The Impact of the Mortgage Crisis on Children and Their Education

Julia B. Isaacs and
Julia B. Isaacs Former Brookings Expert, Senior Fellow - Urban Institute
Phillip Lovell

May 1, 2008


We know that the mortgage crisis is wreaking havoc on the stock market, on the housing industry, and on our economy as a whole. But there are 2 million voiceless victims of this crisis about whom we hear little. Largely over the next 2 years, an estimated 2 million children will be directly impacted by the mortgage crisis as their families lose their homes due to foreclosures. These children are not just losing their homes, but they also risk losing their friends, schools, and in many ways, their childhood.

Acknowledging the Problem

When foreclosures force children from their homes, their education is disrupted, their peer relationships crumble, and the social networks that support them are fractured. Indeed, their physical health, as well as their emotional health and well-being, is placed at risk. As a result, our attention must turn to the unintended and often unnoticed impact of the credit crunch on our nation’s children and their education.

The Center for Responsible Lending projects that one out of every five subprime mortgages that has originated in the last two years will go into foreclosure. The silent sufferers of these foreclosures are the 1.95 million children and youth who are losing their homes, ranging from 1,000 children in North Dakota to 311,900 children in California (see textbox on page two). Our estimate is based on projected foreclosures of 2.26 million single-family homes, and is likely to be low because it does not include those children being evicted from rental units that are going into default, nor does it include children whose parents default on conventional loans.