The decision will have severe consequences for two groups of buildings. Older, almost entirely rent-regulated buildings that are already under severe financial distress<\/a> will struggle to refinance their mortgages and face foreclosure. They could be taken over by their lenders or sold for a fraction of their value. Buildings composed of all affordable units built with city help whose finances are also deteriorating<\/a> will need ever larger city subsidies to find financing.<\/p>\n \u201cI don\u2019t think the new underwriting standard should be a surprise or controversial to anybody, because underwriting anything other than operating in a rent-freeze environment wouldn\u2019t really be factually accurate,\u201d said Rafael Cestero, CEO of the Community Preservation Corp.<\/p>\n Cestero says that because the rent freeze will exacerbate financial pressures on nonprofit affordable housing projects, his organization will make 50% fewer loans in New York City to all-affordable projects than it did two years ago.<\/p>\n Fannie Mae\u2019s new requirements assume that rents will not increase on rent-stabilized units for four to eight years, covering Mamdani\u2019s current term and a potential second term.<\/p>\n Fannie Mae and lenders like Community Preservation Corp. are also assuming that expenses increase each year by at least 5%, which means the operating margin for buildings will decline by at least that amount each year.<\/p>\n Numerous landlords, advocates and nonprofit housing executives, some with direct knowledge of the current terms, confirmed the changes in the loan standards. Many agreed to discuss the issue only if they were not identified, fearful of retaliation from either the government-backed lenders or the Mamdani administration.<\/p>\n Fannie Mae did not return a request for comment, and Freddie Mac said it \u201ccontinuously reviews market conditions and makes real-time adjustments to offer responsible, risk-adjusted lending aligned with mission-driven objectives.\u201d<\/p>\n \u201cOur city\u2019s housing finance agencies support tens of thousands of affordable homes each year amidst a variety of ever-changing macroeconomic factors \u2014 including higher interest rates that are partially driven by federal monetary policy,\u201d Deputy Mayor for Housing and Planning Leila Bozorg said in a statement to The City Reporter. \u201cWe are always prepared to work with our financing partners and explore new lending practices.\u201d<\/p>\n She also pointed to initiatives to reduce landlords\u2019 costs, such as a city-backed insurance program, reforms to cut the pre-development, permitting and lease-up timelines, and new financing tools, most of which are in the planning stage or very early in their rollout.<\/p>\n Lenders have also increased the expected shortfall in collections, anticipating that more tenants do not pay their rent. Cestero\u2019s group, for example, has doubled the expected loss to 10%.<\/p>\n The combination of increasing operating expenses and shortfalls on rent collection means that the amount that will be loaned for any property will be less. Even so, lenders are also lending a smaller percentage of the value of the property, requiring more equity to be put up.\u00a0<\/p>\n Lender of Last Resort<\/p>\n Buildings that are composed of a combination of market-rate and rent-regulated units remain in good financial shape because of the sharp run-up in market rents, especially buildings built in recent years with requirements settings aside 20% to 40% of units at below-market rents.<\/p>\n Another group that can refinance loans are landlords who built their buildings decades ago, have kept ownership of the properties and keep loans on the buildings at less than half the value, said Jon Estreich, who has been arranging loans for multifamily buildings for 40 years. He cites Rudin Management, the 100-year-old company now being run by its third generation, and the Litwins\u2019 Glenwood Management Co. as examples of who can still get financing.<\/p>\n Estreich agrees new loans are virtually impossible for the rest of the private buildings composed of all rent-regulated units.<\/p>\n Loans for rent-regulated buildings, which are usually for five or 10 years, were plentiful before the 2019 rent law changes made it uneconomic for landlords to renovate rent-regulated units as they became vacant and collect a much higher rent. Many buildings were purchased before 2019 because of the possibility of raising rents and because interest rates were at historic lows.<\/p>\n
![\"Tenant-rights](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/11\/062526_rgb_vote.jpg\")
Tenant-rights advocates cheer at the El Museo del Barrio while the Rent Guidelines Board voted to freeze rent for two-year leases on rent-stabilized apartments, June 2, 2026. Credit: Kaitlyn Schwanemann\/The City Reporter<\/p>\n