Mortgage lenders might decide to charge off bad debt from account receivable records. The borrowers who are reflected on the mortgage note are generally responsible for the repayment of a home loan. You can review your documents to determine if your spouse was included on your mortgage loan.
Mortgage Note
A lender-issued mortgage note provides a borrower with the loan terms and other important details. The mortgage note should reflect the loan amount and the interest rate, as well as the payment due date. Late fees are shown within a mortgage note to inform a borrower of additional charges that might accrue if a payment is received beyond the grace period.
Loan Default
Several consecutively missed payments or late payments that cause severe delinquency might result in a loan default. Some mortgage lenders automatically enter a loan into a default status when a borrower's loan payment becomes 60 days past due. To cure a loan default the borrower must resolve past-due payments or set up a payment arrangement with his mortgage lender. A loan default could lead to foreclosure if the arrearage is not satisfied within the allotted time. Generally, the lender reports the loan default to the major credit bureaus. A loan default typically hurts the credit profile of the borrower and of any co-borrowers listed on the mortgage note.
Charge-Off
Mortgages loans that remain past due for an extended period of time may appear noncollectable and prompt a lender to charge off the debt. When a charge-off occurs, a mortgage lender often eliminates in-house resources that were committed toward collecting the debt. A charged-off mortgage account may be eventually sold to a collection agency. The collection agency will attempt to recover the outstanding debt or propose a settlement offer.
Consideration
A home loan foreclosure may present funds that are still due to your lender -- even if the home was sold. Generally, the amount recouped from a foreclosure sale gets credited toward the amount outstanding on your defaulted mortgage loan, as well as additional costs, such as selling fees, transfer costs and property maintenance. If your spouse was listed on the mortgage note as a borrower or as a co-borrower, a charge-off could present an adverse credit status. However, if the home loan was solely in your name, a mortgage charge-off should not impact your spouse's personal credit. Your spouse can visit the Annual Credit Report website to check her credit status.
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