Note 4—Loans Held for Investment (“HFI”) and Loans Held for Sale (“HFS”)

The following table provides information about the carrying value of the Company’s loans:


	At		At
	September 30,		December 31,
(in thousands)	2019		2018
Loans HFI	$	87,267	$	67,299
Loans HFS		─		─
Total loans	$	87,267	$	67,299

Loans HFI

We report the carrying value of HFI loans at their UPB, net of unamortized premiums, discounts and other cost basis adjustments and related allowances for loan losses.

The following table provides information about the UPB and cost basis adjustments that were recognized in the Company’s Consolidated Balance Sheets related to loans that it classified as HFI:


	At		At
	September 30,		December 31,
(in thousands)	2019		2018
UPB	$	88,018	$	68,050
Cost basis adjustments, net		(751)		(751)
Loans HFI, net	$	87,267	$	67,299

The following table provides information about the UPB and amortized cost of loans that are current with respect to principal and interest payments, as well as information about the UPB of loans that are past due with respect to principal or interest payments:


	At				At
	September 30,				December 31,
(in thousands)	2019				2018
	UPB		Carrying value		UPB		Carrying value
Total current	$	86,968	$	86,968	$	67,000	$	67,000
30-59 days past due		─		─		─		─
60-89 days past due		─		─		─		─
90 days or greater		1,050		299		1,050		299
Total	$	88,018	$	87,267	$	68,050	$	67,299

At September 30, 2019 and December 31, 2018, the Company did not have any loans for which it elected the fair value option (“FVO”).

At September 30, 2019 and December 31, 2018, the UPB of HFI loans that were placed on nonaccrual status was $1.1 million, while the carrying value of these loans was $0.3 million as of such reporting dates.

At September 30, 2019 and December 31, 2018, no HFI loans that were 90 days or more past due in scheduled principal or interest payments were still accruing interest.

On April 1, 2019, the Company acquired Hunt’s 5.4% ownership interest in SDL for $11.3 million. Such transaction did not qualify as a purchase for reporting purposes and, as a result, the Company recognized $11.3 million as a loan receivable that is secured by Hunt’s interest in SDL. At September 30, 2019, the UPB and carrying value for this loan receivable was $20.0 million and had an effective interest rate of 17.3%. Refer to Note 13, “Related Party Transactions and Transactions with Affiliates,” for additional information.

Loans HFS

We report the carrying value of HFS loans at the lower of cost or fair value. In this regard, if a loan’s amortized cost exceeds its fair value at a reporting date, the Company will establish a valuation allowance and recognize a related provision for loan loss in our Consolidated Statements of Operations as a component of “Net gains (losses) on loans.” Subsequent increases in the fair value of an HFS loan for which a valuation allowance was established will be recognized in the Consolidated Statements of Operations as an increase (reduction) of “Net gains (losses) on loans” up to the amount of previously recognized losses.

At September 30, 2019 and December 31, 2018, the cost basis and carrying value of the Company’s HFS loans were $6.0 million and zero, respectively, as of such reporting dates.

During the three and nine months ended September 30, 2019 and September 30, 2018, the Company did not recognize any lower of cost or market adjustments associated with any HFS loans that were recognized in the Consolidated Balance Sheets.

Unfunded Loan Commitments

The Company had no unfunded loan commitments at September 30, 2019 and December 31, 2018.