Homeowners with low-interest mortgages can now use defeasance to unlock the value of their below-market loans when selling their homes. Defeasance involves purchasing government securities that cover remaining mortgage payments, allowing borrowers to avoid paying the full loan balance upfront. This method benefits both lenders and borrowers by sharing the unlocked value and reducing regulatory capital requirements for lenders. It offers a new way to ease the housing market lock-in effect.
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