Defease definitions
| Word backwards | esaefed |
|---|---|
| Part of speech | The part of speech of the word "defease" is a verb. |
| Syllabic division | de-fease |
| Plural | The plural of defease is defeases. |
| Total letters | 7 |
| Vogais (2) | e,a |
| Consonants (3) | d,f,s |
Defeasance is a term commonly used in the world of finance and real estate. It refers to the process of releasing a property from a mortgage loan by setting aside enough funds to cover the remaining balance of the loan. This process effectively removes the property as collateral for the loan and allows the borrower to repay the loan without any further obligations.
Key Benefits of Defeasance
One of the main benefits of defeasance is that it allows the borrower to sell the property without having to pay off the entire remaining balance of the loan. This can be especially advantageous in situations where the borrower wants to transfer ownership of the property but does not have enough cash on hand to pay off the loan in full.
Defeasance Process
The defeasance process typically involves the borrower purchasing a portfolio of government securities that will generate enough interest to cover the remaining balance of the loan. These securities are then placed in a trust, which makes the periodic payments to the lender on behalf of the borrower. Once the loan is paid off in full, the property is released from the mortgage.
Legal Requirements
Defeasance is a legal process that must adhere to strict guidelines to ensure compliance with state and federal laws. It is important for borrowers to work with experienced legal and financial professionals to navigate the defeasance process successfully and avoid any potential pitfalls.
In conclusion, defeasance is a useful tool for borrowers looking to release their property from a mortgage loan without having to pay off the remaining balance in full. By setting aside funds in a trust to cover the loan payments, borrowers can effectively transfer ownership of the property and move forward with their financial goals.
Defease Examples
- The company decided to defease its outstanding debt to reduce interest expenses.
- Defeasing a loan involves setting aside funds to pay off the principal at a future date.
- The defeasance clause in the contract allowed for the mortgage to be discharged upon full payment.
- By defeasing the liability, the company was able to free up cash flow for other investments.
- The defeasement process involves transferring assets into a trust to secure debt repayment.
- Investors often require defeasance of debt as a condition for refinancing a property.
- Defeasing a bond can help mitigate risks and protect investors from default.
- The defeasance account was established to ensure the timely repayment of the loan.
- Legal counsel was consulted to oversee the defeasance transaction and ensure compliance.
- Companies use defeasance to retire debt early and optimize their financial position.