PUBLISHED:March 08, 2009
Keith Ernst '96
March 7, 2009 — Reflecting on the economic crisis during an early February interview in his office at the Center for Responsible Lending in downtown Durham, Keith Ernst ’96 suggests that the foreclosure rate is worse than even “routinely hyperbolic headlines” indicate.
“Right now, the best projections are that over the next four years, one in 12 homes with a mortgage in North Carolina will be lost to foreclosure, and nationally it’s almost 15 percent,” says Ernst, senior policy counsel for CRL, who also earned an MA in public policy from Duke. As many as one-third of the subprime mortgages that originated in 2005 or 2006 will ultimately end in foreclosure, he adds.
Ernst and his colleagues predicted a foreclosure crisis almost three years ago. At a time when national subprime foreclosure rates were relatively modest, they studied the performance of subprime mortgages across a spectrum of housing markets. “We saw a very clear relationship,” says Ernst. “Strong housing prices led to modest foreclosure rates — 2 or 3 percent.”
Using data that predicted a national housing downturn, the researchers looked into the expectations for subprime mortgage performance. “We foresaw foreclosure rates skyrocketing, from relatively low rates up to one in five subprime mortgages being foreclosed,” says Ernst. “And ultimately the foreclosure rates will be much higher because we’re dealing with a down housing market and a crippled financial sector.”
Ernst is proud of the empirical research that CRL undertakes on a wide range of consumer issues, from predatory lending practices to how banks service subprime loans. He and his colleagues are committed to shaping a transparent, empirically-based, and balanced body of evidence relating to consumer protection, which has made them highly credible participants in the policy-making process, he explains.
They also try to stay one step ahead. That’s why CRL, an affiliate of the Durham-based nonprofit Self-Help Credit Union, released its foreclosure research in 2006 and is now investigating how banks and other financial institutions are helping borrowers manage the financial crisis as well as what policies are needed to prevent a recurrence.
A Long Island native who arrived in Durham for law school and never left, Ernst says he always knew he wanted a career in public interest. “I always wanted to part of a process that made the world a better place for all the families out there who are trying to just have a good life for themselves and their kids,” he says.
He never summered or interviewed with a firm and actively pursued pro bono projects throughout law school. He says he remains grateful for the mentorship of former Associate Dean for Public Interest and Pro Bono Carol Spruill, as well as such professors as the late Jerome Culp, and is equally grateful for Duke’s loan forgiveness program that made public interest work possible.
A summer internship at what is now the North Carolina Justice Center led to Ernst’s first policy job after graduation: working on the state implementation of the welfare reform laws passed during the Clinton administration. He then worked with the Institute for Southern Studies, helping community and labor organizations throughout the South use research to achieve their public policy objectives. Since joining CRL in 2001, he’s done everything from front-line research to lobbying for consumer protections against predatory lending in more than half-a-dozen states.
Now he focuses primarily on managing research projects and formulating the “right questions” that will make a case for change to policymakers and private lenders.
“The great thing about this job is the ability to think big, to think creatively, to work on a variety of projects, and to have the resources to do it,” he says. “We’re fairly unique in a lot of ways as an organization, so a lot of times what gets me excited and bounding up the stairs in the morning is the notion that we’re doing something that other people aren’t doing [or] hasn’t been done in quite the way we’re doing it. A lot of the excitement for me in this job is creating new paths.”
“Right now, the best projections are that over the next four years, one in 12 homes with a mortgage in North Carolina will be lost to foreclosure, and nationally it’s almost 15 percent,” says Ernst, senior policy counsel for CRL, who also earned an MA in public policy from Duke. As many as one-third of the subprime mortgages that originated in 2005 or 2006 will ultimately end in foreclosure, he adds.
Ernst and his colleagues predicted a foreclosure crisis almost three years ago. At a time when national subprime foreclosure rates were relatively modest, they studied the performance of subprime mortgages across a spectrum of housing markets. “We saw a very clear relationship,” says Ernst. “Strong housing prices led to modest foreclosure rates — 2 or 3 percent.”
Using data that predicted a national housing downturn, the researchers looked into the expectations for subprime mortgage performance. “We foresaw foreclosure rates skyrocketing, from relatively low rates up to one in five subprime mortgages being foreclosed,” says Ernst. “And ultimately the foreclosure rates will be much higher because we’re dealing with a down housing market and a crippled financial sector.”
Ernst is proud of the empirical research that CRL undertakes on a wide range of consumer issues, from predatory lending practices to how banks service subprime loans. He and his colleagues are committed to shaping a transparent, empirically-based, and balanced body of evidence relating to consumer protection, which has made them highly credible participants in the policy-making process, he explains.
They also try to stay one step ahead. That’s why CRL, an affiliate of the Durham-based nonprofit Self-Help Credit Union, released its foreclosure research in 2006 and is now investigating how banks and other financial institutions are helping borrowers manage the financial crisis as well as what policies are needed to prevent a recurrence.
A Long Island native who arrived in Durham for law school and never left, Ernst says he always knew he wanted a career in public interest. “I always wanted to part of a process that made the world a better place for all the families out there who are trying to just have a good life for themselves and their kids,” he says.
He never summered or interviewed with a firm and actively pursued pro bono projects throughout law school. He says he remains grateful for the mentorship of former Associate Dean for Public Interest and Pro Bono Carol Spruill, as well as such professors as the late Jerome Culp, and is equally grateful for Duke’s loan forgiveness program that made public interest work possible.
A summer internship at what is now the North Carolina Justice Center led to Ernst’s first policy job after graduation: working on the state implementation of the welfare reform laws passed during the Clinton administration. He then worked with the Institute for Southern Studies, helping community and labor organizations throughout the South use research to achieve their public policy objectives. Since joining CRL in 2001, he’s done everything from front-line research to lobbying for consumer protections against predatory lending in more than half-a-dozen states.
Now he focuses primarily on managing research projects and formulating the “right questions” that will make a case for change to policymakers and private lenders.
“The great thing about this job is the ability to think big, to think creatively, to work on a variety of projects, and to have the resources to do it,” he says. “We’re fairly unique in a lot of ways as an organization, so a lot of times what gets me excited and bounding up the stairs in the morning is the notion that we’re doing something that other people aren’t doing [or] hasn’t been done in quite the way we’re doing it. A lot of the excitement for me in this job is creating new paths.”
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