Negotiating Defeasance Provisions at Origination Can Materially Impact the Bottom Line

  • April 17, 2007
  • • Written by: Cheryl Pavic Henner 

Spring 2007, Vol 32, No 1

Abstract: Often, defeasance is the only mechanism borrowers can use to release property from a securitized mortgage lien. The process allows borrowers to purchase a portfolio of securities to serve as a substitute for the property collateral identified at loan origination. But borrowers who pay attention to defeasance provisions and negotiate favorable terms at the onset of loan origination can avoid additional costs related to this sometime arduous process.