Mortgage Servicing News Blog
Determining a portfolio’s exact level of risk is particularly challenging due, in part, to the sheer volume of data and information requiring thorough review. One area of risk that often vexes servicers is evaluating lien risk, especially determining the proper reserves to hold for junior liens. This is an area that must be mastered, since regulators are putting more attention on loan loss reserves to mitigate risk.
Junior liens present several areas of potential risk in a portfolio, but the greatest is the possibility of partial or nonrepayment as senior liens are paid in first.