December 19, 2024

Brown, Colleagues Urge Clear Process for Renters to Report Issues with Enterprise-Backed Properties

Renters and Community Leaders Have No Way to Resolve Housing Issues Through the Enterprises or FHFA

WASHINGTON, D.C. – Today, U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, along with Senators Elizabeth Warren (D-MA), Jack Reed (D-RI), Catherine Cortez Masto (D-NV), John Fetterman (D-PA), Martin Heinrich (D-NM), and Alex Padilla (D-CA) urged the Federal Housing Finance Agency (FHFA) to direct Fannie Mae and Freddie Mac (the Enterprises) to establish a clear process for renters and local officials to report maintenance, safety, and other issues affecting renters at properties backed by the Enterprises.

Currently, Fannie Mae and Freddie Mac finance more than 40 percent of multifamily mortgages and help support affordable housing options in neighborhoods across the country. However, local leaders and renters have reported maintenance issues and resident concerns that indicate owners may not be adhering to the terms of their financing at some Enterprise-backed properties. Residents and community leaders do not have a clear process to report their issues to the Enterprises or FHFA and get them resolved in a timely manner.

“Local officials and residents are the canaries in the coal mine. They live in these homes. They see them every day. They are the best equipped to spot issues early on and help to have them addressed before a small problem becomes a critical issue. Unfortunately, neither the Enterprises nor the Federal Housing Finance Agency (FHFA) have a process for residents and community members to elevate issues and get those issues resolved,” said the lawmakers. “Failure to initiate and maintain a process to receive and respond to resident and community concerns about rental properties backed by the Enterprises undermines both their mission and safety and soundness.”

A copy of the letter can be found here and below:

Dear Director Thompson:

Fannie Mae and Freddie Mac (the Enterprises) play a critical role in financing multifamily rental housing and manufactured housing communities. Together, the Enterprises back more than 40 percent of multifamily mortgage debt outstanding.^[1] The homes that these mortgages support can provide a safe, affordable housing option in neighborhoods across the country. However, we also hear from local leaders and residents of properties with financing backed by the Enterprises who report that a property is unsafe or the owner isn’t adhering to the terms of their financing through Fannie Mae or Freddie Mac in their interactions with tenants. When property owners fail to live up to their obligations, they upend the lives of their residents and burden local officials who must deal with a blighted property or displaced tenants. They also threaten the Enterprises’ financial health by putting the assets that back their guarantees at risk, exposing them to potential future losses.

Local officials and residents are the canaries in the coal mine. They live in these homes. They see them every day. They are the best equipped to spot issues early on and help to have them addressed before a small problem becomes a critical issue. Unfortunately, neither the Enterprises nor the Federal Housing Finance Agency (FHFA) have a process for residents and community members to elevate issues and get those issues resolved. Fannie Mae^[2] and Freddie Mac’s existing renter resources pages focus only on challenges paying rent.^[3] They do not offer a clear way for residents or local leaders to report issues at Enterprise-backed properties, nor do they suggest that there will be any follow-up to ensure the problem is addressed. And FHFA only maintains a “General Questions and Comments Form” with no indication that any comment will be read, let alone receive a response.^[4] This is unacceptable.

Failure to initiate and maintain a process to receive and respond to resident and community concerns about rental properties backed by the Enterprises undermines both their mission and safety and soundness.

We ask that FHFA immediately direct the Enterprises to establish a clear method for residents and other local officials to report issues involving individual properties or owners electronically and by phone, as well as a process for responding directly to those submitted concerns. We also ask that FHFA develop a process for monitoring the Enterprises’ response to submitted complaints and that both the Enterprises and FHFA include regular updates on the number and types of complaints received and the disposition of those responses in their public reporting. When repeated issues are identified with an individual property or owner, whether at one Enterprise or both, FHFA and the Enterprises should act to ensure that irresponsible owners are not allowed to expose the Enterprises or residents to unnecessary risks.     

When property owners let their properties fall into disrepair or fail to follow their contractual obligations to Fannie Mae, Freddie Mac, or residents, they hurt families, communities, and the stability of our housing finance system. Thank you for your prompt attention to this critical issue.

Sincerely,  

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