If a bank sells a mortgage, there obviously has to be a buyer.
Any buyer who does their due diligence is going to see a mortgage on a commercial office property, and weigh the risks of the borrower defaulting on their mortgage, or the borrower not being able to refinance when the mortgage is due.
So given the current environment for commercial offices, any reasonable buyer is going to offer to buy commercial office mortgages at a discount, maybe even at a significant discount, which likely means a financial loss for the bank anyway.
So what’s the difference if the bank holds on to the mortgage, and if the borrower defaults, then seizing the building, i.e. the real asset, and auctioning it off for whatever it can get?
Wouldn’t the loss on a mortgage default and asset seizure, likely the be about same as the loss as selling to a prospective buyer for the mortgage, a buyer who had properly calculated a discount for the risk into their purchase price?