Radon Requirements for Fannie & Freddie Multifamily Loans
If you’re involved in multifamily real estate with Fannie Mae or Freddie Mac, the new radon testing standards introduced on June 30, 2023, are crucial to know. These changes, part of an effort to improve tenant safety, directly impact property owners, lenders, and developers seeking financing through these agencies.
Key Changes in Radon Testing Policies
- Mandatory Radon Testing: Radon testing is now required at all Fannie Mae and Freddie Mac-backed multifamily properties. Previously, certain properties were exempt, but now almost all must be tested for radon, though some specific property types may qualify for exemptions or deferrals.
- Expanded Ground-Floor Testing: The percentage of ground-floor units requiring radon testing has increased from 10% to 25%. At least one unit in every building must be tested, even if the building size is small.
- Limits on Faulty Tests: No more than 15% of tests can be faulty or inaccessible, placing an emphasis on quality and properly conducted testing procedures.
- Tenant Notification: Tenants must be notified about upcoming radon tests, including instructions to ensure accurate testing results, such as keeping windows closed during the testing period.
- Guidance for Lenders and Consultants: Lenders and environmental consultants must follow strict radon testing procedures, adhering to the most stringent regulations at the federal, state, or local level.
Why Is This Important?
Radon is a naturally occurring, radioactive gas that can seep into buildings and pose serious health risks. According to the Environmental Protection Agency (EPA), radon exposure is the second leading cause of lung cancer in the U.S., responsible for around 21,000 deaths annually. By expanding radon testing, the Federal Housing Finance Agency (FHFA) aims to better protect tenants from this silent but deadly risk.
Exemptions from Testing
Some properties are exempt from these new testing requirements, including:
- Properties with Existing Testing: Properties that have already completed radon testing and mitigation under previous standards.
- Supplemental Loans: These loans do not require additional radon testing.
- Cooperatives and Upper-Floor Units: Properties without ground-contact residential units.
- Buildings with Radon Mitigation Systems: Properties that have already installed systems to manage radon levels.
Choosing a Qualified Consultant
Testing certifications vary state-by-state. Working with an experienced environmental professional (EP) is essential to ensure accurate testing and compliance with these new rules. The EP will conduct the testing, interpret the results, and recommend mitigation if necessary. The testing process typically involves placing devices in 25% of ground-floor units, with results available after 48 hours. If radon levels exceed 4.0 pCi/L, mitigation is required. Call us today to discuss your project/property.
Looking Ahead
The FHFA will reassess the radon testing requirements in 2025 to evaluate their effectiveness and any necessary adjustments. Until then, property owners and lenders should stay informed and ensure compliance to protect tenants and secure financing.
These new radon standards emphasize tenant safety and align with federal efforts to reduce radon exposure risks in multifamily housing.