- US regulators will mandate that landlords with federally backed mortgages provide 30 days’ notice before upping rents or ending leases.
- The policy, starting February 2025, also includes a 5-day grace period for late rents, but tenant advocates argue more is needed.
- Fannie Mae and Freddie Mac back 58% of newly originated apartment loans, engaging with over 16 million renters.
In a move to enhance tenant protections, the Biden administration will require landlords with federally backed mortgages to give tenants 30 days’ notice before raising rents or ending leases, as reported on Bloomberg.
New Policy Details
The Federal Housing Finance Agency (FHFA) announced that apartment owners financed by Fannie Mae (FNMA) or Freddie Mac (FMCC) must implement these tenant protections. The policy applies only to newly originated or refinanced mortgages.
The new policy, set to start in February 2025, will apply to millions of renters and includes added measures such as a mandatory 5-day grace period for late rent payments.
Tenant Advocacy
Tenant advocates have long called for protections linked directly to federal financing via Fannie and Freddie. According to Morgan Stanley, the two firms accounted for 58% of newly originated apartment loans in 2023, affecting over 16 million renters.
Tara Raghuveer, director of the National Tenant Union Federation, described this latest move as a significant first step towards conditioning federal financing on tenant protections.
Meanwhile, advocates like Diane Yentel, president and CEO of the National Low Income Housing Coalition, argue that the new protections are minimal and fall short of stronger measures like rent control.
Context And Background
The FHFA directive is part of broader efforts by the Biden administration to support American renters.
In November, the Department of Housing and Urban Development (HUD) required a 30-day notice before evictions in federally subsidized housing. And in March, the White House capped rent hikes at 10% for properties funded through the Low Income Housing Tax Credit.
The latest policy change follows an FHFA request for input issued last year, soliciting feedback on tenant protections from various stakeholders. While tenants requested stronger measures like rent control and just-cause eviction standards, landlords expressed concerns.
The Mortgage Bankers Association, for example, argued that lenders cannot monitor landlord-tenant relationships and warned that rent control could discourage borrowers from seeking federally backed-financing.
Why It Matters
The Biden administration’s new tenant protection policy marks a significant step toward safeguarding renters in federally financed properties.
However, with tenant advocates calling for more robust measures and industry leaders wary of overregulation, the balance between tenant rights and market viability remains a contentious issue.
