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FHFA Insights
FHFA Increases Radon Testing Requirements at Enterprise-Backed Multifamily Properties

Published:
01/19/2023

​​FHFA has adopted more robust radon testing requirements for multifamily properties backed by Fannie Mae and Freddie Mac (the Enterprises). This policy enhancement ensures that properties financed by the Enterprises continue to provide safe and sustainable housing for tenants across the United States. FHFA’s determination to reevaluate the Enterprises’ radon standards is based on a growing body of research that raises concerns about human exposure to naturally occurring radon gas. 

Background

Radon is an invisible, odorless, and tasteless gas that comes from the breakdown of uranium inside the earth. Radon is a carcinogen, and extended exposure may be linked with an increased risk of lung cancer. Where present in soils, radon exposure can occur by breathing air entering buildings through cracks and gaps in walls and floors. 

In 2021, FHFA directed the Enterprises’ multifamily divisions to review their radon assessment requirements to ensure the policies are data-informed, fully understood by lenders and borrowers, and properly implemented and enforced. Through oversight of our regulated entities, FHFA’s mission is to responsibly foster a sustainable housing finance system that supports equitable access to affordable, decent, and safe homeownership and rental housing. 

Feedback from the Public Listening Session

Because of the vital role the Enterprises play in providing liquidity in the mortgage market, particularly in affordable housing, FHFA takes a holistic view when considering policy changes and works to identify the foreseeable market, industry, and risk impacts of any policy changes. On July 20, 2021, FHFA hosted a public listening session with over 485 stakeholders to identify opportunities and challenges to address radon exposure at Enterprise-backed multifamily properties and improve radon data collection. Some of the policy considerations raised during the listening session included:

  • Tenant Health & Safety
  • Testing Costs
  • Underwriting Delays
  • Radon Industry Capacity
  • Housing Affordability
  • Market Liquidity 
  • Potential Market Disruption
  • Multifamily Data at Enterprise-backed Properties

In evaluating the Enterprises’ radon policies, FHFA sought to prioritize tenant health and safety but also considered possible market disruptions by assessing testing costs, delays, the radon industry’s current capacity, and the impact of increasing testing standards on the Enterprises’ affordable housing and Duty to Serve requirements. ​

Summary of Changes

Based on our extensive research and stakeholder outreach, FHFA and the Enterprises have determined that updating and aligning the Enterprises’ radon testing and mitigation standards is appropriate. As such, loan applications received by the Enterprises after June 30, 2023, will be subject to new radon testing requirements, which include:

  • Requiring radon testing at multifamily Enterprise-backed properties, regardless of property location, subject to some exemptions and deferrals.​
  • Increasing required testing from 10 percent of ground floor units to 25 percent.
  • Continuing to allow an environmental professional to manage the radon testing process.
  • Requiring the environmental professional or property representative to provide tenant notifications for radon testing.
  • Providing additional guidance for lenders and environmental consultants on the Enterprises’ radon standards. As part of such guidance, the Enterprises will reinforce the need for compliance with state and local radon laws.

Data Collection

Additionally, FHFA and the Enterprises are partnering with the Centers for Disease Control and Prevention (CDC) to conduct stakeholder outreach and identify opportunities and challenges in collecting radon data at multifamily properties with Enterprise-backed mortgages. These efforts will ensure the Enterprises are using their positions as leading multifamily financers to move the industry forward thoughtfully on radon issues.

Conclusion

The health and safety of tenants is a top priority for FHFA and the Enterprises, which is why we are committed to maintaining strong and robust due diligence requirements for identifying radon to help better protect tenants at risk of radon exposure. FHFA will continue to monitor the multifamily mortgage market and will work with the U.S. Environmental Protection Agency (EPA) to reassess the Enterprises’ radon standards in 2024 to determine what adjustments are warranted.​​

FHFA Press Release: 

FHFA Announces Enhancements to Fannie Mae and Freddie Mac Radon Standards for Multifamily Properties​

2023 Enterprise Multifamily Radon Policy:

 

Multifamily Radon Frequently Asked Questions (FAQs):

 

Tagged: Enterprises; Fannie Mae; Freddie Mac; Government Sponsored Enterprises (GSEs); GSE; National Radon Action Month; Policy; Radon; Radon Prevention