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What is
Defeasance?
Defeasance is a
form of a prepayment
fee on conduit loans
redeemed prior to
maturity.
Prepayment options
for fixed rate
conduit loans
include defeasance,
declining fixed
percentages and two
yield maintenance
options.
Defeasance allows
the borrower to
purchase substitute
collateral for the
conduit loan.
With conduit
loan defeasance, single
or multiple US
Treasury securities
with varying
maturities must be
purchased in order
to complete the
defeasance. There is
no minimum
prepayment under
Conduit Loan Defeasance, and in
some circumstances,
the borrower could
actually receive a
payment when the
conduit loan is defeased.
Yield Maintenance is
based on a minimum
yield to the
investor
that
purchased the
conduit loan
(or the Fannie Mae
security backed by
the loan) and is
basically the
present value of the
difference between
the conduit loan’s interest
rate and current
rates with a similar
maturity date as the
original conduit loan. Historically,
Yield Maintenance
terms have been 6
months less than the
actual conduit loan term.
How much will it
cost to defease a
conduit loan?
Is your conduit loan
maturing and you
would like to
calculate the
defeasance cost?
CommercialBanc
provides a
defeasance loan
calculator online
to assist our
visitors with these
questions and more.
Conduit Financing Provides The
Lowest Rates To Borrowers
CMBS loan programs
provide the lowest fixed rates...period. Why? The
loan is funded with bond money. Our investment
banking partners securitize (bundle) our loans and
sell mortgage backed securities to investors with
the asset (property) serving as the collateral for
the bonds. Property quality grade, tenant
quality, tenant bond grade, property location,
management, seasoning, property cash-flow, and area
CAP rates all impact a borrowers interest rate
either positively or negatively.
Conduit Lending Overview
Conduit loans have
been around for less than 10 years
and are somewhat unfamiliar to most commercial real estate
investors. A Real Estate Conduit
Loan is a permanent, fixed-rate commercial real
estate loan structured on a non-recourse basis
according to specific underwriting and documentation
standards. These standards facilitate the loan's
ultimate securitization.CommercialBanc
provides conduit loan programs for commercial real
estate property types nationwide.
Our minimum loan size for conduit financing is
$1,000,000. You can review all of our
conduit loan
program guidelines online, check conduit loan
interest rates online, calculate the cost to defease
your CMBS loan, and even track and review the status
of your conduit loan throughout the entire
commercial loan process! Contact a commercial
mortgage banker at 1-888-678-BANC for more
information. |
