Scenario B: You currently have a 3.25% securitized loan on a multifamily property and want to sell your asset. The Buyer doesnt want the existing loan and wants to put new debt on it. Your option under the existing loan documents is to exchange collateral with the existing Lender versus prepay the loan with a penalty. The collateral substitution described above requires you to purchase and pledge a portfolio of US Treasuries to replace the multifamily property; the Note remains outstanding but the ongoing loan payments are made from cash flow income and redemption of the US treasury securities.

This scenario describes:

A) Defeasance

B) Yield Maintenance

C) Swap