Obligation Bond


DEFINITION of 'Obligation Bond'

A municipal bond used to secure a mortgage on property or other physical assets that can be liquidated. The face value of the bond is greater than the value of the property itself.

BREAKING DOWN 'Obligation Bond'

An obligation bond creates a personal obligation on the part of the borrower to compensate the lender for costs in excess of the value of the mortgaged property or assets, such as closing costs or transaction costs.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Face Value

    The nominal value or dollar value of a security stated by the ...
  3. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  4. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  5. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  6. Capitalization Rate

    The rate of return on a real estate investment property based ...
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