What is Obligation Bond?

An obligation bond is a legal document which forces the borrower to compensate the creditor for the costs which are associated with closing or transaction. If the face value of the property is higher then the market value of the real-estate in question then the borrower is personally obliged to repay the lender if he defaults on his payments or the lender has to foreclose the property. This municipal bond is in use to secure a mortgage on a property or any other assets or valuables that can be liquidated.