The Federal Housing Finance Agency (FHFA) recently announced changes to Fannie Mae and Freddie Mac’s (the Enterprises) multifamily radon standards.  The new standards are consistent across both Enterprises.

Summary of Radon Changes for Fannie Mae and Freddie Mac Seller/Servicers

Below is a summary of the standard changes, which 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 documents reasons supporting this conclusion.
  • Small loans/Small Balance Loan (SBL) mortgages (deferred from testing until 2024, when it will be reassessed).

Choose A Qualified Consultant for Radon Testing

Standards and regulations for radon testing are complex. In addition to the updated standards issued by FHFA, state regulations and license requirements apply. Lenders should verify that their due diligence provider has a complete understanding of federal and state radon regulations, as well as EPA’s ANSI/AARST standards for all building types. In addition to appropriately experienced and licensed technicians, qualified due diligence providers should also be experienced with reporting templates and standards for Freddie Mac and Fannie Mae.

Submit Your Questions to a Panel of Experts

In anticipation of the many questions lenders may have regarding the implementation of the new radon standards, Partner Engineering and Science is planning a webinar in April featuring a panel of experts with extensive experience in radon testing and due diligence requirements for Fannie Mae and Freddie Mac loans. If you have a question regarding the implementation of the new radon standards, click here to submit it to our panel.