Some multifamily housing properties, including many senior housing properties, will be required to provide new protections for tenants starting next year, under new requirements announced Wednesday by Fannie Mae and Freddie Mac.
The two shareholder-owned lending giants, which operate under a congressional charter, announced that starting Feb. 25, borrowers with new Fannie Mae and Freddie Mac-backed mortgages will be required to include new protections for renters in their leases, including a 5-day grace period for late rental payments, a 30-day notice for rent increases and a 30-day notice of a lease expiration.
“The new Enterprise Multifamily Lease Standards align with our mission to expand access to housing that is both affordable and sustainable. They reflect our comprehensive Renter Needs Research and methodical approach to analyzing renter obstacles and outcomes and will provide the industry with consistent expectations regarding tenant notification and grace period practices,” said Michele Evans, executive vice president and head of multifamily for Fannie Mae, in a news release.
“These lease standards seek to extend the reach of common baseline tenant protections,” Kevin Palmer, head of multifamily for Freddie Mac, said in a news release. “Although many borrowers already exceed these minimum standards, all will be required to meet the standards to obtain GSE financing in the future.”
Fannie Mae offers financing for the senior housing market, including independent living, assisted living and memory care communities. It also finances continuing care retirement communities and some facilities with skilled nursing. Since 2008, it has financed more than $15 billion worth of senior housing, according to the organization.
Freddie Mac Optigo Seniors Housing Loans include independent living, assisted living, memory care and skilled nursing properties.
At least one senior living advocacy organization has expressed support for the new housing standards.
Juliana Bilowich, director of housing operations and policy for LeadingAge, said the organization supports the Federal Housing Finance Agency’s new minimum tenant protections at all multifamily properties with mortgages financed by Fannie Mae and Freddie Mac.
“The first-of-its-kind announcement marks a new era of centering tenant protections in federally supported rental housing; the new minimum standards validate the mission-aligned practices already in place among our membership of affordable senior housing providers,” she said in an emailed statement to McKnight’s Business Daily. “LeadingAge urges the FHFA to build on this first and overdue step of addressing housing stability needs of renters, including older adults with low incomes who are aging independently in their homes.
To provide transparency to tenants and help lenders and borrowers implement the new requirements, Fannie Mae and Freddie Mac have published answers to frequently asked questions that outline the new policy standards and implementation requirements for borrowers.
