For most mortgage loans on commercial real estate, the right of prepayment is constrained through a prepayment penalty. Which of the following types of prepayment penalties requires a borrower to provide the lender with some combination of U.S. Treasury securities that will serve to replace the cash flows of the loan being paid off?

Question

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Defeasance prepayment penalty requires a borrower to provide the lender with U.S. Treasury securities that will generate the same amount of cash flow as that of the loan being paid off. This ensures that the lender's cash flows are not affected by prepayment and allows borrowers to avoid paying the penalty without hindering the lender's return on investment.

For Most Mortgage Loans on Commercial Real Estate, the Right