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Joint Interagency Policy on Accounting and Reporting for Loans Held for Sale

01-01 / May 2001
Joint Interagency Policy on Accounting and Reporting for Loans Held for Sale


To distribute an interagency policy statement clarifying guidance on the accounting and reporting for loans held for sale. Such guidance will be incorporated into the Accounting Manual for Federal Credit Unions.


Enclosed Joint Interagency Policy Statement.


The National Credit Union Administration is joining the other four federal financial institution regulatory agencies in issuing guidance about the appropriate accounting and reporting treatment for certain loans that are sold directly from the loan portfolio or transferred to a held-for-sale account.

The Interagency Guidance applies when:

  • a credit union decides to sell loans that were not originated or otherwise acquired with the intent to sell, and
  • the fair value of those loans has declined for any reason other than a change in the general market level of interest or foreign exchange rates.

Selling loans has become an increasingly important portfolio risk management tool for credit unions seeking to manage concentrations, change risk profiles, improve returns, and generate liquidity. Examiners, however, have noted differences among institutions in the accounting for and reporting of these transactions. Specifically, accounting inconsistencies relate to how and where initial and subsequent fair value adjustments are recorded, and the reporting of past-due and nonaccrual loans that have been designated as held for sale.

The Interagency Guidance clarifies existing instructions and promotes accounting treatment consistent with generally accepted accounting principles (GAAP). The guidance reminds credit unions to appropriately report reductions in the value of loans transferred to held-for-sale through a write-down of the recorded investment to fair value upon transfer. At the same time, there should be a charge to the credit union’s allowance for loan and lease losses. Credit unions are also reminded that loans transferred to a held-for-sale account should continue to be accorded the same past-due and nonaccrual treatment as other loans.

The Securities and Exchange Commission said in a letter to the agencies that it had reviewed the Interagency Guidance and determined that the guidance will assist in promoting consistent accounting and reporting treatment for the loan sales and transfers of loans to held- for-sale accounts that are within the scope of the agencies' guidance.


This Bulletin is effective upon issuance.


This Bulletin will expire when superseded or incorporated into the Accounting Manual for Federal Credit Unions, whichever occurs first.


Dennis Dollar
Acting Chairman
National Credit Union Administration Board


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