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Residential Department: Q&A: Ellen Schloemer, Center for Responsible Lending: April 2007


Q&A: Ellen Schloemer, Center for Responsible Lending

Ellen Schloemer, Executive Vice President, Center for Responsible Lending

Self-Help Credit Union, a North Carolina community-development lender, formed the Center for Responsible Lending in 2002. The credit union wanted to build on its anti-predatory-lending efforts — most notably, helping to pass the North Carolina Predatory Lending Law in 1999. Ellen Schloemer, the center’s executive vice president, tells us more.

How does the center accomplish its advocacy work for consumers? Much of our work is aimed at educating policymakers. It’s one thing to say there’s a problem, but we need to measure it and prove how much of a problem it is. We published a recent report on foreclosures demonstrating how much worse we think the situation will get. That tends to be a starting point for many conversations.

We also work with community groups to make them aware of the challenges their constituents may be facing. 

In a recent congressional hearing, the Mortgage Bankers Association’s chief economist, Doug Duncan, said that new underwriting standards and the imposition of suitability requirements would stifle innovation and limit consumer choice. Do you have a different take on that? I do. In the [non]prime industry, in the interest of keeping volume going and keeping profits up, the industry has gone too far. The pendulum needs to swing back some. I don’t see tighter standards cutting off innovation. I think mortgage bankers and brokers will always look for new ways to get people in homes. That’s what they should do; they just want to make sure people can stay in homes. 

The center’s recent report “Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners” found that one out of five nonprime mortgages originated in past two years will end in foreclosure. What can brokers do about this? I don’t think brokers can do much to help people already in trouble. I think policymakers need to work with community groups and lenders to help people with foreclosure-prevention programs or servicing practices.

The other side is making sure that new people getting loans aren’t at same risk. Don’t put people in bad products. Make sure that with stated-income loans, the income that people claim bares some resemblance to what the consumer actually makes. And be sure people know they’ll have to pay for taxes and insurance. 

Given the strength of the economy, why do you think foreclosures are increasing? Our research shows that while job loss or divorce or illness are triggering events that throw people into a financial crisis or make them fall behind on mortgage payments, housing appreciation is still what allows them to get out of trouble. 

What is the most important thing brokers can do to stop predatory lending? It sounds silly, but I wish they would look at the loan they’re suggesting and ask, “Would this be the loan I’d want my mother to have?”


Melinda Young was an associate editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail

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