July 12, 2024

Fannie Mae, Freddie Mac Adopt New Tenant Protections 

 Today, the Federal Housing Finance Agency (FHFA) has announced three new tenant protections for multifamily properties financed with Fannie Mae and Freddie Mac (the Enterprises), marking the first tenant protection policy applicable to all such properties. Effective February 28, 2025, this policy mandates multifamily housing providers with Enterprise-backed mortgages to offer tenants: a 30-day notice of any rent increase, a 30-day notice before a lease term expires, and a minimum five-day grace period for late rent payments.

With over 44 million households in the U.S. living in rental housing, including more than 16 million in Enterprise-backed properties, these measures aim to standardize tenant protections. Although many housing providers already follow similar practices, the new requirements will ensure a consistent baseline across all Enterprise-backed properties.

The policy details include:

1. 30-Day Written Notice of Rent Increases: Renters must be notified at least 30 days in advance of any rent hike.
2. 30-Day Notice of Lease Expiration: Renters must receive a 30-day notice before their lease expires, regardless of whether the lease ends naturally or is terminated by the landlord.
3. Minimum 5-Day Grace Period for Late Rent Payments: Renters will have up to five days after their rent is due to make payments without facing fees, eviction, or other penalties.

These protections, monitored and enforced by the Enterprises, are part of FHFA’s commitment to advancing resident-centered practices. Non-compliance by borrowers could lead to penalties under their loan agreements. Detailed policy descriptions will be published in August 2024, and the tenant protections will apply to loans submitted after February 28, 2025. State and local laws may provide additional protections.

Senate Appropriators Adopt Totals for FY2025 Funding Bills

This week, the U.S. Senate Committee on Appropriations approved funding totals for twelve annual spending bills, known as 302(b)s, in a 15-11 vote along party lines, initiating the committee’s summer markups of fiscal 2025 bills. Although no Republicans supported the totals, bipartisan backing is expected for the bills. The approved totals exclude tens of billions of dollars negotiated outside funding caps from the previous summer’s debt limit deal and emergency funds Senate appropriators plan to add.

The approved funding totals for fiscal 2025 are as follows for housing related accounts:

• Agriculture-FDA: $27 billion (current year (FY24) funding level is at $26.23 billion.)
• Transportation-HUD: $87.7 billion (current year (FY24) funding level is $89.48 billion.)

Senate Appropriations Chair Patty Murray (D-Wash.) and ranking member Sen. Susan Collins (R-Maine) plan to add $34.5 billion in emergency funding to the bills, citing the inadequacy of the funding limits set by last summer’s debt ceiling deal. This emergency funding would provide a 3.4 percent boost for defense programs and a 2.7 percent increase for non-defense programs, compared to the 1 percent increase allowed by the law.

Senate appropriators and their House counterparts aim to advance these spending bills as their initial proposals for bipartisan funding discussions, expected to intensify post-November elections. In the interim, Congress will likely need to pass a continuing resolution to prevent a government shutdown on October 1.

Senate Advances FY25 Ag-FDA funding bill, Maintains Level Funding for RHS

 This week,  the Senate Appropriations Committee approved a fiscal year 2025 (FY25) funding bill maintaining most of USDA-RHS programs at their current (FY24) funding levels.  A funding chart is below, highlighting key RHS program-level funding:

Decoupling Pilot Program Expansion: The Senate bill seeks to expand the decoupling pilot for Section 515 properties, which allows these properties to continue receiving Section 521 Rental Assistance after their mortgages are paid off. The proposal would increase the units eligible for decoupled rental assistance from 1,000 to 5,000. The House bill supports continuing the pilot but retains the cap at 1,000 units.

Section 542 Voucher Program: The bill allocates $38 million to renew vouchers already issued, ensuring continuity for tenants. Additionally, the administration’s decoupling proposal aims to provide Section 521 Rental Assistance to most tenants in USDA-financed rental properties where mortgages end or are paid off. An extra $20 million is included in the HUD tenant protection vouchers account. These funds are designated for new vouchers for tenants in USDA properties that cannot refinance, participate in multi-family preservation and rehabilitation options, or decouple.

Overall, the Senate’s funding bill reflects a mixed approach, preserving many existing funding levels. The expansion of the decoupling pilot highlights a significant effort to maintain rental assistance for properties transitioning out of their mortgage terms.

House Appropriations Subcommittee Approves FY25 THUD Funding Bill

This week, the House Appropriations Transportation, Housing and Urban Development, and Related Agencies (THUD) Subcommittee’s approved their FY25 appropriations bill. This bill proposes significant cuts for HUD programs, reflecting a strategic reallocation of funds across various programs.

Key Funding Allocations:

The bill sets HUD’s total funding at $64.827 billion, a reduction of $5.242 billion from the FY24 enacted level. The notable adjustments in funding levels include:

• Tenant-Based Rental Assistance (TBRA): The allocation remains stable at $32.3 billion, roughly matching FY24 levels but falling $500 million short of the President’s Budget Request. This stability ensures the continuation of rental assistance for low-income families but does not address the growing demand for vouchers.
• Project-Based Rental Assistance (PBRA): The bill increases funding to $16.6 billion, up $500 million from FY24, aligning with the President’s request.
• Section 202 Housing for the Elderly: Funding rises slightly to $931.4 million, an $18 million increase from FY24 and similar to the President’s request.
• Section 811 Housing for Persons with Disabilities: This program receives $256.7 million, $39 million more than FY24, on par with the President’s budget.
• Community Development Block Grant (CDBG): Funding holds steady at $3.3 billion, $370 million above the President’s request.
• HOME Investment Partnerships Program: The most significant cut is to the HOME program, slashed to $500 million, a reduction of $750 million from both the FY24 level and the President’s request. This drastic cut, highlighted by Ranking Member Rosa DeLauro (D-CT), signals a severe setback for affordable housing construction and rehabilitation efforts. NAHMA will work to get a higher level in the U.S. Senate.

PBCA Procurement: The bill also directs HUD to initiate a new competition for Performance-Based Contract Administration (PBCA) awards on a state-by-state basis, renewable every seven years. This move aims to enhance the efficiency and effectiveness of administering project-based rental assistance by involving public housing agencies and housing finance agencies (HFAs) with proven experience.

Next Steps: The significant cut to the HOME program and other HUD programs raises concerns about the future of affordable housing development amid an ongoing housing crisis. The overall reduction in HUD’s budget could strain resources needed to tackle the nation’s housing affordability challenges effectively. NAHMA will work with the U.S. Senate to boost HUD accounts that received deep cuts.  The Senate is expected to release their version of THUD before the August Recess period.