GSE-Backed Apartments Now Require New Rental Protections

Landlords that have mortgages provided by Fannie Mae and Freddie Mac will soon be required to send a 30-day notice before they can hike rent prices or evict tenants, the Federal Housing Finance Agency has announced announced. The new rule will also require a five-day notice regarding tardy rental payments.

The changes will take effect in February 2025. They will apply to new originations and refinancings.

The move is part of a larger push by the Biden Administration to provide renter protections to the millions of Americans living in federally-backed properties. Last year the FHFA issued a request for input regarding protections that Fannie Mae and Freddie Mac could require from companies seeking multifamily mortgages.

Some of the proposals included standardized rental leases; grace periods for late rents; a right to counsel for tenants facing eviction; the sealing of eviction records; and a federal campaign to end discrimination against affordable housing voucher holders based on the source of income.

These new requirements have likely been met with disappointment from both sides of the issue with the commercial real estate industry unhappy about the new rules and housing advocates wishing that more would have been done. At a meeting with FHFA last year, several of the members of the National Association of Home Builders “urged FHFA to refrain from pressing Fannie Mae and Freddie Mac to add rent control in any form or to add source of income protections as a condition of their mortgages,” the organization said at the time.

National Low Income Housing Coalition president and CEO Diane Yentel expressed his discontent with the measure, noting that the announced changes” provide a bare minimum of tenant notification but fail to provide any of the protections needed to address the pressing challenges renters face in today’s brutal housing market.”

The Biden Administration has also put forward potential initiatives that would encompass a larger universe of landlords including a 10 percent rent hike cap as well as a rule that landlords cannot increase annually by five percent or two times the national median income average. It applies to whatever figure is higher.

Plus, in the fall of 2023, the US Department of Housing and Urban Development proposed a rule that would force public housing agencies to provide tenants, who have not paid rent, a 30-day written warning before filing for eviction in court.

The FHFA has advocated for further increased protections for renters including giving those at risk for eviction a right to counsel, ending discrimination in the housing sector, and sealing eviction records.

Biden has also vowed to do more for renters if the people call on him to serve a second term in office.

“If I’m reelected, we’re going to make sure that rents are kept at 5 percent increase, cor- — corporate rents for cor- — apartments and the like and homes are limited to 5 percent,” the President said on July 11 remarks, according to a White House transcript.