The Federal Housing Finance Agency (FHFA) recently announced changes to Fannie Mae and Freddie Mac’s (the Enterprises) multifamily radon standards. NAR commented on this proposal in 2021 to express concerns about the cost and regulatory burden of these requirements. The new standards will go into effect for loan applications received after June 30, 2023:
- Requiring radon testing at multifamily Enterprise-backed properties, regardless of property location, subject to some exemptions and deferrals.
- Increasing required testing from 10 percent of ground floor units to 25 percent of ground floor units.
- Continuing to allow an environmental professional to manage the radon testing process.
- Requiring the environmental professional or property representative to provide tenant notifications for radon testing.
- Providing additional guidance for lenders and environmental consultants on the Enterprises’ radon standards. As part of such guidance, the Enterprises will reinforce the need for compliance with state and local radon laws.
Below are loans and areas not subject to radon testing:
- Refinances of properties with existing Enterprise debt that have undergone previous radon testing and mitigation (if applicable) compliant with this policy.
- Supplemental loans
- Cooperatives
- Manufactured Housing Communities
- Properties with no ground-contact residential units (including properties with ground-floor retail, first-floor amenities/leasing, or residential units above parking garage or over code-compliant ventilated crawl space)
- Upper-floor residential units
- Any improvements that are not part of the collateral
- Properties with property-wide radon mitigation systems and Operations and Maintenance (O&M) plans in place
- New construction built with radon resistant measures
- When the EP concludes that testing or mitigation is not necessary and reasons supporting this conclusion.
- Small loans/Small Balance Loan (SBL) mortgages (deferred from testing until 2024, when it will be reassessed).