The Quick Read: On a New York co-op, the usual mortgage recording tax generally does not apply, so there is nothing for a CEMA to reduce. A co-op loan is secured by your shares and proprietary lease, not by a recorded mortgage on real property. The lender files a UCC financing statement instead, and the costs that replace the tax are filing, lien-search and legal charges. The larger question is whether the lender and the building will take an FHA cash-out on your co-op at all.
Key Takeaways
- A co-op is not real property in the legal sense. You own shares in a corporation plus the right to occupy a unit.
- A CEMA (defined below) exists to cut recording tax on a recorded mortgage. A co-op share loan generally has no such mortgage, so the tool has no job to do.
- “No recording tax” does not mean “no government or legal costs.” Filing fees, lien searches and lender legal fees still show up.
- FHA cash-out reaches 80% LTV on a home you have owned and occupied for 12 months before the case number. County loan limits apply.
- Whether an FHA cash-out is available on a given co-op depends on the lender’s appetite and the building’s project eligibility. Confirm that first.
Key Terms Defined
Recording fee: a government charge for putting a document on the public record.
Mortgage recording tax: a New York tax on a recorded mortgage, based on the loan amount. It is a tax, not a fee, even though both show up near each other on your costs.
CEMA: a Consolidation, Extension and Modification Agreement. It assigns your existing recorded mortgage to the new lender and combines it with the new money, so the tax falls mainly on the new money.
UCC filing: a public notice, filed under the Uniform Commercial Code, that a lender has a claim on personal property. On a co-op, the personal property is your shares.
Proprietary lease: the document that gives you the right to live in your co-op unit.
Recognition agreement: a document in which the co-op corporation acknowledges the lender’s claim on your shares and lease.
Why a Co-Op Has No CEMA
A co-op share loan has no recorded mortgage to consolidate. Brick Underground’s explainer on how a CEMA works notes that a CEMA is generally unavailable for co-ops, because the tax applies to real property and a co-op buyer owns shares in a building.
HUD’s own legal analysis of share loans describes the same structure. In a HUD Office of General Counsel opinion, loans on a member’s interest in a co-op are collateralized by the stock certificate and occupancy agreement. That opinion addresses a Michigan case, so treat it as a picture of the structure, not a New York ruling.
Here is how the pieces compare.
| Item | Co-op | Condo or 1-4 family |
|---|---|---|
| What secures the loan | Shares and lease | Recorded mortgage |
| What gets filed | UCC-1 statement | Mortgage on the land records |
| NY mortgage recording tax | Generally not charged | Charged on the loan |
| CEMA available | Generally no | Often yes |
| Building involved | Yes, recognition step | No |
One caution. Some other states record a leasehold mortgage on co-ops. That is not the New York pattern, but it shows “co-op means no recording” is not a universal law. Your closing attorney confirms what applies to your building.
Does FHA Cash-Out Even Work on a Co-Op?
This is the question most pages skip, and it matters more than the recording math.
FHA’s policy source is HUD Handbook 4000.1. Across the wholesale lenders Lendmire works with, co-op share loans are a narrow slice of FHA files. Two things decide whether a file can move.
First, the project. FHA co-op lending historically ran through the Section 203(n) program, which HUD’s archived program description says insures loans for people buying a unit in a cooperative project. HUD’s older handbook for that program also said an existing member could not use it to put a new loan on their certificate. That is a legacy document, not today’s rule. It does tell you why co-op FHA refinance eligibility is something to verify, not assume.
Second, the lender. Many wholesale lenders do not take co-op share loans. Those that do will want cooperative paperwork, such as a project questionnaire and a lender certification that the co-op meets eligibility. A building that is not on an eligible footing can end the conversation before costs matter.
If your co-op passes both tests, the standard FHA cash-out rules apply. The home must be your owner-occupied principal residence. You must have owned and lived in it for 12 months before the case number. The maximum is 80% LTV, subject to lender guidelines and full file review. You can read more about the structure on Lendmire’s FHA cash-out refinance program page.
The Line-by-Line Cost Map
Think of the closing costs as three groups: items that stay, items that fall away, and items that replace them.
| Cost line | Status on a co-op |
|---|---|
| Mortgage recording tax | Falls away |
| CEMA fees and extra attorney work | Fall away |
| UCC filing fee | Replaces recording |
| UCC lien search | Replaces title search |
| Lender’s attorney fee | Stays, often larger |
| Appraisal and flood check | Stay |
| Building or managing-agent charges | New, varies by building |
| FHA upfront premium | Stays |
This article quotes no dollar amounts. Fees vary by lender, attorney and building, and any figure would read like a price. For scale, one New York credit union publishes its co-op fees as separate small lines for the UCC filing, the lien search, the attorney and the flood check. The filing fee itself is modest. The legal and search charges are where the money goes. That is one lender’s schedule, not a benchmark for any other file.
Notice what that means. A co-op borrower avoids a percentage-of-loan tax, which is the biggest recording cost on a comparable condo. In return, the borrower pays several smaller flat-style charges. Savings versus a condo are real but not unlimited, and they depend on the lender and attorney.
What the FHA Pieces Look Like
FHA’s mortgage insurance still applies. The upfront premium is 1.75% of the base loan, and it is financed into the balance. The annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan above 90% LTV, the annual premium lasts the full term. At or below 90% LTV, it ends after eleven years. A cash-out at 80% LTV sits in the second group. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Think of that premium as a program mechanic, not a closing-day surprise. It affects your net cash because the upfront piece is added to the loan and the annual piece is part of your monthly housing cost.
Qualifying ratios follow the usual FHA pattern: a base pair of 31/43 (housing to total income) with no compensating factors. Documented compensating factors can reach 40/50 at the top tier, and the automated finding governs most files. Those figures are program guidelines, not a promise of approval.
A co-op adds one budget item the other property types do not have in the same way. Your monthly maintenance charge continues after the cash-out. HUD’s older co-op handbook explains that members’ charges cover the corporation’s own costs, such as its underlying mortgage interest and taxes. A cash-out raises your share-loan payment while the maintenance charge stays. Lenders count both when they check your ratios.
A Scenario in Percentages
Say your co-op is worth a given amount, you have owned and lived in it past the 12-month mark, and you want cash. At 80% LTV, the new loan can reach 80% of the appraised value. From that, the lender pays off your current loan, then the filing, search, legal and FHA premium costs come out of the picture. What remains is your net cash. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Now compare a condo at the same value. The condo borrower’s loan can reach the same 80% LTV, but a recording tax on the new loan amount comes off the proceeds, unless a CEMA trims it. A CEMA brings its own extra legal work. The co-op borrower skips both steps and pays the smaller co-op items instead. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
That is the whole difference. The co-op does not get a larger loan. It gets a different set of costs.
What to Check on Your Closing Disclosure
Government charges appear in Section E of the Loan Estimate and Closing Disclosure. The CFPB’s page on government recording charges explains that recording charges, together with certain other services, generally cannot rise more than 10% from the Loan Estimate to closing.
For a co-op, read your disclosure with these questions in mind.
- Is there a mortgage tax line? On a co-op share loan, you should not expect one. If you see it, ask why.
- Where is the UCC filing fee? It is a government fee, so it plausibly sits in the recording or taxes line. Ask your lender to confirm the placement.
- Is the attorney fee listed? Co-op files lean on legal work, so this line deserves a close look.
- Is any building charge listed? Managing agents and boards may charge for their part of the process.
- Is there a CEMA charge? If so, someone has misread the property type.
Compare each line against your Loan Estimate. A line that shows up on the Closing Disclosure and was never on the estimate is worth a call to your lender before closing.
Building and Lender Steps That Move the Cost
A co-op closing involves more parties than a typical house or condo. The board or managing agent may need to acknowledge the lender’s claim on your shares. That is the recognition step. Boards set their own rules, and some charge for processing.
Your current lender also has work to do. When your old loan is paid off, it must release its claim on your shares, which means ending its UCC filing. Your attorney coordinates that release with the new lender’s filing.
Underlying building debt matters too. Co-op buildings carry a blanket mortgage. The HUD Office of General Counsel opinion cited earlier describes the co-op’s claim on a shareholder’s charges as staying ahead of a share lender’s. In plain terms, the building gets paid before your share lender does. Lenders look at the building’s finances when deciding whether they want the file.
None of this is unusual. It simply means more people touch a co-op file, and you want your attorney involved early.
Common Misconceptions
“Every New York cash-out needs a CEMA to save money.” A CEMA works on recorded mortgages on real property. A co-op share loan generally has none, so there is no mortgage tax for it to reduce.
“Co-op means no government costs.” The recording tax is generally absent. Filing fees, search charges and legal fees are not.
“I should shop for a CEMA.” A CEMA is a legal structure that needs both your old and new lender to cooperate. It is not a loan product you can compare across lenders, and for co-ops it generally does not apply.
“A recording fee and a recording tax are the same thing.” A fee is a flat government charge for filing a document. A tax is based on the loan amount. The CFPB’s rules treat loan-amount-based government charges as transfer taxes on the disclosure, whatever state law calls them.
“An FHA co-op loan works like an FHA condo loan.” Co-op loans have their own project requirements, paperwork and security documents.
One more point on taxes. Co-op units still face New York transfer taxes on sales, but that is a sale cost, not a cash-out refinance cost. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Your Next Step
Start with the two eligibility questions before you spend money on appraisals or attorneys. Is your building one a lender will consider? Will the lender consider an FHA cash-out on a co-op? Once both answers are yes, the cost map above tells you what to expect.
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. Program details are subject to lender guidelines, and nothing here is a commitment to lend.
Frequently Asked Questions
Do I pay mortgage recording tax on an FHA cash-out for a co-op?
Generally no. A co-op share loan is secured by your shares and lease through a UCC filing, not a recorded mortgage. Have your attorney confirm how this applies to your building.
Can I use a CEMA on a co-op to lower my costs?
Generally no. A CEMA consolidates a recorded mortgage, and a co-op share loan usually does not have one. Skipping the CEMA is not a missed savings opportunity here, since the tax it reduces is not charged in the first place.
What do I pay instead of a recording tax?
You pay smaller items: a UCC filing fee, a lien search, the lender’s attorney, and possibly building or managing-agent charges. Amounts vary by lender and building. Your Loan Estimate itemizes them.
Does FHA allow cash-out refinancing on a co-op?
It depends on the lender and the co-op project. FHA’s cash-out rules call for an owner-occupied principal residence, 12 months of ownership and occupancy before the case number, and up to 80% LTV. Co-op share loans add project eligibility and cooperative paperwork on top. Confirm both with the lender first.
Will my maintenance charge change after a cash-out?
No, the maintenance charge stays the same. Your share-loan payment rises with the larger balance, and lenders count both charges when they review your ratios.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see FHA loan programs.
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References
1. Brick Underground: What’s a CEMA?
2. HUD Office of General Counsel opinion on cooperative share loans
3. HUD Handbook 4000.1 (FHA Single Family Housing Policy Handbook)
4. HUD archived description of the Section 203(n) program
6. CFPB: What are government recording charges for a mortgage?
This article is part of Lendmire’s FHA Loan series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: FHA Cash-Out vs. a Small-Business Loan for a New Business Owner · How Closing Costs Shrink a High DTI FHA Cash-Out Debt Consolidation · Can a Trust With a Co-Trustee Get an FHA Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.