In 2016, CMBS 2.0+ loans have comprised nearly 40% of all defeasance activity. The defeasance of these newer vintage CMBS loans highlights hidden Borrower risk, in the area of defeasance portfolio structuring and pricing. Borrower exposure to securities portfolio markup grows exponentially with 2.0 loans due to a combination of longer maturities and alternative collateral options. Sloppy structuring and poor pricing equate to higher Borrower costs.
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Entries by mcampbell
U.S. defeasance activity reached a post-crash high of $22.4 billion last year, but the rate of growth slowed sharply. The volume of commercial MBS loans defeased in 2015 was up by $1.5 billion, or 7%, from $20.9 billion the previous year, according to a draﬅ of an annual Moody’s report to be released today. That was a modest increase compared to jumps of $7.7 billion (58%) in 2014 and $7.3 billion (124%) in 2013.