source:
  type: guide
  id: fnma-sel-b4-2.3-04
  authority: Fannie Mae Selling Guide B4-2.3-04 — Loan Eligibility for Co-op Share
    Loans
  description: Fannie Mae Selling Guide B4-2.3-04 — Loan Eligibility for Co-op Share
    Loans.
  coverage_tier: operative
obligations:
- id: fnma-sel-b4-2.3-04-full
  canonical_id: fnma-sel-b4-2.3-04-full
  section: Fannie Mae Selling Guide B4-2.3-04 — Loan Eligibility for Co-op Share Loans
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B4-2.3-04 — Loan Eligibility for Co-op Share
      Loans
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B4-2.3-04, Loan Eligibility for Co-op Share Loans (08/06/2025)
      Introduction This topic contains information on loan eligibility for co-op share
      loans, including: Overview Co-op Share Loan Eligibility Requirements Calculating
      the LTV Ratio for Co-op Share Loans Co-op Share Loans Subject to Flip Tax Co-op
      Share Loan Documentation Whole Loan and MBS Delivery Requirements Published
      May 6, 2026 696 Overview Co-op share loans ﬁnance the purchase or reﬁnancing
      of the borrower’s ownership interest in a co-op housing corporation and accompanying
      occupancy rights in a residential unit in a co-op project owned by the co-op
      housing corporation. The property that secures Fannie Mae’s ﬁrst lien is the
      borrower’s ownership interest in a co-op housing corporation that is represented
      by stock or shares in the co-op housing corporation (or by a membership certiﬁcate
      or other contractual agreement evidencing ownership) and an assignment of the
      borrower’s rights under a proprietary lease or occupancy agreement with the
      co-op housing corporation. Co-op Share Loan Eligibility Requirements Fannie
      Mae will purchase co-op share loans provided borrowers occupy the property as
      a principal residence or second home. Investment properties are prohibited.
      For the applicable credit score, minimum reserve requirements, and maximum debt-to-income
      ratio requirements, see the Eligibility Matrix. Calculating the LTV Ratio for
      Co-op Share Loans The method for calculating the LTV ratio for a co-op share
      loan is based on whether the borrower assumes their pro rata share of the blanket
      mortgage or does not. In those markets where the borrower assumes their pro
      rata share of the blanket mortgage, the LTV ratio is determined by dividing
      the original loan amount by the lower of the sales price for the co-op unit
      (unencumbered by the unit’s pro rata share of the co-op project’s blanket mortgage(s)),
      or the appraised value of the co-op stock or shares and the related occupancy
      rights (unencumbered by the unit’s pro rata share of the project’s blanket mortgage(s)).
      In those markets where the borrower does not assume their pro rata share of
      the blanket mortgage, then the LTV ratio is determined by dividing the original
      loan amount by the lower of the sales price for the co-op unit, or the appraised
      value of the co-op stock or shares and the related occupancy rights. Co-op Share
      Loans Subject to Flip Tax Co-op share loans secured by units in co-op projects
      that require the payment of a “ﬂip tax” are eligible for delivery as long as
      the co-op project’s legal documents permit the imposition of a ﬂip tax and provide
      for one of the following: the lender is exempt from paying the ﬂip tax if the
      lender acquires the co-op unit in foreclosure, in a transfer by the borrower
      in lieu of foreclosure, or any other transfer of the borrower’s interest in
      the co-op unit in full or partial satisfaction of the borrower’s obligations
      under the co-op share loan; or the ﬂip tax is payable when the sales price of
      the co-op unit exceeds the existing unit owner’s purchase price (based on property
      appreciation) and then is assessed only on the amount of the appreciation in
      Published May 6, 2026 697 value (this ﬂip tax is proﬁt-based). If the ﬂip tax
      does not meet one of these requirements and is due whether or not the sales
      price exceeds the existing unit owner’s purchase price, then it may still be
      eligible as long as the amount of the ﬂip tax is less than or equal to 5% of
      the value of the property (calculated as the lesser of appraised value or sales
      price) and it is calculated in one of the following ways: a ﬂat fee, a fee per
      share, a percentage of the appraised value or sales price of the co-op unit,
      or a dollar amount per room. Co-op Share Loan Documentation Fannie Mae does
      not publish multistate standard co-op share loan instruments because of the
      variations in state laws pertaining to the co-op form of ownership. If a lender
      elects to use the Fannie Mae ﬁxed-rate note forms for co-op share loans, the
      lender represents and warrants that the notes comply with all applicable laws
      and regulations for co-op share loans in and are enforceable and negotiable
      under the laws of the applicable jurisdiction. Fannie Mae publishes state-speciﬁc
      documentation requirements for states in which Fannie Mae purchases co- op share
      loans on Fannie Mae''s website. Those requirements describe documents that must
      be delivered to the document custodian (for example, co-op Recognition Agreement,
      assignments to Fannie Mae, and evidence of share ownership) and documents that
      the lender must retain in the individual loan ﬁle. Whole Loan and MBS Delivery
      Requirements Co-op share loans may be delivered as whole loans in standard commitments.
      Co-op share loans pooled in MBS may be eligible for delivery as long as they
      meet the requirements in C3-2-01, Determining Eligibility for Loans Pooled into
      MBS; C3-5-05, Commingling ARMs in MBS; and C3-6-01, Parameters for Pooling Loans
      Into Fannie Majors. Recent Related Announcements The table below provides references
      to recently issued Announcements that are related to this topic. Announcements
      Issue Date Announcement SEL-2025-06 August 06, 2025 Announcement SEL-2019-07
      August 07, 2019 Published May 6, 2026 698 Subpart B5, Unique Eligibility and
      Underwriting Considerations Introduction This subpart contains unique eligibility
      and underwriting considerations pertaining to certain loan, property, and ﬁnancing
      types. Chapter B5-1, High-Balance Mortgage Loans Introduction This chapter describes
      the policies and requirements related to high-balance mortgage loans.'
  judgment: false
