Fannie Mae and Freddie Mac guarantee the mortgages of 40 percent of all multifamily rental units nationwide according to the Mortgage Bankers Association. Based on numbers from the PEW research center, this represents around 1.8 million households in the country. Proposing greater protection for residents in Mae-/Mac-backed units, the Federal Housing Finance Agency (FHFA) sought public comment on the matter.
FHFA received nearly 3,500 responses. FHFA, in the Request for Input (issued May 30, 2023), said the agency wants to collect information that highlights tenants’ experiences and stakeholders’ perspectives and also solicit ideas for improved data collection to quantify better the size and scope of the issues s identified by tenants.
“The Enterprises have a responsibility to not only ensure liquidity is available for affordable rental housing, but also to address challenges faced by tenants and property owners in the multifamily housing market,” said FHFA Director Sandra L. Thompson. “FHFA is seeking public input to help identify these challenges nationwide, particularly in underserved communities.”
U.S. Senators have suggestions
In Dogwood, a newsletter covering Virginia, says that Sens. Tim Kane (D-VA0 and Mark Warner (D-VA) have offered these suggestions:
- Limiting rent hikes in properties with financing backed by Fannie Mae and Freddie Mac;
- Requiring good cause for evictions and lease non-renewals and adopting a strong definition of “good cause,”—such as serious and repeated lease violations (like nonpayment of rent)—to ensure that tenants are protected against unfair, discriminatory, and retaliatory evictions;
- Requiring owners to maintain housing that meets or exceeds standards for safety, accessibility, and quality;
- Establishing comprehensive asset management procedures to ensure housing safety and quality;
- Enforcing protections against discrimination under the Fair Housing Act, as well as protecting against presumptive exclusion based on information in tenant screening reports, such as a prior eviction or credit score;
- Ensuring the timely provision of any tenant screening report to applicants upon request;
- Posting property owner/manager information online to help ensure renters have access to their landlords;
- Ensuring that tenants are able to organize within their buildings and communities if need be.
A history of intervention
FHFA took a number of actions that provided multifamily tenant protections and support for multifamily property owners during the COVID-19 national emergency. FHFA’s decision to evaluate the Enterprises’ multifamily tenant standards is based on lessons learned from COVID-19, rising rents, and a shortage of safe and affordable housing in America.
A brief case for further protections
Renter advocates say that Fannie and Freddie’s market share and mission require that more remains to be done to protect those who live in units backed by the companies. “Tenants, especially low-income tenants, desperately need the federal government to provide a floor of minimum protections,” the National Housing Law Project responded. “Relying on state and local landlord-tenant law to protect tenants is unrealistic and naive given the seismic shifts in the rental housing market — especially in the aftermath of the Great Recession, through the pandemic, and into the present day.”
A brief case against
The apartment industry, including the National Multifamily Housing Council and National Apartment Association, disagree. They say such measures would exceed FHFA’s legal authority. “Moreover,” they wrote in response, “the consequences of such broad application would undoubtedly negatively impact the multifamily and related secondary mortgage market in several ways including, but not limited to, disinvestment in affordable housing, increased operational confusion, reduced property revenue and increased expenses or uncollected debt and an overall decrease in borrower interest and willingness to use [Fannie and Freddie’s] products.”
The need to protect
More than 500,000 apartments affordable to extremely low-income renters were lost during the past few years, according to Moody’s. The National Housing Preservation Database projects 327,000 subsidized units will reach the end of their required affordability periods by 2025. The circumstances that create preservation needs — expiring subsidy commitments and rent protections, aging building systems and accruing repair needs — put whole buildings of low-income tenants at risk. And when properties cannot be preserved as affordable, entire communities can be affected.
