Skip to Content
Skip to Content

December 05, 2019

Changes to Our Loan Docs to Address Eminent Domain

Recently, with the support of private enterprises, certain local government agencies have used the power of eminent domain to acquire multifamily properties in an effort to preserve affordable housing. Freddie Mac fully encourages private investment that brings additional participants into the market to help develop additional affordable housing stock.

Freddie Mac’s multifamily loan documents will continue to provide for prepayment relief when a traditional condemnation proceeding is undertaken by a governmental agency (such as a taking of a portion of a property for street widening, installation of turning lanes or sidewalks). To avoid any confusion, however, when a non-traditional use of eminent domain occurs, Freddie Mac is making the following clarification to its multifamily loan documents.

With respect to prepayments made in connection with a condemnation, no prepayment premium will be required unless the condemnation is intended to result in the continued use of the condemned portion of the property for residential purposes or if the condemning authority is required by law to reimburse for any prepayment premiums, in either case, a prepayment premium will be due.

This clarification specifies that we will continue the historical treatment of not requiring a prepayment premium in connection with traditional exercise of the power of eminent domain. It also ensures compliance with applicable laws and uninterrupted provision of cost-competitive and reliable liquidity to the multifamily housing market.

Freddie Mac’s loan documents will be revised to incorporate the clarifications effective for all loans under application as of January 1, 2020 Additionally, all loans currently under application and located in King County, Washington, will incorporate the clarification effective immediately.

Please contact your Freddie Mac Multifamily representative for additional information on these changes.

  • Feedback

    Have a comment or question? Email us to let us know what's on your mind.

    Maximum of 250 characters.

    California residents can review our California Privacy Notice before providing information. For more general Privacy information, view our Privacy Policy.