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With the real estate market on a significant upswing and lenders across the U.S. loosening their purse strings, defeasance activity has picked up substantially over the past two years. According to industry reports, more than $13.2 billion of commercial mortgage backed securities loans were defeased in 2013, representing a 123 percent increase from the previous year.
With Treasury yields
keeping defeasance costs relatively high, defeasance activity has been driven
primarily by borrowers looking to capitalize on the current low interest rate
environment and the improved lending arena in general, both for purchases and
refinances. A major impetus behind defeasance is an increase in property value.
The defeasance process allows borrowers to extract equity out of their
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