source:
  type: guide
  id: fhlmc-5705.10
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.10 — Cooperative
    Project conversions
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.10 — Cooperative
    Project conversions.
  coverage_tier: operative
obligations:
- id: fhlmc-5705.10-full
  canonical_id: fhlmc-5705.10-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.10 — Cooperative
    Project conversions
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.10 — Cooperative
      Project conversions
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '5705.10: Cooperative Project conversions (03/05/25) This section
      contains requirements related to: ■ Cooperative Project conversions with prior
      use ■ Cooperative Project conversion documents ■ Prior Cooperative Project financing
      For a Cooperative Project that was created by the conversion of a building(s)
      with a prior use, the following requirements must be met for Seller’s review
      and determination of Cooperative Project eligibility in addition to all other
      applicable requirements for Cooperative Projects in the Guide. (a) Cooperative
      Project conversions with prior use (i) Non-Gut Rehabilitation conversion Conversions
      involving a Non-Gut Rehabilitation of a Cooperative Project that was legally
      created within three years of underwriting the Cooperative Project must meet
      all of the following: 1. An engineer’s report must confirm that the Cooperative
      Project is structurally sound 2. The condition and remaining useful life of
      the major Cooperative Project components (i.e., the roof, elevators and mechanical
      systems, such as central heating, ventilation and air conditioning (HVAC); plumbing
      and electricity) are sufficient to meet the residential needs of the Cooperative
      Project 3. All rehabilitation work involved in the conversion was completed
      in a professional manner; and 4. There is no evidence of any adverse conditions
      (ii) Gut Rehabilitation and Non-Gut Rehabilitation conversions over three years
      old A review of the engineer’s report is not required for conversions involving
      a Gut Rehabilitation or Non-Gut Rehabilitation if more than three years have
      elapsed since the legal creation of the Cooperative Project. (b) Cooperative
      Project conversion documents For a Cooperative Project that was created by the
      conversion of a building(s) with a prior use within three years of underwriting
      the Cooperative Project, the Seller’s project review and determination of project
      eligibility must include a review of all the Cooperative Project Documents.
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5705 As of 01/26/26
      Page 5705-41 For an existing Cooperative Project and Cooperative Project conversions
      if more than three years have elapsed since the legal creation of the Cooperative
      Project, a review of all the Cooperative Project Documents is not required.
      (c) Prior Cooperative Project financing In a conversion, the mortgagee of the
      Blanket Mortgage agrees to the use of the building as a Cooperative Project,
      and, in the event of a default on the Blanket Mortgage, it will not wipe out
      the Cooperative Shares of the Shareholders who are current in the payment of
      Maintenance Fees or assessments. 5705.11: Documents to be delivered to the Document
      Custodian and other documents to be maintained by Seller (03/05/25) This section
      contains requirements related to: ■ Mortgage file documentation ■ Other file
      documents ■ Retention of Cooperative Project documentation ■ Document Custodian
      documentation (a) Mortgage file documentation A copy of the Recognition Agreement
      and a copy of the Proprietary Lease must be maintained in the Mortgage file.
      (b) Other file documents Seller must maintain the following documentation on
      the Cooperative Corporation and the Cooperative Project: 1. Most recent two
      year’s financial statements including income and expense statement and all footnotes
      2. Current fiscal year’s operating budget 3. One of the following forms of evidence
      that the Cooperative Project meets insurance requirements: Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 5705 As of 01/26/26 Page 5705-42 i. Original policy
      (including a commercial package policy under which the required coverages may
      be provided in whole or in part) and applicable endorsements ii. Copy of the
      original policy and applicable endorsements, if the copy meets the Mortgage
      file retention requirements of Chapter 3302; or iii. Certificate, evidence or
      declarations of insurance, which must include the following information: ■ Name
      of insured Cooperative Corporation (as “First Named Insured”) ■ Name and address
      of Cooperative Project mortgagee(s) ■ Address of insured Cooperative Project
      ■ Type, limit and effective dates of coverage ■ Deductible amount and applicable
      coverage for each deductible ■ Any endorsement or optional coverage obtained
      and made part of the original policy ■ Insurer’s agreement to provide at least
      10 days’ notice to the Cooperative Corporation, the Cooperative Project mortgagee
      and the Cooperative Unit mortgagee before any reduction in coverage or cancelation
      of the policy; and ■ Signature of an authorized representative of the insurer
      The Servicer must maintain a specimen of each policy and endorsement for which
      a certificate, evidence or declarations of insurance is maintained in lieu of
      the policy and endorsements. (c) Retention of Cooperative Project documentation
      The Seller/Servicer must retain all Cooperative Project documentation that supports
      its warranty that the Cooperative Project meets Freddie Mac requirements for:
      ■ As long as Freddie Mac retains an interest in the applicable Cooperative Share
      Loan, and ■ At least seven years from the date Freddie Mac’s interest in the
      Cooperative Share Loan is satisfied (d) Document Custodian documentation See
      Section 6304.2(b) for documents that Seller/Servicers must submit to the Document
      Custodian. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5705 As of
      01/26/26 Page 5705-43 5705.12: Pooling and delivery requirements for Cooperative
      Share Loans (03/05/25) See Section 6202.3(e)(vii) for information on pooling
      and delivery requirements for fixed-rate Cooperative Share Loans under the fixed-rate
      Guarantor and MultiLender Swap programs. See Section 6302.45 for special delivery
      requirements for Cooperative Share Loans. Note: There are no special pooling
      or delivery requirements for adjustable-rate Cooperative Share Loans. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5706 As of 04/01/26 Page 5706-1
      Chapter 5706: Manufactured Homes on Leasehold Estates 5706.1: Purchase of Mortgages
      secured by Manufactured Homes on leasehold estates (06/04/25) Freddie Mac will
      purchase a Mortgage secured by a Manufactured Home on a leasehold estate when
      there is demonstrated market acceptance. Mortgages that are secured by a Manufactured
      Home on a leasehold estate must meet the requirements of this Chapter 5706.
      The Seller must obtain Freddie Mac’s written approval before selling Mortgages
      secured by a Manufactured Home on a leasehold estate to Freddie Mac by contacting
      its Freddie Mac representative or Customer Service at 800-FREDDIE. Mortgages
      secured by Manufactured Homes on leasehold estates must satisfy the provisions
      of Chapter 5703 and related Guide sections pertaining to Manufactured Homes
      and Chapter 5704 and related Guide sections pertaining to leasehold estates.
      5706.2: Property eligibility for Mortgages secured by Manufactured Homes on
      leasehold estates (06/04/25) To be eligible for purchase by Freddie Mac, a Manufactured
      Home on a leasehold estate must be: ■ A one-unit dwelling comprised of multiple
      sections (a “multiwide Manufactured Home”) ■ Located on a leasehold estate meeting
      the requirements of Chapter 5704; and ■ Located in a ground lease community
      ❑ For ground lease communities that are Condominium Projects, the Seller must
      comply with the Condominium Project requirements and warranties in Chapter 5701
      ❑ For ground lease communities that are Planned Unit Developments (PUDs), the
      Seller must comply with the PUD requirements and warranties in Chapter 5702
      A Manufactured Home on a leasehold estate must not include an ADU. Note: See
      Chapter 4504 for requirements for HeritageOne® Mortgages, including the special
      requirements for HeritageOne Mortgages that are leasehold Mortgages secured
      by Manufactured Homes in Section 4504.8. Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5706 As of 04/01/26 Page 5706-2 5706.3: Eligible transaction types
      for Mortgages secured by Manufactured Homes on leasehold estates (04/01/26)
      This section contains requirements related to: ■ Purchase transactions ■ “No
      cash-out” refinance transactions A Mortgage secured by a Manufactured Home located
      on a leasehold estate may be a purchase transaction or a “no cash-out” refinance
      transaction. For a new Manufactured Home, whether it is affixed to a permanent
      foundation prior to or after the Application Received Date, the Seller must
      obtain a copy of the manufacturer’s invoice and Manufactured Home Purchase Agreement.
      (a) Purchase transactions A purchase transaction is one in which the Mortgage
      proceeds are used to finance the purchase of the Manufactured Home. The proceeds
      may also be used to purchase the leasehold interest in the land, as the Borrower
      does not separately own the land. For Manufactured Homes, the following requirements
      apply: ■ The purchase price may include documented costs for delivery and setup,
      installation and permanent utility connections, including well and/or septic
      systems ■ Credits for wheels and axles and any Manufactured Home retailer rebates
      must be deducted from the purchase price along with any sales concessions in
      accordance with Section 5501.6(c) ■ Financing of any forms of insurance, except
      for mortgage insurance, or other costs is not allowed for purchase transactions
      The maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit
      (HELOC) TLTV (HTLTV) ratios (if applicable) for a purchase transaction Mortgage
      secured by a newly built Manufactured Home (not previously owned) and/or not
      affixed to a permanent foundation as of the Application Received Date are based
      on value calculated as the lower of: ■ The purchase price of the Manufactured
      Home and leasehold interest in the land, or ■ The current appraised value of
      the Manufactured Home and leasehold interest in the land Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 5706 As of 04/01/26 Page 5706-3 The LTV ratio
      (and TLTV/HTLTV ratio, if applicable) for a purchase transaction Mortgage secured
      by a previously owned Manufactured Home that is affixed to a permanent foundation
      prior to the Application Received Date is based on value calculated as the lower
      of: ■ The purchase price of the Manufactured Home and leasehold interest in
      the land, or ■ The current appraised value of the Manufactured Home and leasehold
      interest in the land (b) “No cash-out” refinance transactions A “no cash-out”
      refinance transaction involves the payoff of an existing Mortgage secured by
      the Manufactured Home and leasehold interest in the land. Proceeds from a “no
      cash-out” refinance Mortgage may be used only to: ■ Pay off the principal and
      interest due, including a balance deferred under a loss mitigation plan, for
      the existing first Mortgage secured by the Manufactured Home and leasehold interest
      in the land ■ Pay off any costs or fees associated with the satisfaction and
      release of the first Mortgage (e.g., late fees, prepayment penalties, etc.)
      ■ Pay off or pay down any junior lien(s) obtained by the Borrower solely to
      acquire the Manufactured Home. Any remaining balance must be subordinated to
      the refinance Mortgage. ■ Pay related Closing Costs ■ Disburse cash out to the
      Borrower (or any other payee) up to the greater of 1% of the new refinance Mortgage
      or $2,000 A “no cash-out” refinance Mortgage must also meet the requirements
      in Section 4301.4(a). 5706.4: Lease provisions and value of leasehold estates
      (06/04/25) This section contains requirements related to: ■ Lease provisions
      ■ Value of leasehold estates Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 5706 As of 04/01/26 Page 5706-4 (a) Lease provisions In addition to
      the requirements in Section 5704.1(c), the lease must also provide that subleasing
      is allowed if the leasehold mortgagee or its designee takes title to the Manufactured
      Home and the leasehold estate. (b) Value of leasehold estates The provisions
      of Section 5703.8(b) pertaining to calculating the treatment of the land in
      determining value for computing the loan-to-value ratio in different types of
      financing transactions structures do not apply to leasehold estates. The provisions
      of Section 5703.7(b)(i) pertaining to the use of the land as an equity contribution
      do not apply to the leasehold estate. The provisions of Section 5703.9 pertaining
      to the appraisal requirements for Manufactured Homes do apply. Although Section
      5704.2 pertaining to appraisal requirements for leasehold Mortgages allows for
      the use of comparable sales that are not on a leasehold estate, at least two
      comparable properties that are also on a leasehold estate must be included in
      the appraisal report to demonstrate market acceptance. 5706.5: Underwriting
      requirements for Mortgages secured by Manufactured Homes on leasehold estates
      (06/04/25) This section contains requirements related to: ■ Loan Product Advisor®
      Mortgages ■ Maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of
      Credit (HELOC) TLTV (HTLTV) ratios and value (a) Loan Product Advisor Mortgages
      All Mortgages secured by Manufactured Homes on leasehold estates must be submitted
      to Loan Product Advisor and be an Accept Mortgage. (b) Maximum LTV/TLTV/HTLTV
      ratios and value The maximum LTV, TLTV and HTLTV ratios for Mortgages secured
      by Manufactured Homes on leasehold estates are as follows: Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 5706 As of 04/01/26 Page 5706-5 Purchase transactions
      and “no cash-out” refinance transactions Primary Residence Maximum LTV Maximum
      TLTV Maximum HTLTV 95% 95% 95% 5706.6: Title issues and lien requirements relating
      to Manufactured Homes on leasehold estates (06/04/25) This section contains
      requirements related to: ■ State permits surrender of certificate of title ■
      Title insurance (a) State permits surrender of certificate of title A Manufactured
      Home on a leasehold estate must be located in a State that permits surrender
      of a certificate of title, regardless of whether the land on which the Manufactured
      Home is located is owned by the owner of the Manufactured Housing. (b) Title
      insurance In addition to the requirements in Section 5703.4(e), the American
      Land Title Association (ALTA) Form 13.1 endorsement must be attached to the
      title insurance policy. The title insurance policy must include the Manufactured
      Home as part of the lessee’s leasehold improvements and must include the value
      of the lessee’s leasehold improvements, including the Manufactured Home, in
      the insured estate. All requirements necessary to obtain title insurance, including
      ALTA Form 13.1 and Form 7 endorsements, must be satisfied, including any requirements
      necessary to ensure the leasehold transaction, such as a recordation of the
      lease or a short form lease that incorporates the various provisions of the
      unrecorded lease. An attorney opinion of title letter is not acceptable in lieu
      of a title insurance policy. Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 5801 As of 11/05/25 Page 5801-1 Chapter 5801: The Uniform Closing Dataset
      5801.1: The Uniform Closing Dataset and Loan Closing Advisor® (11/05/25) This
      section contains information and requirements relating to: ■ The Uniform Closing
      Dataset’s (UCD) function in electronic data transmission to Freddie Mac ■ The
      UCD ■ UCD messaging through Loan Closing Advisor® (a) The UCD’s function in
      electronic data transmission to Freddie Mac The UCD is a common industry dataset
      that allows information on the Settlement/Closing Disclosure Statement to be
      communicated electronically. The specific active version of the UCD Specification
      provides field-specific standardization requirements for preparing the UCD in
      proper XML format for file transmission to Freddie Mac. Loan Closing Advisor
      is Freddie Mac’s electronic collection solution for the UCD that helps Sellers
      validate that their closing data aligns with the UCD. Loan Closing Advisor assesses
      the data against the specific active version of the UCD Specification, checking
      for the completeness, validity and accuracy of certain calculated values, as
      well as consistency of the data. (b) The UCD The following requirements apply
      to the UCD for Mortgages sold to Freddie Mac: ■ The UCD XML file with the embedded
      Settlement/Closing Disclosure Statement (PDF) is required on all Mortgages sold
      to Freddie Mac with a Note Date on or after September 25, 2017 ■ The requirement
      to submit the UCD through Loan Closing Advisor is satisfied when the transaction
      has received data quality feedback messages and the final Settlement/Closing
      Disclosure Statement PDF is embedded in the UCD XML file ■ The specific active
      version of the UCD Specification may be amended from time to time. The current
      version can be found at https://sf.freddiemac.com/tools-learning/uniform- mortgage-data-program/ucd.
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5801 As of 11/05/25
      Page 5801-2 (c) UCD messaging through Loan Closing Advisor When the UCD XML
      file is submitted to Loan Closing Advisor, the Seller will receive a variety
      of feedback messages designed to assist the Seller in evaluating the closing
      data against the UCD delivery specification requirements and determining if
      the associated Mortgage meets the requirements of the specific active version
      of the UCD Specification, including those related to the completeness, validity
      and accuracy of certain calculated values and consistency of the data. The presence
      of one or more feedback message(s) with a warning severity indicator at the
      time of delivery does not prevent a submission from satisfying the UCD submission
      requirement. Freddie Mac Single-Family Seller/Servicer Guide Chapter 6101 As
      of 12/17/25 Page 6101-1 Chapter 6101: Fixed-Rate Cash'
  judgment: false
