source:
  type: guide
  id: fhlmc-5705.1
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.1 — Cooperative
    Share Loans
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.1 — Cooperative
    Share Loans.
  coverage_tier: operative
obligations:
- id: fhlmc-5705.1-full
  canonical_id: fhlmc-5705.1-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 5705.1 — Cooperative
    Share Loans
  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 5705.1 — Cooperative
      Share Loans
    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: '5705.1: Cooperative Share Loans (03/05/25) Freddie Mac purchases
      Cooperative Share Loans secured by an ownership interest in Cooperative Projects
      that meet Freddie Mac’s eligibility requirements. This section contains requirements
      related to: ■ Seller’s assessment of Cooperative Project risks ■ Seller approval
      for Cooperative Share Loans ■ Glossary definitions and other terms used in this
      chapter Sellers must obtain written approval to be eligible to deliver Cooperative
      Share Loans to Freddie Mac. A Seller should contact its Freddie Mac representative
      or Customer Service at 800- FREDDIE to discuss how to obtain the applicable
      term of business. Freddie Mac reserves the right to cease approving Sellers
      or accepting deliveries of Cooperative Share Loans from any or all Sellers.
      The term “Mortgage” as used in the Guide includes, as the context requires,
      the term “Cooperative Share Loan.” Requirements pertaining to Mortgages apply
      to Cooperative Share Loans. (a) Seller’s assessment of Cooperative Project risks
      Freddie Mac requires a Cooperative Project review to address certain project
      risks, including, but not limited to: ■ The marketability and condition of the
      project ■ The marketability of the units within the project ■ The financial
      stability and viability of the project ■ Project-level litigation ■ Restrictions
      on Shareholders’ rights to occupy the unit; and ■ The adequacy of insurance
      coverage to protect the project from damage and loss Freddie Mac expects the
      Seller to have staff that is experienced and knowledgeable about Cooperative
      Project risks and to place as much emphasis on the adequacy of the Cooperative
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5705 As of 01/26/26
      Page 5705-2 Interest as collateral as it does on underwriting the Borrower’s
      creditworthiness. The quality of a Cooperative Share Loan can be impacted by
      the financial stability and viability of the particular project, among other
      project characteristics. The conclusion that a Cooperative Share Loan is acceptable
      to Freddie Mac must be based on the determination that the Borrower is creditworthy
      and the Cooperative Interest in the Cooperative Corporation is adequate collateral
      for the Cooperative Share Loan transaction. (b) Seller approval for Cooperative
      Share Loans To be approved to sell Cooperative Share Loans, Sellers/Servicers
      must meet minimum requirements to be considered for approval to sell Cooperative
      Share Loans, including: 1. Possess sufficient expertise with Cooperative Projects
      and Cooperative Share Loans, along with the capacity and resources to ensure
      that the Cooperative Project is likely to be successful does not expose Freddie
      Mac to material credit risk and meets eligibility requirements 2. Possess substantial
      experience in the geographic market in which Cooperative Share Loans are being
      originated 3. Demonstrate volume of Cooperative Share Loans correlates to years
      of experience 4. Engage dedicated project review staff with experience in underwriting
      Cooperative Projects, and retain legal counsel (or have access to legal counsel)
      familiar with Cooperative Projects and Cooperative Project eligibility requirements
      5. Maintain written policies and procedures consistent with Freddie Mac’s project
      eligibility requirements. The policies and procedures must address pre-sale
      and owner-occupancy requirements, declining market trends, project completion
      and any other issues that layer additional risk for Cooperative Share Loans.
      The policies and procedures for identifying the Cooperative Share Loans to be
      sold to Freddie Mac may be no less stringent than the policies and procedures
      for the Seller’s investment decisions. 6. Maintain controls for monitoring performance
      of Cooperative Share Loans it originates (e.g., a 60-day Delinquency within
      the first three months or any 90 or more day Delinquency ever). Sellers must
      also maintain policies and procedures to implement default management corrective
      actions that also evaluate and monitor the performance of the Cooperative Share
      Loans following implementation of such corrective action. Seller/Servicer must
      not be aware of any quality or servicing issues related to the Cooperative Share
      Loans it originates. 7. Provide project-related reporting and any project underwriting
      documentation or Cooperative Project Documents upon request from Freddie Mac
      or request the documentation from the Cooperative Corporation on Freddie Mac’s
      behalf, if applicable Freddie Mac Single-Family Seller/Servicer Guide Chapter
      5705 As of 01/26/26 Page 5705-3 (c) Glossary definitions and other terms used
      in this chapter (i) Glossary definitions The Seller should be familiar with
      Freddie Mac’s Glossary definitions of the following terms: Glossary definitions
      for Critical Repairs and Routine Repairs C Critical Repairs (includes material
      deficiencies and significant deferred maintenance) Repairs and replacements
      that significantly impact the safety, soundness, structural integrity or habitability
      of the project’s building(s) and/or that impact unit values, financial viability
      or marketability of the project. These include: ■ Material deficiencies which,
      if left uncorrected, have the potential to result in or contribute to critical
      element or system failure within one year ■ Any mold, water intrusions or potentially
      damaging leaks to the project’s building(s) that have not been repaired ■ Advanced
      physical deterioration ■ Any project that failed to pass state, county, or other
      jurisdictional mandatory inspections and/or certifications specific to structural
      soundness, safety, and habitability; or ■ Any unfunded repairs costing more
      than $10,000 per unit that should be undertaken within the next 12 months (does
      not include repairs made by the unit owner or repairs funded through a special
      assessment) Examples of some items to consider include, but are not limited
      to, sea walls, elevators, waterproofing, stairwells, balconies, foundation,
      electrical systems, parking structures or other load- bearing structures. R
      Routine Repairs These repairs are not considered to be critical and include
      work that is: ■ Preventative in nature or part of normal capital replacements
      (e.g., focused on keeping the project fully functioning and serviceable); and
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5705 As of 01/26/26
      Page 5705-4 ■ Accomplished within the project’s normal operating budget or through
      special assessments that are within guidelines (ii) Other terms used in this
      chapter The following additional terms are used in this chapter: Additional
      defined terms B Blanket Mortgage A Mortgage secured by a Cooperative Project;
      is also referred to as an “underlying mortgage.” E Established Cooperative Project
      An Established Cooperative Project is a Cooperative Project in which: ■ The
      Cooperative Project is complete, and is not subject to additional phasing, and
      ■ The sponsor/developer (or Holder of Unsold Shares) has turned control of the
      Cooperative Corporation over to the Cooperative Unit owners H Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 5705 As of 01/26/26 Page 5705-5 Holder of Unsold
      Shares Any of the following persons or Entities that (a) hold Cooperative Shares
      in Cooperative Units, (b) except as described below, do not intend to cause
      the Cooperative Units to be occupied and (c) intend to lease the Cooperative
      Units or keep the Cooperative Units vacant: ■ Sponsor/developer ■ Persons/entities
      that the sponsor/developer designates as holders of unsold Cooperative Shares;
      and ■ Subsequent transferees of such unsold Cooperative Shares which retain
      their character as unsold Cooperative Shares until one of the occupancy events
      described below occurs For purposes of this definition, intending to cause the
      Cooperative Unit to be occupied means occupancy by the persons holding the Cooperative
      Shares in the Cooperative Unit (i.e., subsequent transferees) the principals
      of an Entity holding such Cooperative Shares or any family members of the persons
      holding the Cooperative Shares, employees or persons affiliated with such Entities
      holding the Cooperative Shares. N New Cooperative Project A New Cooperative
      Project is a Cooperative Project in which: ■ The Cooperative Project is not
      complete, or is subject to additional phasing, or ■ The sponsor/developer (or
      Holder of Unsold Shares) has not turned control of the Cooperative Corporation
      over to the unit owners 5705.2: Cooperative Project review and general Cooperative
      Project eligibility requirements (03/05/25) The Seller must determine compliance
      with Freddie Mac’s Cooperative Project review and eligibility requirements in
      this section. This section contains the following subsections: ■ Cooperative
      Project review requirements ■ General Cooperative Project eligibility requirements
      ■ Freddie Mac right to review Cooperative Projects (a) Cooperative Project review
      requirements Freddie Mac Single-Family Seller/Servicer Guide Chapter 5705 As
      of 01/26/26 Page 5705-6 Except for Freddie Mac-owned “no cash-out” refinance
      Cooperative Share Loans delivered in accordance with the requirements in Section
      5705.7 relating to Exempt from Review, the Seller must ensure that: 1. The Cooperative
      Project, the Cooperative Unit and Cooperative Share Loan comply with the following
      sections in this chapter: ■ Cooperative Project eligibility (see Section 5705.4)
      ■ Legal requirements for New Cooperative Projects (see Section 5705.6) 2. The
      project must not be an ineligible Cooperative Project (see Section 5705.3) 3.
      The Seller must review and determine that a Cooperative Project complies with
      Freddie Mac’s requirements as follows: Cooperative Project review expiration
      Type of Cooperative Project Expiration of project review Established Cooperative
      Project Within one year prior to the Note Date New and Newly Converted Cooperative
      Projects Within 180 days prior to the Note Date If the Cooperative Project does
      not meet Freddie Mac’s project eligibility requirements on the Note Date, the
      Seller may deliver the Cooperative Share Loan at the time the Cooperative Project
      complies with all of the project eligibility requirements as long as all other
      applicable requirements have been met. 4. The Cooperative Project, Cooperative
      Project Documents and Cooperative Share Loan documents must comply with all
      applicable laws, ordinances and regulations for the State and local jurisdiction
      in which the project is located, and all documents must be enforceable under
      the laws, ordinances and regulations of the applicable jurisdiction. (b) General
      Cooperative Project eligibility requirements The Seller must also review and
      determine compliance with the following requirements: 1. The project must have
      insurance that complies with the applicable requirements of Chapter 4703 2.
      The Cooperative Unit and the Cooperative Project must be covered by a title
      insurance policy that complies with requirements of Chapter 4702 Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 5705 As of 01/26/26 Page 5705-7
      3. The Cooperative Project and Cooperative Unit must comply with all applicable
      requirements of Topic 5600 4. The Cooperative Project must be designed primarily
      for residential use 5. The Cooperative Share Loan must comply with all applicable
      requirements in Section 5705.5 6. A Cooperative Share Loan must be delivered
      to Freddie Mac within 120 days after the Note Date. If the Cooperative Share
      Loan is not delivered within 120 days after the Note Date, Seller must update
      the project review and eligibility determination prior to delivery. 7. The Seller
      must have policies and procedures in place and take appropriate steps to ensure
      that the Cooperative Unit, Cooperative Share Loan and Cooperative Project comply
      with applicable requirements 8. The Seller must retain all documentation related
      to the review of the Cooperative Project. Upon request, the Seller must provide
      the project information and documentation to Freddie Mac. (c) Freddie Mac right
      to review Cooperative Projects Freddie Mac reserves the right to conduct its
      own review of the Cooperative Project for Cooperative Share Loans delivered
      to Freddie Mac.'
  judgment: false
