Freddie Mac Multifamily Announces Lease Standards Policy Framework

Rhea-AI Summary

Freddie Mac Multifamily has released a policy framework for minimum lease standards at multifamily properties with new enterprise-backed loans. The standards, announced by the FHFA in July, include a 5-day grace period for rent payments, a 30-day notice for rent increases, and a 30-day notice of lease expiration. These requirements will apply to new loans under application starting February 2025.

The policy framework, published jointly with Fannie Mae, outlines implementation, monitoring, and enforcement provisions. Freddie Mac's head of Multifamily, Kevin Palmer, stated that these standards aim to extend common baseline tenant protections. The company conducted research and engaged with stakeholders to identify best practices before implementing this change.

Positive

• Implementation of tenant protection measures, potentially improving Freddie Mac's public image and social responsibility
• Collaboration with Fannie Mae and FHFA in developing the policy framework, indicating industry alignment
• Historically, over 90% of Freddie Mac's funded rental units are affordable for low-to-moderate income families
• Securitization of about 90% of multifamily loans, transferring credit risk from taxpayers to private investors

Negative

• New policy may potentially increase administrative burden for borrowers and lenders
• Possible resistance from property owners who may need to adjust their current practices
• Potential impact on loan origination volume if some borrowers choose alternative financing options

News Market Reaction

-4.27%

1 alert

-4.27% News Effect

On the day this news was published, FMCC declined 4.27%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Tenant Protections Announced in July to Take Effect February 2025

MCLEAN, Va., Aug. 28, 2024 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) Multifamily today published an overview of its policy framework to require minimum lease standards at multifamily properties with a new enterprise-backed loan. Announced by the Federal Housing Finance Agency (FHFA) in July, the lease standards require a 5-day grace period for rent payments, a 30-day notice for rent increases and a 30-day notice of a lease expiration. The policy will apply to new loans under application beginning in February of 2025.

The policy framework, which was published jointly by both Freddie Mac and Fannie Mae on their respective websites today, includes an overview of implementation, monitoring and enforcement provisions. The Enterprises also published identical FAQ documents. Additional details will be provided in updates to the Multifamily Seller/Servicer Guide and loan documents in early 2025.

“These lease standards seek to extend the reach of common baseline tenant protections,” said Kevin Palmer, head of Multifamily for Freddie Mac. “Although many borrowers already exceed these minimum standards, all will be required to meet the standards to obtain GSE financing in the future. The details we released today are intended to give lenders, borrowers and other market participants clearer expectations with regard to how we will implement, monitor and enforce the new requirement.”

Prior to making this change, Freddie Mac worked with Fannie Mae and FHFA to examine the landscape of state landlord-tenant laws and engaged with stakeholders to identify best practice tenant protections. Groundbreaking research findings were published in Freddie Mac’s National Survey of Tenant Protections. Freddie Mac continues to work across the multifamily industry to encourage broader adaptation of resident-centered housing practices. Learn more about our work here.

Freddie Mac Multifamily is the nation's multifamily housing finance leader. Historically, more than 90% of the eligible rental units we fund are affordable to families with low-to-moderate incomes earning up to 120% of area median income. Freddie Mac securitizes about 90% of the multifamily loans it purchases, thus transferring the majority of the expected credit risk from taxpayers to private investors.

Freddie Mac’s mission is to make home possible for families across the nation. We promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, we have helped tens of millions of families buy, rent or keep their home. Learn More: Website | Consumers | Twitter | LinkedIn | Facebook | Instagram | YouTube

MEDIA CONTACT: Melissa Silverman
703-388-7037
Melissa_Silverman@FreddieMac.com

FAQ

When will Freddie Mac's new lease standards policy for multifamily properties take effect?

Freddie Mac's new lease standards policy for multifamily properties will take effect in February 2025, applying to new loans under application from that date.

What are the key tenant protections included in Freddie Mac's (FMCC) new lease standards policy?

The key tenant protections in Freddie Mac's new policy include a 5-day grace period for rent payments, a 30-day notice for rent increases, and a 30-day notice of lease expiration.

How does Freddie Mac (FMCC) plan to implement and enforce the new lease standards policy?

Freddie Mac has published a policy framework outlining implementation, monitoring, and enforcement provisions. Additional details will be provided in updates to the Multifamily Seller/Servicer Guide and loan documents in early 2025.

What percentage of Freddie Mac's (FMCC) multifamily loans are securitized?

According to the press release, Freddie Mac securitizes about 90% of the multifamily loans it purchases, transferring the majority of the expected credit risk from taxpayers to private investors.