First Liens a Growing Problem for Seconds.(LienWatch)

Dallas -- With the home-equity market growing fast, second-lien holders face increasing anxiety about protecting the lien in the event that a borrower defaults on the first mortgage.

First American Real Estate Information Services has launched LienWatch, a new product designed to help mortgage servicers detect early warning signs that a borrower may default on a second mortgage.

Because first-lien holders take precedence in the event of foreclosure, servicers of second liens are exposed to a much greater risk of loss. Until now, First American said, there has been no way for servicers to receive the early warnings necessary to help manage portfolios and minimize losses.

"One of the biggest problems we have is finding out too late that there was foreclosure action happening to the first lien when we were in second-lien position," said Jason Pinson, vice president of EMC Mortgage Corp., in a First American press release. "With LienWatch, we are proactively tracking the first liens and are now in a position to make better decisions when an action on the first occurs."

Through LienWatch, servicers can know the status of all mortgages associated with a property, including all recorded mortgages for the customer/property, the outstanding mortgage balances, due dates of all mortgages and the estimated value of the property.

LienWatch uses First American's national property and credit database to provide a monitoring and alert service for the second-lien holders, said Reid Lange, vice president and product manager with First American Real Estate Information Services. "The mortgage servicing industry has been looking for this type of solution for a long time, and we now offer the technology that makes it possible."

Mr. Lange told MSN that with new privacy laws in effect, it is often difficult for servicers of junior liens to get information from the servicer of the first mortgage. But if the first mortgage holder forecloses on the loan, that usually wipes out any junior liens.