Increased liquidity and investor confidence in the commercial real estate sector have led to a threefold increase in defeasance activity during the first half of the year, according to a report from credit rating agency, Moody’s Investors Service. Moody's said loans originally secured by multi-family properties saw the highest level of defeasance during the first six months, accounting for 46% of total defeasance. Retail properties represented 22% of all defeasance for the period with lodging properties at 17%. And 61% of all defeased loans during the period had two years or less remaining on the loan. Defeasance activity is when a borrower in a commercial real estate securitization substitutes some type of capital-generating collateral – often Treasury securities – in  lieu of a hard payment. Analysts at the ratings agency also said the level of defeasance during the first six months is equal to nearly 80% of all defeasance during 2009. "Although the recent level of defeasance is not expected to significantly improve the credit profile of individual deals, defeasance remains an important factor in CMBS credit because it reduces the inherent risk in commercial real estate loans," Moody's vice president Sandra Ruffin said. Write to Jason Philyaw.