Defeasance is a substitution of one type of collateral for another. It is usually closed in conjunction with a refinance or sale of the property. The proceeds from the refinance or sale are used to purchase a portfolio of U.S. Government or other eligible securities whose cash flow closely matches all the remaining payments due under the existing loan. The borrower pledges the securities to the lender (usually a Trust for securitized loans) as collateral in exchange for a release of the mortgage lien on the property. The borrower’s obligations under the existing loan are then assigned to an unaffiliated successor borrower who becomes responsible for making all future debt service payments.