GSEs Announce New Policies for PMI and Multifamily Loans
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) along with Fannie Mae and Freddie Mac announced a pair of new eligibility requirements at the end of August that will go into effect over the next two years.
Fannie and Freddie have issued updates to the Private Mortgage Insurer Eligibility Requirements (PMIERs), which are financial and operational standards that private mortgage insurance companies must meet to provide insurance on mortgage loans acquired by the enterprises.
FHFA said the updated standards differentiate between bonds based on credit quality and liquidity. The updates also establish limits for assets backed by residential mortgages or commercial real estate to mitigate the impact if such assets lose value during periods of housing stress.
The agency said in its announcement that the updated standards will improve the enterprises’ counterparty risk management and better prepare them for adverse environments.
“Financially sound private mortgage insurance companies play a critical role in a healthy residential mortgage market that helps borrowers, including first-time homebuyers, achieve their homeownership dreams,” said FHFA Director Sandra L. Thompson. “These updates represent an ongoing commitment to the safety and soundness of the enterprises, ensuring that their private mortgage insurer counterparties have the necessary financial strength to pay claims in a wide range of economic environments.”
The first PMIERs aligned by the two GSEs were issued in 2025. The standards are periodically reviewed to help ensure safety and soundness. This last review included standards for available assets held by mortgage insurers to pay claims to ensure that these assets are high quality, highly liquid, and readily available when needed.
The updated standards will be implemented through a 24-month phased-in approach, with a fully effective date of September 30, 2026.
In the multifamily lending business, Fannie and Freddie collaborated on new provisions designed to protect tenants.
Under the new policy to be enforced by both enterprises beginning in February 2025, all new GSE-backed loans will require multifamily borrowers to provide the following standards to renters:
Written notice of a rent increase at least 30 calendar days in advance.
Written notice of the scheduled expiration of the residential lease at least 30 calendar days in advance.
A minimum of five calendar day from the rent due date before late fees or other penalties can be charged.
The new policy requirement will not apply to manufactured housing communities, which fall under a separate tenant protections policy established by Duty to Serve; existing credit facilities including loans funded through credit facility agreements that pre-date February 28, 2025; loans for cooperative housing corporations; and loans that were originated using third-party form loan documents.
“The new Enterprise Multifamily Lease Standards align with our mission to expand access to housing that is both affordable and sustainable. They reflect our comprehensive renter needs research and methodical approach to analyzing renter obstacles and outcomes and will provide the industry with consistent expectations regarding tenant notification and grace period practices,” said Michele Evans, Executive Vice President and Head of Multifamily for Fannie Mae.
“Although many borrowers already exceed these minimum standards, all will be required to meet the standards to obtain GSE financing in the future,” said Kevin Palmer, head of Multifamily for Freddie Mac. “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.”
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
