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Foreclosures And The Affect On Children

Children are often overlooked and a silent issue during tough economic times.  This doesn’t mean that they are not still there, or that they do not need our help and attention.  Many of us on the team are parents ourselves and unfortunately see many families, even here in the Greater Raleigh Area, who have had to move out of their home due to unforseen financial difficulties.

Rececently  Julia Isaacs of the Brookings Institute for the Organization First Focus wrote an interesting article titled The Ongoing Impact of Foreclosures on Children. In the report, Ms. Isaacs quantified the number of children that have been impacted:

2.3 million children have already lost their homes to foreclosure

3 million additional children are at risk of losing their home

She also noted the four ways foreclosures may affect children negatively:

First, and most obviously, families receiving foreclosure notices are much more likely to move than other families, and, … children who move frequently do less well in school.

Second, homeowners receiving a foreclosure notice are under a lot of financial and psychological stress, as they struggle to stay in their house, and if that fails, to find a new home quickly…parents under a lot of financial distress sometimes engage in harsher and less supportive parenting, which in turn can lead to negative behaviors on the part of children, making it harder for them to interact well with peers and in school.

Third, foreclosures and housing instability have a negative impact on physical as well as mental health, with studies finding higher rates of non-elective visits to emergency rooms and hospitals in ZIP codes with the highest foreclosure rates, as well as a strong association between housing instability and postponement of needed health care visits and necessary medications.

Finally, because foreclosures are often highly concentrated in certain neighborhoods, children living in or near foreclosed homes may suffer the consequences of living in neighborhoods with more vacant houses, higher crime rates, lower social cohesion, and a lower tax base.” KCM Blog April 24, 2012

In addition to Julia Isaacs research, my personal experience as a CDPE Certified Distressed Property Expert in the greater Raleigh area, is that there is still a lot of confusion, questions and misunderstanding about short sales and foreclosures with adults so you know it is confusing to children.

From a financial standpoint, short sales are always the best option. The short sale process allows homeowners to work with the bank and pre-determine the day they will need to move out. A short sale allows families to move with a plan and they do not leave the neighborhood with the headaches associated with a vacant house on the block for a long time. There is a level of dignity in a short sale that almost never takes place during the foreclosure process.

When a home goes into foreclosure, the owner has two choices:

1.   Move and leave the house vacant for months

2.  Stay and wait to be evicted.

The second choice can create even more stress on families as they wait for the day an official knocks on the door demanding you and your family leave immediately. A foreclosure in a neighborhood also has other concerns:

• Home values fall more in neighborhoods where there are foreclosures
• Abandoned house look scary to children
• Grass grows tall a parents are worried their children will be bitten by snakes, rodents etc.
• Foreclosure notices attached to doors, Property Preservation Inspectors going in and out of the houses and Sheriff cars in a neighborhood worry adults, so you know it concerns children too
• Children do not understand why people lose their homes or why they have to move.
• Peer pressure is great among children and where there is confusion, bulling and shame is usually close by.

Children hear the news, see the vacant houses and know something is wrong. In many cases, they go to school with children who have lived through foreclosure or short sale and had to leave their home. A friend who once lived in their neighborhood now lives in an apartment. Children are confused. Why did their friend have to move? Why is that house vacant? Why is the grass so tall? Is it haunted mommy?

This is a great time for parents and adults to teach children valuable life lessons. The people who are losing their home to foreclosure are not bad people. They were unprepared for loss of income and the downturn in the real estate market. What can we learn from this experience? What can we change and most importantly what can we teach our children?

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