Freddie Mac Single-Family Seller/Servicer Guide §5705.8 — Appraisal requirements for Cooperative Units (01/26/26)
Freddie Mac Guide §5705.8 (Appraisal requirements for Cooperative Units). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §5705.8 — Appraisal requirements for Cooperative Units (01/26/26) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 5705.8
(01/26/26) Refer to Bulletin 2025-7, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of this section. This section contains requirements related to: ■ Cooperative Interest ■ General appraisal requirements for units in Cooperative Projects ■ Comparable sale requirements for units in Cooperative Projects The Seller must obtain an appraisal of the Cooperative Unit with an interior and exterior property inspection reported on Fannie Mae Form 2090, Individual Cooperative Interest Appraisal Report, which must be submitted to the Uniform Collateral Data Portal® (UDCP®) in accordance with the requirements in Chapter 5606 and must receive a “Successful” status before the Delivery Date of the Cooperative Share Loan. (a) Cooperative Interest The Cooperative Interest is the Cooperative Shares (or ownership interest) in the Cooperative Corporation and the related occupancy rights, excluding the Cooperative Interest’s Pro Rata Share of the underlying Blanket Mortgage. The Cooperative Interest is the equity portion that is over and above the Pro Rata Share of the Blanket Mortgage(s). (b) General appraisal requirements for units in Cooperative Projects When appraising a Cooperative Unit, appraisers must develop the opinion of market value for the Cooperative Interest. To determine the value of the Cooperative Interest, appraisers must report and analyze including, but not limited to, the following information: ■ Number of shares attributable to the subject unit ■ Number of shares issued and outstanding for the Cooperative Corporation ■ Lienholder name, lien position and the amount and repayment terms for all the Cooperative Project’s blanket financing ■ Pro Rata Share of the Blanket Mortgage payments attributable to the subject unit, determined by dividing the number of shares attributable to the subject unit by the total number of project shares
Freddie Mac Guide 5705.8
705-32 ■ Pro Rata Share of each lien attributable to the subject unit ■ Any tax abatements or exemptions that are attributable to the subject unit ■ Remaining term for any tax abatements or exemptions and provisions for escalation of real estate taxes (dollar amount by which the taxes will increase and the year in which the increase occurs); and ■ Monthly Maintenance Fees, including: ❑ Utility charges (if included in the fee) ❑ Special assessments ❑ Ground rent; and ❑ Other fees for the use of the facilities that are attributable to the unit (fee type, amount and term) This information can generally be developed through Fannie Mae Form 1074, Request for Cooperative Project Information, if the management agent, Cooperative Corporation or project sponsor/developer uses the form to respond to Seller or appraiser inquiries for project information. When Fannie Mae Form 1074 is used, appraisers may either report the appropriate information in the appraisal report form or attach the Fannie Mae Form 1074 to the appraisal report as an addendum. When reporting the information applicable to the Cooperative Unit and Cooperative Project, appraisers must: ■ Use reliable sources to obtain data on the Cooperative Project, the individual subject unit and the comparable properties and indicate each source by name on the appraisal report or an addendum to the appraisal report ■ Address any factors that could result in an increase to the monthly debt service for the subject unit ■ Indicate the dollar amount of the monthly Maintenance Fees for each of the comparable sales in the Sales Comparison Approach ■ Report the value of the Cooperative Interest, excluding the Pro Rata Share of the Blanket Mortgage(s). This value reflects the market value of the Cooperative Interest for the subject unit (e.g., if the indicated value of the unit encumbered by the Blanket Mortgage(s) is $100,000, and the unit’s Pro Rata Share of the Blanket Mortgage(s) is $25,000, then the market value estimate that the appraiser must report for the Cooperative Interest is: $100,000 − $25,000 = $75,000).
Freddie Mac Guide 5705.8
705-33 ■ Include a certification in the appraisal report that the Pro Rata Share of the Blanket Mortgage(s) on the real estate has not been included in the opinion of the market value of the Cooperative Interest (c) Comparable sale requirements for units in Cooperative Projects Appraisers must comment on the acceptance of housing cooperatives in the Market Area. The degree of acceptance is generally reflected in the availability of similar comparable sales data for Cooperative Units. If there is limited market acceptance of the cooperative form of ownership or if cooperative forms of ownership are relatively new in the Market Area, appraisers must address any effect that has on the value and marketability of the Cooperative Unit that is being appraised. The appraiser must compare the subject unit to the general Market Area as well as to other units in the subject Cooperative Project to demonstrate the market acceptance of Cooperative Units in the area. (i) General comparable sale requirements Comparable sales must be from similar types of projects that have similar Common Elements and recreational facilities, including, but not limited to, townhouses and mid- rise and high-rise buildings. Appraisers must use Cooperative Units as comparable sales when they are available. Appraisers may also use condominium units as comparable sales if Cooperative Units are not available, with an explanation for why those types of comparables were used. The appraiser must adjust the condominium comparables to reflect the reaction of the market to the Cooperative Unit when there is a preference for condominium ownership in the subject Market Area. (See Section 5605.6(g) for general requirements regarding comparable sales selection.) (ii) Comparable sale requirements for units in Established Cooperative Projects For Cooperative Units located in Established Cooperative Projects, the appraiser should use comparable sales from within the Cooperative Project when they are the best indicators of value for the subject property. The use of comparable sales that are located outside of the established subject Cooperative Project must be explained in the appraisal report. When the subject Cooperative Unit is in an Established Cooperative Project, appraisers should use the following as comparable sales: ■ Two comparable sales from within the subject Cooperative Project, when available; and ■ One comparable sale from a competing Cooperative Project
Freddie Mac Guide 5705.8
705-34 Note: See Section 5605.6(g) for general requirements regarding selection of comparable sales. (iii) Comparable sale requirements for units in recently converted or New Cooperative Projects If the subject Cooperative Unit is in a recently converted or New Cooperative Project, appraisers should use the following as comparable sales: ■ One comparable sale from the subject Cooperative Project, when available; and ■ Two comparable sales from outside of the Cooperative Project In the event the subject project is so new that a closed (settled) sale is not available, comparable sales from competing projects must be used. The appraiser must comment on the marketability of the new project and justify and support the use of the comparable sales from outside the Cooperative Project. Note: See Section 5605.6(g) for general requirements regarding comparable sales selection.
Freddie Mac Guide 5705.8
Appraisal requirements for Cooperative Units (Future effective date 11/02/26) This section contains requirements related to: ■ Cooperative Interest ■ General appraisal requirements for units in Cooperative Projects ■ Comparable sale requirements for units in Cooperative Projects The Seller must obtain a Traditional Appraisal Report of the Cooperative Unit which must be submitted to the Uniform Collateral Data Portal® (UDCP®) in accordance with the requirements in Chapter 5606 and must receive a “Successful” status before the Delivery Date of the Cooperative Share Loan. (a) Cooperative Interest The Cooperative Interest is the Cooperative Shares (or ownership interest) in the Cooperative Corporation and the related occupancy rights, excluding the Cooperative Interest’s Pro Rata Share of the underlying Blanket Mortgage. The Cooperative Interest is the equity portion that is over and above the Pro Rata Share of the Blanket Mortgage(s).
Freddie Mac Guide 5705.8
705-35 (b) General appraisal requirements for units in Cooperative Projects The opinion of market value for a Cooperative Unit must be based on the Cooperative Interest. The appraisal report must include information and additional commentary as applicable including, but not limited to, the following: ■ Number of shares attributable to the subject unit ■ Number of shares issued and outstanding for the Cooperative Corporation ■ Lien position and the amount and repayment terms for all the Cooperative Project’s blanket financing ■ Pro Rata Share of the Blanket Mortgage payments attributable to the subject unit, determined by dividing the number of shares attributable to the subject unit by the total number of project shares ■ Pro Rata Share of each lien attributable to the subject unit ■ Any tax abatements or exemptions that are attributable to the subject unit ■ Remaining term for any tax abatements or exemptions and provisions for escalation of real estate taxes (dollar amount by which the taxes will increase and the year in which the increase occurs); and ■ Monthly Maintenance Fees, including: ❑ Utility charges (if included in the fee) ❑ Special assessments ❑ Ground rent; and ❑ Other fees for the use of the facilities that are attributable to the unit (fee type, amount and term) This information can generally be developed through Fannie Mae Form 1074, Request for Cooperative Project Information, if the management agent, Cooperative Corporation or project sponsor/developer uses the form to respond to Seller or appraiser inquiries for project information. The appraisal report must include the appropriate information in the “Project Information” and the “Cooperative Information” sections of the appraisal report. Fannie Mae Form 1074 may be included as an exhibit. When reporting the information applicable to the Cooperative Unit and Cooperative Project, appraisers must:
Freddie Mac Guide 5705.8
705-36 ■ Use reliable sources to obtain data on the Cooperative Project, the individual subject unit and the comparable properties and indicate each source by name on the appraisal report ■ Address any factors that could result in an increase to the monthly debt service for the subject unit ■ Indicate the dollar amount of the monthly Maintenance Fees for each of the comparable sales in the Sales Comparison Approach ■ Report the value of the Cooperative Interest, excluding the Pro Rata Share of the Blanket Mortgage(s). This value reflects the market value of the Cooperative Interest for the subject unit (e.g., if the indicated value of the unit encumbered by the Blanket Mortgage(s) is $100,000, and the unit’s Pro Rata Share of the Blanket Mortgage(s) is $25,000, then the market value estimate that must be reported for the Cooperative Interest is: $100,000 − $25,000 = $75,000). (c) Comparable sale requirements for units in Cooperative Projects The appraisal report must include comments on the acceptance of housing cooperatives in the Market Area. The degree of acceptance is generally reflected in the availability of similar comparable sales data for Cooperative Units. If there is limited market acceptance of the cooperative form of ownership or if cooperative forms of ownership are relatively new in the Market Area, the appraisal report must address any effect that has on the value and marketability of the Cooperative Unit that is being appraised. The subject unit must be compared to the general Market Area as well as to other units in the subject Cooperative Project to demonstrate the market acceptance of Cooperative Units in the area. (i) General comparable sale requirements Comparable sales must be from similar types of projects that have similar Common Elements and recreational facilities, including, but not limited to, townhouses and mid- rise and high-rise buildings. The appraisal report must use Cooperative Units as comparable sales when they are available. Condominium units may be used as comparable sales if Cooperative Units are not available and the appraisal report must include an explanation for why those types of comparables were used. Adjustments must be made to the condominium comparables to reflect the reaction of the market to the Cooperative Unit when there is a preference for condominium ownership in the subject Market Area. (See Section 5605.7(g) for general requirements regarding comparable sales selection.) (ii) Comparable sale requirements for units in Established Cooperative Projects For Cooperative Units located in Established Cooperative Projects, comparable sales from within the Cooperative Project should be used when they are the best indicators of
Freddie Mac Guide 5705.8
705-37 value for the subject property. The use of comparable sales that are located outside of the established subject Cooperative Project must be explained in the appraisal report. When the subject Cooperative Unit is in an Established Cooperative Project, the appraisal report should include the following as comparable sales: ■ Two comparable sales from within the subject Cooperative Project, when available; and ■ One comparable sale from a competing Cooperative Project Note: See Section 5605.7(f) for general requirements regarding selection of comparable sales. (iii)Comparable sale requirements for units in recently converted or New Cooperative Projects If the subject Cooperative Unit is in a recently converted or New Cooperative Project, the appraisal report should include the following as comparable sales: ■ One comparable sale from the subject Cooperative Project, when available; and ■ Two comparable sales from outside of the Cooperative Project In the event the subject project is so new that a closed (settled) sale is not available, comparable sales from competing projects must be used. The appraisal report must include commentary on the marketability of the new project and justification and support for the use of comparable sales from outside the Cooperative Project. Note: See Section 5605.7(f) for general requirements regarding comparable sales selection.