Defeasance is a process by which a borrower who had previously entered into a CMBS loan can unencumber themselves prior to the maturity of the loan. Defeasance is most commonly seen on prepayments of securitized CMBS loans. Rather than a simple prepayment calculation, the defeasance is really a substitution of collateral. A portfolio of securities, usually Treasurys, replaces the underlying real estate as the collateral and provides the payments to cover the debt service.