Hello, and thank you for contacting Just Answer.

Just to clarify, the debt was charged off because you were not paying it?

Ok, thank you for the extra information.

First, always remember that a charge-off just means that the creditor is reporting it as a loss, it doesn't mean that they will not still try to collect on the debt.

As for a foreclosure, a second mortgage could initiate a foreclosure, although there are economic reasons that they often do not.

Basically, this is because if a second (or junior) mortgagee were to initiate foreclosure, and the property were seized and sold, the funds from the sale would first have to go to the primary mortgage. The primary mortgage must be paid first and, given relatively low home values currently, this could leave the junior mortgagee who initiated the process with nothing to gain from the foreclosure.

So, often, a second mortgage when it is in default, will instead take action similar to credit card collections, such as sending the debt to collections (a debt collector), or filing suit to collect the default balance, but not through foreclosure.

So, again, a second mortgage holder can initiate foreclosure proceedings, but there are a number of reasons why they often do not, primarily because funds from a home sale would first have to go to the primary mortgage.

That is a little strange. For a foreclosure to have taken place, you would have to have been served foreclosure papers if the foreclosure was initiated through the court. Or, if the mortgage agreement had a term that allowed a foreclosure and sale (called a power of sale clause), this could have been initiated, but still requires a hearing before the county clerk to determine if the sale can go forward, and you should have been given notice of this.

So, there is a way that the home could be in foreclosure, but you would have to be given notice. It is possible that you found the credit report listing in between the time where the second loan holder has either filed a foreclosure suit (or if they have a power of sale clause in the mortgage, have filed a request for the sale hearing with the county clerk), and when the notice arrives. You can check with the county clerk for the county in which you live to see if a hearing date has either been set or has passed. If not, then you can check with the clerk for the county court in the county in which you live to see if a foreclosure suit was filed.

Again, it is certainly possible that the foreclosure process has begun, and you just haven't received notice yet. The process requires that the borrower receive at least 20 days notice prior to any attempts to seize and sell the property. After that 20 days is up, the mortgage holder can attempt to sell the property at auction (generally conducted at the courthouse). The borrower is then given a 10 day right of redemption during which they can redeem the property by getting caught up on the mortgage.

You are welcome, and good luck to you.

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Again, I wish you the best of luck.