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Fannie, Freddie Plan Stricter Rules for CRE Lenders and Brokers
Fannie Mae and Freddie Mac are preparing to impose stricter rules for commercial-property lenders and brokers, amid a growing regulatory crackdown on fraud in the multitrillion-dollar market. The Wall Street Journal reported Monday that the new rules could be issued as soon as this summer.
Under the new rules, lenders would have to independently verify financial information related to borrowers for apartment complexes and other multifamily properties, the WSJ reported, citing people familiar with the preliminary plans. Additionally, lenders could face tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds.
The new rules might also require lenders to complete due diligence on the appraised value of a property. That’s in contrast to the current system, in which lenders can take a more hands-off approach when it comes to borrower and property financials.
Before the Federal Reserve began raising rates, prices on apartment buildings and other commercial properties reached new highs. This led to a flurry of loans based on doctored financials and valuations, according to federal investigators and real estate brokers.
Pictured: Fannie Mae headquarters in Washington, DC.
- ◦Financing
- ◦Policy/Gov't
