Fannie Mae and Freddie Mac are set to implement stricter regulations for commercial property lenders and brokers, as part of a larger effort to crack down on fraudulent activities in the multitrillion-dollar market. According to sources familiar with the plans, these new rules could be released as early as this summer.
Under these proposed regulations, lenders would be required to independently verify financial information provided by borrowers for apartment complexes and other multifamily properties. Additionally, they may face more rigorous standards when it comes to confirming a borrower’s available funds and their source.
Another potential change is that lenders may now have to conduct due diligence on property appraisals themselves. This marks a departure from the current system where lenders can rely on third-party appraisers without much involvement in verifying borrower or property finances.
The recent increase in interest rates by the Federal Reserve has led prices for commercial properties such as apartment buildings soaring. As a result, there has been an uptick in loans based on falsified financials and inflated valuations according federal investigators and real estate professionals.
