When a lender decides to sell a loan, it generally reclassifies the credit from held-for-investment (HFI) to held-for-sale (HFS) and carries it at the lower of cost or fair value — recognizing the expected loss at that point. The cash sale then settles the position. This is an overview, not advice; confirm treatment with your own accountants and tax counsel.
Once the loss is recognized on transfer to held-for-sale, the institution's objective often shifts from maximizing price to executing cleanly and on time — which is where a certain, all-cash buyer adds the most value. Standing Bid Capital is a direct principal buyer of CRE loans, discounted payoffs, and REO — $250K–$25M, all-cash, no re-trade, confidential. Request a confidential review.
This page is general information, not tax, legal, or accounting advice. Treatment depends on facts and applicable standards; consult your own professionals.
When a lender decides to sell a loan it holds for investment, it moves the credit to held-for-sale and measures it at the lower of cost or fair value, recognizing the expected loss at that point.
It can — but the tax treatment depends on the institution and the facts; confirm with your tax advisors.
CECL drives the allowance carried against the credit while held for investment; the transfer to held-for-sale changes the measurement basis to lower-of-cost-or-fair-value.