A transmission includes a stationary member, an input member, and gear sets each having a plurality of nodes. The transmission includes a first clutch that connects a node of one gear set to the stationary member to establish an L1 mode, and a second clutch that connects a node of another gear set to the stationary member to establish a 2L mode. A SOWC is connected between nodes of two gear sets, and a controller, in response to a requested shift L1-L2 shift while engine braking, executes a method to release the first clutch and thereby enters a neutral mode. The SOWC is released when slip across the first clutch exceeds a first threshold, then the first clutch reapplied when a SOWC slip level exceeds another threshold to thereby enter a 1st gear freewheeling mode. The second clutch is reapplied to enter the L2 mode and resume engine braking.