easy · Asset-Backed Securities
In the commercial mortgage-backed securities (CMBS) market, what is 'Defeasance'?
- The substitution of the mortgage collateral with a portfolio of government securities that replicate the loan's cash flows
- The reduction of a loan's principal balance in exchange for a higher interest rate
- The legal process of foreclosing on a property and selling it through a special servicer
- The requirement for a B-piece buyer to hold their investment for at least five years
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