Capital Defeasance Group : The Defeasance Process

Step 1: Notify servicer and kickoff defeasance

Borrower and Capital Defeasance Group notify servicer of defeasance

Identify and notify transaction working parties

Conference call with working parties to explain deliverables, expectations, deadlines

Step 2: Review and finalize defeasance documents

Defeasance pledge and security agreement; defeasance account agreement

Defeasance assignment, assumption and release; defeasance certificate, waiver and consent

Each party reviews; finalized by Servicer counsel

Step 3: Obtain original borrower documentation and opinions

Original borrower articles of formation, resolutions, certificate of good standing

Original borrower reps, warranties and certification

NY law, enforceability and REMIC opinions

Step 4: Construct and optimize securities portfolio

Determine eligible securities

Create optimal, lowest cost defesance portfolio

Obtain accountant’s verification report

Step 5: Create Successor Borrower entity

Form Successor Borrower entity

Obtain custodial account for securities

Obtain SB opinions from SB counsel

Rating agency review

Only required for larger, more significant loans in securitization

Step 6: Three day closing process

Day 1: Purchase defeasance collateral portfolio

Day 2: Deliver securities; buyer/lender funds escrow

Day 3: Transfer securities, settle payments; release lien

Read more about the 3 day closing process.

Capital Defeasance Group helps borrowers prepay their conduit loans. We work with you as the borrower’s independent advocate throughout the defeasance process, offering reliable closings, guaranteed lowest cost portfolios and returning cashback through the Defeasance Refund™. Our team has extensive experience with defeasance and with acquiring, operating and selling commercial real estate, so we know your transaction. Contact us to see why we should be Your Defeasance Partner™.

The Defeasance Process

Overview of the Process

A Defeasance has six main steps which are outlined below. The closing itself is a 3 day process where the defeasance simultaneously closes with the underlying real estate sale or refinance transaction.