How long does a defeasance take to close?

Loan agreements typically require notice to the servicer 30 days before closing, and keeping to that schedule is the smoothest path. Waterstone says it has closed transactions in as little as one week, though third parties may add expediting fees when notice is shorter than 30 days.

What is the first step in a defeasance?

Give the servicer notice of the intent to defease, as the loan documents require, often 60 to 90 days before the projected closing date. The servicer then requires various up-front deposits and engages its outside counsel to begin the process with the other parties.

What securities are bought in a defeasance?

The loan documents govern which securities qualify, typically US Treasuries and agency securities. Waterstone's securities professionals work with major broker dealers to structure the portfolio, and the firm says it seeks multiple bids to keep the securities cost down.

Defeasance

Waterstone Defeasance

Waterstone Defeasance advises commercial real estate borrowers through defeasance, the process of substituting securities for a loan's collateral so a securitized loan can be retired early on a sale or refinance.

The firm works as the borrower's advocate and project manager. It produces free cost estimates and quotes, structures the securities portfolio - typically US Treasuries and agency securities, as the loan documents dictate - working with major broker dealers, and coordinates the servicer, servicer's counsel, verification accountant, securities dealer, securities custodian, rating agencies, title company, and successor borrower to hold the closing schedule. It also creates and maintains the special purpose, bankruptcy-remote entity that assumes the loan from the original borrower, and discloses residual dollars generated by the successor borrower account.

Waterstone was founded in 2004 and says it has defeased more than $20 billion in securitized debt, including CMBS, agency, and corporate bond loans, with advisors citing over 100 years of combined experience. It lists offices in Anaheim, Charlotte, Dallas, New York, and Raleigh, and assigns every transaction a named consultant reachable by phone, text, or email. The firm states it holds no conflicting relationships with any particular servicer or trading desk, does not mark up securities pricing, and seeks multiple broker bids where possible.

Notice of intent to defease normally has to reach the servicer 30 days before closing, and loan documents often call for 60 to 90 days. Get a current quote and a breakdown of third-party fees before committing to a closing date.

Best for

Owners and mortgage brokers with a CMBS, agency, or corporate bond loan who need to defease ahead of a sale or refinance and want an advisor working the borrower's side, including deals on a compressed closing timetable.

What they do

Defeasance consulting for CMBS loans
Agency and corporate bond loan defeasance
Defeasance cost estimates and quotes
Securities portfolio structuring
Successor borrower entity creation and maintenance
Servicer and third-party vendor coordination
Residual value sharing disclosure
Closing project management

Details

Attribute	Value
Founded	2004

What stands out

Founded in 2004 and reports defeasing more than $20 billion in securitized debt.
Advisors cite more than 100 years of combined defeasance experience.
Lists offices in Anaheim, Charlotte, Dallas, New York, and Raleigh.
Assigns each transaction a consultant reachable directly by phone, text, or email.
States it does not mark up securities pricing and seeks multiple broker bids where possible.

Common questions

How long does a defeasance take to close?: Loan agreements typically require notice to the servicer 30 days before closing, and keeping to that schedule is the smoothest path. Waterstone says it has closed transactions in as little as one week, though third parties may add expediting fees when notice is shorter than 30 days.
What is the first step in a defeasance?: Give the servicer notice of the intent to defease, as the loan documents require, often 60 to 90 days before the projected closing date. The servicer then requires various up-front deposits and engages its outside counsel to begin the process with the other parties.
What securities are bought in a defeasance?: The loan documents govern which securities qualify, typically US Treasuries and agency securities. Waterstone's securities professionals work with major broker dealers to structure the portfolio, and the firm says it seeks multiple bids to keep the securities cost down.