The Ongoing Impact of Foreclosures on Children

Five years into the foreclosure crisis, many American families with children continue to lose their homes through foreclosure. An estimated 2.3 million children in single-family homes have already lost their homes to foreclosure, and even more – 3.0 million children – are at serious risk of losing their homes in the future. Another three million or so children may face eviction from rental properties that undergo foreclosure, suggesting that more than 8 million children are directly affected by the ongoing foreclosure crisis (see Figure 1). As single-family and rental properties continue to enter foreclosure, children face not just the loss of their homes, but also the risk of losing friends and falling behind academically if they are forced to switch neighborhoods and schools.

Children Affected by Foreclosures
Children are the often invisible victims of the foreclosure crisis. Mortgage records do not tell how many children are in owner-occupied homes, and it is even harder to estimate the number of children in rental properties. Yet foreclosure affects not just the homeowner or landlord, but also the children living in the foreclosed properties. This brief combines state-by-state estimates on foreclosures with Census Bureau data on the living arrangements of families with children to generate estimates of the numbers of children affected by the mortgage crisis. It also synthesizes research bearing on the negative effects of foreclosure on children’s schooling and overall well-being and outlines some possible policy responses.

This brief updates the author’s earlier (April 2008) estimate that two million children in owner-occupied homes would be immediately affected by the foreclosure crisis, specifically on foreclosures of subprime loans made in 2005-2006. Nearly four years later, the problem shows no signs of abating. In addition to the more than two million children in owner-occupied homes that already have completed foreclosure, there are even more children – more than three million – in owner-occupied homes at immediate risk of future foreclosure. This new analysis also is the first to quantify the millions of children in rental units affected by foreclosure.