While the media discusses the effects of foreclosure on credit scores and home values, little is mentioned about the human cost of foreclosure, especially on children. According to a 2012 report by the Brookings Institute, 2.3 million children have lost their homes due to foreclosure, with another 3 million children at risk of their family losing their homes in the future. The foreclosure crisis event threatens families who rent their homes since they can be at risk of eviction if their landlord’s lender forecloses on the property. Another 3 million children’s families are at risk of being evicted out of their rental properties.
Foreclosure Effects Children Emotional, Socially, and Academically
Not since the Great Depression has so many children in the United States faced the prospect of having their families lose their homes. Since the home serves as both a physical and emotional anchor for children, the sudden loss of their home has a profound effect on them. Younger children notice their parents stress level and will often blame themselves for the tension in the family. Some children might even feel responsible for the loss of the home. Unlike a move a family plans for a new job or to a larger home, families who lose their home often find themselves moving down the socio-economic ladder. While some might be moving into neighborhoods with more crime and social upheaval, other families might face the prospect of being homeless.
With so much of a child and adolescent’s social life centered around friendships in the neighborhood and school, they find their means of peer social support disrupted when a family has to move due to foreclosure. Since many children and teens will internalize a sense of guilt or shame related to the family’s circumstances, they will often have difficulty maintaining their social connections. If the family is forced to move into a neighborhood with a high level of crime and gang activity, a child or teen might either start acting out or socially withdraw.
Along with the downward slide socially, children and teens whose families have lost their homes due to foreclosure often have to switch schools. Many times schools in low rent neighborhoods are of lesser quality than those in more stable areas. In addition to having crowded classrooms, these schools often do not have the supports needed by children and adolescents who not only have to adjust to a new academic environment, but also have to find ways to cope with social and emotional upheaval.
Opting for a Short Sale to Avoid Foreclosure Can Mitigate the Effects of Foreclosure on Children
While the result of a short sale is similar to that of a foreclosure in that the family moves out of their home, the process allows parents a bit more control over their circumstances. The family will likely be able to find a new home in a better neighborhood if they go through a short sale since their credit will not be as devastated. Moreover, the family will be able to time their move so the child will not have to change schools in the middle of the school year. Most importantly, the increased level of control offered by the short sale process decreases the amount of stress felt by parents, so they are more emotionally available to their children during the transition to a new home. The Guldi group is here to help you with a confidential consultation if you are anyone you know may be considering a short sale.