It can be difficult to conceptualise - loans are packaged into Trusts (removed from the loan issuer's Balance Sheet), then the Trust is 'sold' to an investor, although the issuer of the original loan remains the manager and administrator, as well as being ultimately responsible for any losses (*not always but usually) incurred. The purchaser of the income from the Trust (ie: the loan payments) gets a passive income stream.
As analogy to the accounting treatment of the loan packaging and 'sale', if you owned a house which was unencumbered and gave the Title to a lender, they might advance say 80% of its value to you in cash. That would not create a profit or loss, you would simply be getting a loan. It's not an ideal example, but I think it works?
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