterprises’ multifamily tenant standards is based on lessons learned from COVID-19, rising rent prices, and a consensus among stakeholders that the United States lacks sufficient safe and affordable housing. Because of the vital role the Enterprises play in providing liquidity to the mortgage market, particularly in affordable housing, FHFA worked closely with the Enterprises to identify the foreseeable market, industry, and risk impacts of any policy changes. Today’s announcement is supported by extensive research, data collection, and stakeholder outreach.
I. Research and Data Collection
Starting in 2022, FHFA and the Enterprises performed comprehensive assessments of post-pandemic multifamily policies to identify the challenges tenants and housing providers face and to develop solutions where possible.
One notable example of this research is Freddie Mac’s National Survey of Tenant Protections, which evaluated state-level landlord-tenant statutes in all 50 states, as well as the District of Columbia and Guam, to determine which tenant protections currently exist under state law across the country. Freddie Mac’s research provided valuable insights into the Nation’s rental market and the patchwork of state laws and legal processes that tenants and housing providers must navigate.
Additionally, Fannie Mae’s Renter Resource surveyed over 2,500 tenants across the United States to better understand the needs and challenges of renters. The results showed that overall affordability, habitability, and difficulty finding and accessing housing are among tenants’ greatest concerns. According to Fannie Mae’s research, about half of all renters in 2022 – over 22 million households – were cost-burdened, spending more than 30 percent of their income on rent and utilities. Tenants also reported not having adequate information about their rights or responsibilities under their lease.
In the 2023 Conservatorship Scorecard, FHFA first instructed the Enterprises to explore the feasibility of adopting tenant protections for the multifamily properties they finance. The Enterprises were required to consult industry stakeholders to understand the impact, viability, and consequences of adopting different tenant protections.
II. Stakeholder Outreach
Building on post-pandemic research and data collection, in May 2023, FHFA published a Request for Input (RFI) seeking information on potential tenant protections for multifamily properties backed by the Enterprises. The RFI followed the Blueprint for a Renters Bill of Rights, announcing that FHFA would conduct stakeholder outreach and engagement to identify the opportunities and challenges of adopting and enforcing tenant protections.
FHFA received thousands of comments from tenants and tenant advocates, nonprofits, lenders, multifamily borrowers/property owners, housing providers, developers, government and elected officials, and mortgage industry groups. In January 2024, FHFA published a comprehensive RFI Summary of the comments the Agency received in response to the RFI. The RFI revealed key areas of consensus among housing providers and tenants on the importance of tenants understanding their rights and responsibilities under leases.
Summary of Changes
Based on FHFA’s extensive research and stakeholder outreach, FHFA and the Enterprises determined that adopting and aligning on certain tenant protection requirements is an appropriate first step. While many multifamily housing providers already have tenant notification and grace period practices in place, requiring them at Enterprise-backed properties will bring more multifamily housing providers up to a common baseline.
Beginning February 28, 2025, the Enterprises will require all multifamily borrowers (subject to limited exceptions) who receive Enterprise-backed financing to include the following tenant protections:
- 30-Day Written Notice of Rent Increases: Renters will receive at least 30-days’ notice for any rent increase.
- 30-Day Notice of Lease Expiration: Renters will be notified at least 30 days in advance of their lease expiration, whether fixed/scheduled or terminated by the landlord.
- Minimum 5-Day Grace Period for Late Rent Payments: Renters will be permitted to pay their rent up to five days after their due date, without incurring fees or being subject to eviction or other penalties.
These tenant protections will be monitored and enforced by the Enterprises. Failure to comply could result in penalties under the borrower’s loan agreement. A detailed description of the policy is expected to be published by the Enterprises in August 2024.
The Enterprises will also continue to maintain their multifamily property look-up tools, so that tenants can independently verify whether they live in an Enterprise-backed property. These tenant protections apply to multifamily properties where the loan application was submitted after the policy effective date, February 28, 2025. Individual state and local laws may prescribe additional tenant protections.
Conclusion
FHFA recognizes that tenant instability is a serious threat to the U.S. housing finance system and that both FHFA and the Enterprises have an important leadership role in addressing this issue. While today’s announcement is a milestone that will advance baseline tenant protections across the United States, additional work is required to further improve resident-centered practices at Enterprise-backed properties. FHFA will continue its public stakeholder engagement process to build on the policies described above in a manner that reflects the needs of both tenants and housing providers.