A mortgage is a written pledge of property used as security for the repayment of a loan. The property you purchase is the collateral for the mortgage. If you fail to make payments on the loan, the lender can repossess your home. As a result, the lender has some legal rights on your property as you pay off your mortgage.
Unlike a standard loan, the mortgage is used to enforce the lenders rights to the property if the borrower does not repay the home loan. If the borrower does not keep up with his/her monthly mortgage payments, the borrower can obtain the home through what is called foreclosure.
Foreclosure is the forced sale of a home or property that s pledged as security against a mortgage. The property is sold so the lender can recoup its losses on the loan.
There are two types of foreclosure: judicial and non-judicial foreclosure. A judicial foreclosure basically means that the foreclosure is a court-ordered legal process.
I sense you may not fully understand what "charge-off" means. Charge-off is an accounting term used by creditors when they move a delinquent account from its accounts receivable books to its bad debt ledger. This usually occurs between 180 and 240 days from the date of your last payment. The fact that an account is charged-off does not mean the debt may not be collected later. Charge-off is not required before a creditor initiates foreclosure. To understand more about the concepts of charge-off and why this term and event means almost nothing to debtors, see the Bills.com resource Charge-Off & Credit Report.
You mentioned your home is "in the final stages of foreclosure." You later ask, "Should I contact them to settle or let it ride for a while?" The time to let things ride for a while is over if your goal is to retain your residence. Negotiate with both lenders now.
Regarding resolving the the second mortgage, see the Bills.com resource Second Mortgage Foreclosure to learn your options.
I hope this information helps you Find. Learn & Save.