On July 12, the Federal Housing Finance Agency (FHFA) announced new tenant protections for the more than 16 million renters living in its multifamily properties (buildings with five or more units) that use Fannie Mae and Freddie Mac financing. Now, owners of buildings backed by the government-sponsored enterprises (GSEs) must provide 30-day notices for lease expiration and rent increases and a five-day grace period on late payments.

The GSEs jointly back close to half of outstanding multifamily mortgages, accounting for close to $1 trillion in mortgages and about a third of renters living in multifamily apartments nationwide. The tenant protections are similar to announcements made by the White House in 2023 and affect significantly more owners in the private market.

We applaud the protections. They mark an important step to supporting renters at a complex time in the rental market when supply is low, housing is unaffordable, and families with low incomes are experiencing particular instability. 

But the GSEs cannot fulfill their congressionally mandated duties to “preserve housing affordable to very low-, low-, and moderate-income families” without additional protections. Even under these new protections, families with the lowest incomes—those who qualify for housing choice vouchers and Social Security Disability Insurance—can still legally be denied an apartment by landlords enjoying federal government backing through the GSEs. And still, renters can be evicted without reason and have no way to complain about serious housing quality issues like mice and roach infestation.

To eliminate these loopholes, the GSEs should implement the following protections:

1. Ban source of income discrimination, which would help families with low incomes access low-poverty neighborhoods.
2. Limit landlords to just cause evictions, which would reduce wrongful evictions and could reduce racial and ethnic disparities in eviction filings.
3. Provide habitability protections, which would ensure tenants received heat and hot water and were free from situations that could affect tenants’ health, such as mold, unsanitary conditions, and pest infestations.
4. Give tenants an online portal to submit complaints, which would improve landlord accountability akin to similar portals for consumer finance and health care.
5. Require periodic reporting from landlords backed by the GSEs (including data on evictions, tenant acceptance and pricing, and private equity ownership). This would allow for the enforcement of fair housing laws and the development of best practices in the rental arena.

These protections would be a win-win: they would greatly improve renters’ lives, could reduce risk to the GSEs, and would be straightforward to implement.

Additional protections would benefit the GSEs and renters

Stricter protections would do the following:

• Help the GSEs mitigate risk. Additional protections could reduce the number of GSE-backed mortgages for landlords who do not require federal backing but who currently benefit from it. For example, protections may encourage landlords of luxury buildings who do not want to rent to voucher holders to get private financing for a mortgage. Or they may discourage landlords who do not maintain their property, and do not want their tenants to be able to use the complaint portal, from seeking federal funding. Not backing these landlords would decrease risk to the GSEs and save taxpayer dollars.
• Have no impact on multifamily housing supply. The crucial issue in the housing market is lack of supply. Evidence (PDF) points to rent control dampening new construction, and leading to deferred maintenance in the existing housing stock. But there is no evidence that minimal tenant protections have the same effect.
• Help the GSEs comply with the Fair Housing Act. Systemic barriers in the housing market have created appalling national racial and ethnic disparities in eviction rates. Improving data collection from GSE-backed landlords would allow the GSEs to monitor their borrowers and ensure that those taking federal financing are not perpetuating these disparities.
• Be straightforward to implement. Most of these protections are consistent with the ones already afforded by low-income housing tax credit (LIHTC) properties and many jurisdictions, including source of income discrimination bans, data collection, and, in many states, requirements for just cause evictions. This widespread familiarity would make the protections easier to implement. Plus, many LIHTC properties are backed by multifamily GSE loans, which would create consistency across a large swath of the multifamily market.

These new protections will benefit renters and the GSEs. Implementing them now—as opposed to the planned February 2025 rollout—would be an important first step. And it is possible. Similar protections in the past were effective immediately. Further, the evidence suggests implementing additional protections would help the FHFA ensure the GSEs are serving their statutory duties with as low a risk to their portfolios as possible.