The Quick Read: A New York co-op owner does not need a CEMA, because a co-op loan is secured by shares in the building, not by a recorded mortgage. The tax a CEMA is designed to trim generally does not apply to a co-op share loan. What decides your outcome is the building’s paperwork, the board, the appraisal and your file. Terms depend on the lender and a full file review.
Key Takeaways
- A CEMA is a tool for houses and condos. Co-ops generally have no use for it.
- Your co-op loan is secured by your shares and your proprietary lease, and the lender files a UCC-1 statement instead of recording a mortgage.
- The building must cooperate. Expect a recognition agreement and, often, board approval.
- Jumbo cash-out means the new total loan sits above the county’s conforming limit. Leverage on cash-out runs lower than on a purchase.
- Not every lender does co-ops. Pick one that does before you pay for anything.
Key Terms Defined
CEMA is a Consolidation, Extension and Modification Agreement. It lets an existing mortgage be assigned to a new lender and merged with new money.
Mortgage recording tax is a New York tax charged when a mortgage on real property is recorded.
Share loan is the name for a co-op loan. Your collateral is the stock you own in the co-op corporation, not the apartment as real property.
Proprietary lease is your right to occupy the unit. It comes with your shares.
UCC-1 is the financing statement a lender files to claim a security interest in your shares.
Recognition agreement is a document signed by the co-op corporation. It acknowledges the lender’s lien and sets out what happens if you default.
Jumbo loan is a loan above the county’s conforming limit.
What Is a Jumbo Cash-Out on a Co-Op?
You replace your current loan with a bigger one and keep the difference in cash. The test for “jumbo” applies to the new total loan, not to the cash you take. A co-op owner with a modest cash request can still land in jumbo territory if the new balance crosses the county line.
Across the wholesale lanes Lendmire places files with, the headline jumbo lane starts at a 660 decision score. Leverage reaches 90% on the top lane, and several lanes go to 89.99% combined loan-to-value, which is your total debt divided by the home’s value. The rest stop at 80%. Loan amounts reach $5,000,000 on the largest lanes.
Cash-out sits at lower leverage than a purchase, and the largest lanes add a cap on cash. Reserves, counted in months of the full payment, rise with the loan amount. Larger loans also trigger two appraisals above a lane’s threshold. Lendmire’s jumbo cash-out refinance program page lays out how those lanes are organized. Every figure here is subject to lender guidelines and a full file review. None of it is a commitment to lend.
One more thing on ratios. Your debt-to-income ratio is your monthly debts divided by your monthly income. The fixed lanes allow up to 50%. The adjustable lanes stop at 45%, and the interest-only lanes at 43%.
Why a Co-Op Doesn’t Need a CEMA
Start with what a CEMA does. On a house or condo, a refinance normally means recording a new mortgage, and New York taxes that recording. A CEMA keeps the old mortgage alive by assigning it to the new lender. Tax is then owed only on the new money.
A co-op skips that whole problem. The New York City Department of Finance, in its mortgage recording tax report, says refinances are in most cases subject to the tax. It also says mortgages on individual cooperative apartments do not incur liability under it. You own shares, so there is nothing to record as a mortgage.
That means “no CEMA” is not a penalty. You are not missing a discount. You also skip the assignment paperwork, and you do not depend on your old lender agreeing to assign its loan. (That cooperation is not guaranteed even for condo owners.)
Two cautions. First, “no recording tax” does not mean “no costs.” Co-op closings carry their own charges, such as lien searches, filings, the bank’s attorney and building fees. Second, tax questions belong with a New York attorney. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
How Co-Op, Condo and House Compare
| Factor | Co-Op | Condo | 1–3 Family House |
|---|---|---|---|
| Collateral | Shares + lease | Real property | Real property |
| Lien method | UCC-1 filing | Recorded mortgage | Recorded mortgage |
| CEMA available | Generally no | Often | Often |
| Recording tax | Generally none | Usually applies | Usually applies |
| Board role | Often approves | Rarely | None |
The co-op column swaps tax savings for building oversight. That is the real tradeoff.
How the Underwriting Works, Step by Step
The path looks different from a house refinance. Here is the sequence in order.
1. Confirm the lender does co-ops. Many lenders skip share loans because the paperwork and building review take specialized staff. Ask first.
2. Check your building’s rules. Some co-ops limit how much a shareholder can borrow against shares. Some limit cash-out or require board consent for any new lien. Your managing agent can tell you.
3. Apply and document your income and assets. Credit, ratios and reserves are reviewed as on any jumbo file.
4. Order the appraisal. The appraiser values your unit. The lender also reviews the co-op corporation’s finances, since your building’s health supports your collateral.
5. Collect the co-op package. This includes your stock certificate, stock power, proprietary lease and the lender’s recognition agreement for the building to sign.
6. Get board approval if required. Many boards review shareholder loans. Some set standards stricter than the lender’s, including liquidity after closing.
7. Close and file. The lender files a UCC-1 against your shares. Your new note replaces the old one. You receive a Closing Disclosure showing costs and cash to close, and a Loan Estimate comes earlier in the process.
The lien is perfected under the Uniform Commercial Code. Enforcement of a share-loan default also runs through UCC Article 9 rather than a mortgage foreclosure. Per Fannie Mae’s Selling Guide, the collateral is the borrower’s ownership interest in the co-op corporation plus an assignment of the proprietary lease rights. That guide is a benchmark, not Lendmire’s program. Jumbo lanes follow the investor’s own rules.
Where the Usual Rules Break
Some of the standard cash-out rules do not carry over cleanly to co-ops. Five edge cases come up most.
Building approval is a gate. A lender can say yes and the board can still say no. Plan for both approvals.
Seasoning varies. Seasoning is the waiting period before you can refinance a recent loan. The Fannie Mae cash-out rules set a waiting period on the loan being paid off, and add reserve requirements when the ratio is high. A jumbo lane may set its own seasoning and reserves, so ask for the lane’s terms in writing. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Occupancy changes the answer. The Fannie Mae eligibility matrix does not permit cash-out on a second-home or investment co-op share loan. Jumbo occupancy rules are set lane by lane, and leverage drops as occupancy moves away from a primary residence.
Building finances matter. Weak reserves, heavy underlying debt or an underlying mortgage coming due can stall your file. The unit’s loan-to-value can also depend on whether your share of the building’s blanket mortgage is counted.
Sublets and rentals complicate things. If you sublet your unit, the board and lender may both take a closer look. Some files need a portfolio lender.
One more point on the earlier tax discussion. Because the same transaction on a condo does carry the recording tax, some readers find pages that blur co-ops and condos together. Treat any source that applies a CEMA to a co-op with caution and confirm with a New York attorney.
What the Lender Looks At
Five things drive the decision.
- Your credit and ratios. The headline lane starts at a 660 decision score, with the ratio ceilings above.
- Your equity. Cash-out leverage sits below purchase leverage, so appraised value sets how much cash you can take.
- Your reserves. Months of the full payment, scaled to loan size.
- The building. Its financials, its underlying debt and whether it allows share loans.
- The paperwork. A recognition agreement from the corporation and a clean stock and lease package.
Missing any one of these can stall a file. The building piece is the one most borrowers underestimate.
Jumbo or Conforming: Where the Line Sits
The conforming limit is set by the Federal Housing Finance Agency each year and varies by county. The agency’s published calculation sets a baseline for most of the country and higher limits in high-cost counties. Check your county’s current limit before you assume you are jumbo or conforming. A loan one dollar above it is jumbo.
Cash-Out or Keep Your Loan?
A cash-out replaces your whole loan, so it only makes sense if the new terms beat what you hold now. Run the comparison on the full cost of the new loan, not just the cash you receive. A second lien can leave a good first loan in place, though co-op boards and lenders vary on whether they allow one.
If you are weighing the two, the Loan Estimate shows closing costs and cash to close side by side with your current balance. That lets you compare real numbers before you commit.
Common Mistakes
- Hunting for a CEMA. It is not part of a co-op refinance, so stop looking.
- Choosing a lender before checking the building. Ask your managing agent about approved lenders and financing limits first.
- Treating lender approval as final. The board may still need to sign off.
- Forgetting reserves. Larger jumbo loans need more months of payments in the bank.
- Skipping the co-op fee lines. Budget for bank attorney, filing and building charges, since the recording tax line is missing but other lines are not.
Frequently Asked Questions
Can a co-op use a CEMA at all?
Generally no. A CEMA works on real property, such as houses and condos. A co-op loan is secured by shares and a proprietary lease, so there is no recorded mortgage to assign. Confirm details for your building with a New York attorney.
Is a jumbo cash-out on a co-op harder to get than on a condo?
It usually has more moving parts, not a harder credit test. The lender must be set up for share loans, the building must sign a recognition agreement, and the board may need to approve. The credit and ratio review resembles any jumbo file.
What does a co-op cash-out cost without a CEMA?
You skip the recording tax and the CEMA assignment work. You still pay for an appraisal, the bank’s attorney, lien searches, filings and any building fees. Your Loan Estimate lists these before you commit, and lenders set their own charges.
How much cash can I take out?
It depends on appraised value, the lane’s cash-out leverage and any cash cap. Cash-out leverage is lower than purchase leverage, and the largest lanes cap the cash. Your building may also limit how much a shareholder can borrow.
Does my co-op board have to approve the loan?
In many buildings, yes. Boards often review shareholder loans and may set their own standards, including liquidity after closing. Ask your managing agent for the building’s financing rules before you apply.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see jumbo loan programs.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. NYC Department of Finance — Mortgage Recording Tax Statistical Profile
2. Fannie Mae Selling Guide — Loan Eligibility for Co-op Share Loans
3. Fannie Mae Selling Guide — Cash-Out Refinance Transactions
4. Fannie Mae Eligibility Matrix
5. FHFA Conforming Loan Limit Addendum
This article is part of Lendmire’s Jumbo Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How to Choose the Jumbo Cash-Out Lane That Releases the Most Cash · How to Structure a Jumbo Cash-Out Over the Cap as a W-2 Earner · Can an Heir Get a Jumbo Cash-Out Before Probate Closes?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.