Fannie Mae and Freddie Mac tighten mortgage rules for New York City rent-regulated buildings

Overview

Updated 1 hour ago

Landlords of New York City's rent-regulated buildings are finding it nearly impossible to refinance their mortgages. Fannie Mae and Freddie Mac, the two government-backed lenders that dominate the market, have tightened underwriting standards or paused new loans since Mayor Zohran Mamdani's rent freeze took effect in June.

The new rules assume rents will not rise for four to eight years and that operating expenses will climb at least 5% annually. For older buildings that are entirely rent-regulated, the math no longer works. Lenders are pulling back, and the city's affordable housing stock faces a wave of foreclosures or demands for larger subsidies.

Why it matters

If refinancing dries up, thousands of rent-stabilized apartments could fall into disrepair or foreclosure, threatening affordable housing in New York City.

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Key Indicators

1 million

Rent-stabilized apartments in NYC

Nearly one million units are subject to rent stabilization.

50%

CHPC loan reduction

The nonprofit lender will make half as many loans for all-affordable projects as two years ago.

Assumed annual expense growth

Fannie Mae's new underwriting assumes expenses rise at least 5% per year.

10%

Expected rent collection shortfall

CHPC doubled its expected loss to 10%.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Zohran Kwame Mamdani

Mayor of New York City

In office

Rafael Cestero

CEO, Community Housing Preservation Corp

Leading nonprofit lender

Leila Bozorg

Deputy Mayor for Housing and Planning

In office

Organizations Involved

Fannie Mae (Federal National Mortgage Association)

Government-sponsored enterprise

Tightened underwriting for NYC rent-regulated buildings

Fannie Mae buys mortgage loans from lenders, providing liquidity to the housing market.

Freddie Mac (Federal Home Loan Mortgage Corporation)

Government-sponsored enterprise

Paused new loans for NYC rent-regulated buildings

Freddie Mac is the other major buyer of mortgage loans.

Community Housing Preservation Corp

Nonprofit lender

Reducing lending for affordable projects

A nonprofit that finances affordable housing in New York City.

New York City Rent Guidelines Board

Government board

Approved rent freeze

The board sets annual rent increases for rent-stabilized apartments.

Timeline

June 2019 November 2026

4 events Latest: Today

Tap a bar to jump to that date

November 2026
Fannie Mae and Freddie Mac tighten rules
Today Rule Change

Fannie Mae tightens underwriting; Freddie Mac pauses new loans for rent-regulated buildings.
Today
June 2026
Rent Guidelines Board approves rent freeze
Policy

Rent Guidelines Board approves rent freeze for two-year leases.
June 2nd, 2026
March 2023
Signature Bank collapses
Financial

Signature Bank collapses, partly due to distressed rent-stabilized loans.
March 12th, 2023
June 2019
New York passes law limiting rent increases
Legislation

New York passes law limiting rent increases and eliminating vacancy bonuses.
June 14th, 2019

Scenarios

Foreclosure wave hits rent-stabilized buildings

Likely Resolves by Q2 2027

Discussed by: Housing advocates and lenders

Without refinancing, older all-rent-regulated buildings face foreclosure. Lenders could take over properties or sell them at steep discounts, leading to disrepair or conversion to market rate.

City expands subsidies to preserve affordable housing

Possible Resolves by End of 2027

Discussed by: Deputy Mayor Leila Bozorg and housing advocates

The city could increase subsidies or create new financing tools to help affordable buildings refinance. Bozorg says the city is prepared to work with partners, but most initiatives are early.

Fannie and Freddie adjust rules after market stabilizes

Unlikely Resolves by Q2 2027

Discussed by: Lenders and policy analysts

If the rent freeze is modified or if market conditions change, Fannie and Freddie could revise their underwriting standards. Freddie Mac says it continuously reviews conditions.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

June 2019

New York's 2019 rent law overhaul

The state passed the Housing Stability and Tenant Protection Act, eliminating vacancy bonuses and limiting rent increases for stabilized units. Landlords said the law made it harder to cover rising costs.

Then

Lending for rent-regulated buildings slowed as expected income growth fell.

Now

Property values dropped, and some lenders exited the market, leaving Fannie Mae and Freddie Mac as major sources of financing.

Why this matters now

The 2019 law set the stage for the current crisis by reducing landlords' ability to raise rents, making them more vulnerable to a freeze.

March 2023

Signature Bank collapse (2023)

Signature Bank failed after a run on deposits. Its loan portfolio was heavily concentrated in rent-stabilized buildings, which became distressed after the 2019 rent law.

Then

Regulators seized the bank. New York Community Bank acquired some assets but exited rent-stabilized lending.

Now

The collapse highlighted the risks of lending to rent-regulated buildings and accelerated the retreat of private lenders.

Why this matters now

It shows how quickly a funding source for rent-regulated buildings can disappear, leaving Fannie and Freddie as the backstop.