On July 12, the Federal Housing Finance Agency (FHFA) announced the first-ever tenant protections required for all multifamily properties financed by the federal enterprises known as Fannie Mae and Freddie Mac.

The new policy will be effective for loan applications submitted after February 28, 2025, and will require three protections to be put in place at covered properties.

Properties will have to provide the following:

• 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.

While the announcement marks a new era of centering tenant protections in federally-backed mortgages, critics have said the new requirements are minimal and have called on the agency to strengthen protections.

According to FHFA, over 44 million households (roughly 35% of the U.S. population), live in rental housing, with more than 16 million rents living in properties financed by “the enterprises.” About half of all renters in 2022 were cost-burdened according to FHFA’s research, meaning they spend more than 30% of their income on housing costs.

FHFA also stated that before making the announcement, the agency evaluated current tenant protections required under state law and surveyed 2,500 tenants across the United States.

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.

LeadingAge supports the tenant protections as a first and overdue step to addressing housing instability. FHFA stated that the agency will continue its public stakeholder engagement process to build on the policies described above in a way that reflects the needs of both tenants and housing providers.