Assumption of mortgage involves assuming the obligations of a mortgagor toward a mortgagee, usually as part of the purchase price of real estate. This entails the purchaser taking personal liability for the debt unless a novation releases the original borrower.
Netting is the process of offsetting matching sales and purchases against each other, particularly in the context of futures, options, and forward foreign exchange. It helps firms manage risks such as exchange-rate exposure and is often facilitated by a clearing house.
Novation refers to the cancellation of rights and obligations under one legal agreement and their replacement with new ones under another agreement. This process typically results in a change in the identity of one of the parties involved, such as in loan agreements.
