Selling Guide

Published June 3, 2020

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B4-2.3-05, Geographic-Specific Co-op Project Considerations (09/04/2018)


This topic contains information on geographic-specific co-op project considerations, including:


The policies in this topic are applicable to co-op projects located in the five boroughs of the City of New York and the New York state counties of Nassau, Rockland, Suffolk, and Westchester. These policies provide eligibility flexibilities that address specific local market conditions and may not be applied to co-op projects outside of these geographic areas.

Special Treatment of Single-Entity Ownership Requirements

The sponsor may own more than 20% of the stock or shares in the corporation and the related occupancy rights provided that any such stock or share ownership above the 20% limitation pertains to units that are subject to statutory rent regulations that limit the sponsor’s ability to sell his or her ownership interest in such shares or stocks. The lender must obtain documentation to validate that the stock or share is subject to such regulations.

Negative Cash Flow from Unsold Units

Negative cash flow from unsold units is permitted provided all of the following requirements are met:

  • The co-op corporation’s last audited financial statement, current operating budget, and proposed operating budget for the following fiscal year, if any, and the New York State Attorney General’s Financial Disclosure Statement (“Attorney General’s Disclosure Statement”) applicable to such co-op project must demonstrate that to the extent that the project has negative cash flow from unsold units

    • such negative cash flow (including, but not limited to, any principal and interest payments relating to the financing obtained by the sponsor to acquire the co-op project) will not exceed an amount equal to 5% of the project’s annual operating budget;

    • no more than 15% of the co-op unit owners are more than 30 days delinquent in the payment of their financial obligations to the co-op corporation; and

    • if the sponsor fails to pay the monthly assessments relating to all co-op units owned by the sponsor, the monthly assessments of the co-op share owners other than the sponsor will not increase by more than 10%.

  • The Attorney General’s Disclosure Statement or equivalent sponsor disclosure must also indicate that

    • the sponsor is current on all financial obligations under the offering plan relating to the project;

    • the sponsor is current on all financial obligations relating to any other project in which the sponsor owns or holds more than 10% of the units; and

    • the sponsor has not pledged any of the shares of the co-op project as security for any loan other than to secure, in whole or in part, the financing obtained by the sponsor to acquire the co-op project.

  • The Attorney General’s Disclosure Statement or equivalent sponsor disclosure must be dated no more than 18 months prior to the share loan note date.

Delivery Requirements

Co-op share loans delivered with the geographic flexibilities described in this topic must be delivered to Fannie Mae with Special Feature Code (SFC) 107 in addition to any other required SFCs.

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