Defeasance of loans in commercial mortgage-backed securities swelled, rising to its highest level since its peak in 2007.

The significant increase was due to a rise in liquidity options, a low interest rate environment and continued improvement in real estate fundamentals, according to Moody's (MCO). Defeasance is the practice of substituting other forms of income in order to meet the obligations of commercial real estate investors. Higher defeasance means higher availability of liquidity.

Defeasance of CMBS loans increased 21% to $5.9 billion from $4.9 billion in 2011. 

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