Fannie Mae and Freddie Mac, considered the lenders of last resort for New York City’s rent-regulated apartment stock, are reported to be imposing stricter underwriting requirements to account for the newly enacted rent freeze.
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The government-sponsored enterprises’ new standards are expected to make it even more difficult for the owners of approximately 1 million units to refinance their debt, as the GSEs follow in the footsteps of many other traditional financing sources that have exited the market.
Under the new requirements, Fannie Mae assumes that rents won’t increase for four to eight years, accounting for Mayor Zohran Mamdani’s current and potential second term, according to The City Reporter. The lender also projects expenses to rise by at least 5% each year.
Freddie Mac has paused lending on the assets while it evaluates the freeze’s impact, the publication reported, citing anonymous sources. The sources are described as landlords, advocates and nonprofit housing executives with knowledge of the terms.
However, in a series of X posts after The City Reporter published its story, Federal Housing Finance Agency Director Bill Pulte called the report “Fake News.”
“Fannie Mae remains committed to supporting every market responsibly, and we continue to be an active source of financing for New York City's multifamily housing, including rent-stabilized properties,” Pulte said in an X post. “We apply a consistent credit framework to every loan we purchase nationwide, which looks at each property's actual financial picture, including the local rules that affect its income and operating costs.”
Freddie Mac similarly said in a statement to The City Reporter that it “continuously reviews market conditions and makes real-time adjustments to offer responsible, risk-adjusted lending aligned with mission-driven objectives.”
Pulte said in another post, published Monday night, that Freddie Mac hasn’t “frozen lending” on rent-stabilized properties and that “in fact we continue to quote and lend on those properties.”
Lending on rent-stabilized properties has dropped significantly since the Housing Stability and Tenant Protection Act of 2019 changed the economic underpinnings of the assets. Under the reforms, landlords could no longer deregulate units or use other avenues, such as building improvements or tenant turnover, to raise rents.
The changes rewrote valuations that mortgages were based on, pulling landlords underwater. Rising interest rates have put further financial pressure on borrowers seeking to refinance their debt.
Even before the rent freeze, expenses had risen 27% between 2020 and 2024, while rent has only grown 11% in that time, according to a report by Community Preservation Corp. Landlords are fighting the rent freeze, which applies to one- and two-year leases, in court, claiming that the Mamdani administration improperly influenced the decision.
Borrowers have also suffered from the collapse of Signature Bank and the near collapse and exit of New York Community Bancorp from the sector. Both were considered primary sources of debt for the city’s multifamily owners.
In 2019, lenders originated $27.6B of mortgages across more than 3,700 deals covering buildings where at least half of the units are regulated, according to data previously provided to Bisnow by credit intelligence platform Atrium Data. In 2025, that total was less than $11.3B spread across approximately 1,400 transactions.
Government and agencies’ market share of originations has increased from 4% in 2019 to nearly 15% in 2024 and 9% in 2025, according to Atrium.
CPC CEO Rafael Cestero told The City Reporter that his organization is using similarly conservative assumptions in its underwriting. It is also expecting that more tenants will stop paying rent, doubling the expected loss in collections to 10%.
The nonprofit affordable housing lender services Signature Bank’s rent-stabilized loan portfolio. As of December, the portfolio’s delinquency rate, including properties already foreclosed upon, was 12%, up from 10% in 2024, according to a CPC report published in April.
Cestero told The City Reporter that CPC will make half as many loans to fully affordable properties in New York City moving forward.
“I don’t think the new underwriting standard should be a surprise or controversial to anybody, because underwriting anything other than operating in a rent-freeze environment wouldn’t really be factually accurate,” Cestero said.
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