Plain-English definitions of the terms used when a lender sells a commercial real-estate loan — from UPB and non-accrual to discounted payoff, OREO, criticized and classified assets, CECL, and re-trade.
| Term | Definition |
|---|---|
| Unpaid principal balance (UPB) | The outstanding principal owed on a loan, excluding accrued interest and fees — the starting point for pricing a note. |
| Non-performing loan (NPL) | A loan that has stopped paying as agreed, generally 90+ days past due or on non-accrual. |
| Sub-performing loan | A loan that is still paying but impaired — slow, partial, interest-only, or otherwise weak enough to be criticized or classified. |
| Non-accrual | Status applied when full collection is doubtful; the lender stops recognizing interest income and reverses previously accrued interest. |
| Discounted payoff (DPO) | A negotiated resolution in which the lender accepts less than the full balance in cash to retire a loan and release the lien. |
| Note sale | The sale and assignment of a loan to a buyer, who steps into the lender's position; a clean cash exit for the seller. |
| OREO / REO | Other real estate owned / real estate owned — property a lender takes via foreclosure or deed-in-lieu, carried as a non-earning, classified asset. |
| Criticized asset | A loan regulators flag for attention — special mention plus the classified categories. |
| Classified asset | The more severe subset of criticized assets — substandard, doubtful, or loss. |
| Special mention | Potential weaknesses that deserve management's attention; criticized but not yet classified. |
| Substandard | Well-defined weaknesses that jeopardize repayment, with a distinct possibility of loss. |
| Doubtful | Collection or liquidation in full is highly questionable and improbable. |
| Loss | Considered uncollectible; warrants charge-off. |
| CECL / allowance for credit losses (ACL) | The current-expected-credit-losses standard; lenders reserve for lifetime expected losses, a drag on earnings before a loan is resolved. |
| Re-trade | When a buyer lowers an agreed price at the closing table after diligence; a key risk a no-re-trade buyer eliminates. |
| Maturity default | When a loan reaches its maturity date and the borrower cannot pay it off or refinance. |
| CRE concentration | Supervisory screens that flag construction/land at 100%+ of capital, or total CRE at 300%+ of capital with rapid growth, for heightened analysis. |
| Loan-to-value (LTV) | Loan balance divided by collateral value; a primary measure of how well-secured a credit is. |
| Debt-service coverage ratio (DSCR) | Net operating income divided by debt service; below 1.0 means the property does not cover its loan payments. |
| Loan tape | The summary dataset describing a loan or pool — balance, rate, maturity, status, collateral — used to evaluate a sale. |
| Broker price opinion (BPO) | A real-estate professional's value estimate, faster and cheaper than a full appraisal, often used in loan-sale diligence. |
| Proof of funds (POF) | Documentation that a buyer holds the capital to close, provided at indication of interest by a credible principal buyer. |
In a note sale the loan is sold and assigned to a buyer who steps into the lender's position; in a discounted payoff the borrower (or a third party) settles the loan at a discount and the lien is released. Both give the lender a clean cash exit.
On non-accrual the lender stops recognizing interest income and reverses accrued interest, so the asset earns nothing while it sits — one reason lenders move to resolve non-accrual credits.
Standing Bid Capital is a direct principal buyer of criticized and classified CRE loans, DPOs, and REO, $250K–$25M, all-cash, no re-trade. Request a confidential review.