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By Sean A. Kelly

Life is sometimes a roller coaster and there are times when you inadvertently land into financial situations you wish you had never gotten yourself into. There isn’t such a thing as job security anymore and just when you think that you are secured for life with a full-time job and steady income, your world suddenly comes tumbling down as you lose your job because your company decides to downsize. If you don’t have regular paychecks coming in, you may find yourself having trouble keeping up with all your debts including your mortgage. When you keep missing due payments, your bank or lender may finally decide to impose mortgage foreclosure on your home.

Mortgage foreclosure is the legal process through which a lender claims an asset from the borrower. In most cases, this process is initiated as a result of default on payment by the borrower. And since you can’t make partial payments on your monthly mortgage installment, it is easy for you to default and land up in unintended financial complications with your lenders. A mortgage foreclosure implies that your lender or mortgage provider is basically taking over your home since you have continuously failed to make all due payments. But this doesn’t mean that they can simply come to your house and force you to vacate your home immediately. The procedure of foreclosing your home is generally quite expensive and may take quite some time. Due to this lenders generally avoid having to foreclose any property unless they are left with no other choice. Practically speaking, in order to affect the foreclosure your lender may need to follow certain procedures following which you may need to follow certain additional procedures. Finally the procedure for the eviction may be all together different. If you have a second mortgage as well, then things might get pretty complicated.

A second mortgage may have its own benefits in terms of avoidance of costly private mortgage insurance, flexibility in terms of ability to combine first and the second mortgages, option for availing lower interest rates or the availability of cash out refinance mortgage benefits. But a second mortgage also means inflated monthly mortgage payments since now you need to deal with two different loans. In case you are not able to handle this additional burden of payments and have to default, you always run the risk of mortgage charge off on your property.

A mortgage charge off is a procedure that many mortgage companies resort to when they are dealing with bad debt. If you find that your mortgage has been charged off, it does not mean that your debt is no longer valid. In this case, you are still responsible for the debt. It just means that the mortgage company believes that the debt is not collectible and they are writing off the debt. When your lender charges off your mortgage debt, they will sell it to a debt collection agency. It would then become the responsibility of this debt collection agency to collect the balance from you. Now you would no longer be able to work directly with your primary lender and if you send them any payments, they will not be accepted by them.

The flip side of a mortgage charge off is that it would drastically affect your credit. Your credit score will get significantly lowered and it will become increasingly difficult for you to purchase a home in the future. It is therefore, advisable that you put your efforts in always staying current on your mortgage payments as far as possible.

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