Comment Detail

Comment

Protections for tenants, including clearly-written leases, notice of potential eviction, or deductions from security deposits based on apartment damage, are common sense aspects of owner-tenant relationships, and in keeping with understandings of consumer protection generally. At the same time, it is not clear to me that this is an area in which the GSEs should be involved. It is always paramount for Fannie/Freddie to focus on their core mandate: providing liquidity to the US mortgage market. Additional social goals risk straining capacity in the service of regulation which has historically been in the purview of local governments. Moreover, the focus on “tenant protection” narrowly implicitly assumes that tenants are in need of additional protection, rather than understanding that the renter-owner relationship itself disciplines landlords, who must always seek to avoid vacancies and have a strong incentive to serve tenants. The implicit idea that landlords always have the whip hand obscures the disciplines found in markets with higher vacancy rates, for instance. Goals such as seeking to ensure the physical upkeep of buildings whose financing may be in the Fannie/Freddie portfolio suggests a need for an inspection protocol beyond the mandate or capacity of the GSEs. Broadly, in other words, the language of the White House Tenant Bill of Rights, which defers to state and local governments, should best be the guidance for the GSEs.