Defeasance Offers Hope for Homeowners in Low-Rate Mortgages

Many U.S. homeowners are "rate-locked" with low fixed-rate mortgages from 2020–2022, discouraging moves due to higher current rates. Applying a commercial real estate strategy called defeasance—replacing loan payments with a portfolio of secure assets—could unlock trapped equity without full payoff. This would reduce financial penalties for sellers, increase housing inventory, and restore market mobility without lowering interest rates or changing underwriting.