Understanding Mortgage Charge-Offs: What Homeowners Need to Know

A mortgage charge off is a procedure that many mortgage companies will utilize whenever they are dealing with bad debt. Here are the basics of the mortgage charge off and what it means to homeowners.

Mortgage Charge Off

Many times, those that do not pay their mortgage payment find out that their mortgage has been charged off. This does not mean that the debt is no longer valid. If your mortgage is charged off, you are still responsible for the debt. This simply means that the mortgage company believes that the debt is not collectible and they are writing off the debt.

What Happens Next

Whenever a mortgage company charges off their debt, they will then sell it to a debt collection agency. At that point, the debt collection agency is going to come after you to collect the balance. You will no longer be able to work directly with your primary lender. If you try to send them payments, they will not accept them any longer. Whenever a charge off takes place, it is going to drastically affect your credit. This will significantly lower your credit score and make it difficult for you to purchase a home in the future.