Foreclosures Affect On Children

Julia B. Isaacs of the Brookings Institution authored the report, which revealed five years into the housing crises, 2.3 million children have lost their homes to foreclosure, and 3 million more are at serious risk of losing their home in the future. In addition, approximately 3 million children were evicted, or may face eviction, from rental properties. Overall, one in 10 children were found to be affected by foreclosures. “Children are the often invisible victims of the foreclosure crisis,” said Issacs.

The report discussed four negative ways foreclosures impact children.

For one, foreclosed families tend to move, and children who move frequently tend to do worse in school.

Also, research shows financial stress and hardships affect the way parents interact with their children, and more specifically, parents under a lot of stress tend to be less supportive.

Thirdly, foreclosures adversely affect physical as well as mental health, with studies showing higher rates of visits to emergency rooms and hospitals in ZIP codes with the highest foreclosure rates.

Lastly, children living in or near foreclosed homes may be dealing with consequences of foreclosures such as more vacant houses, higher crime rates, lower social cohesion, and a lower tax base. “Housing disruptions due to foreclosure are just as traumatic for kids as losing their homes to a tornado or hurricane – except this disaster will hit one in ten children,” said First Focus president Bruce Lesley.

The report also stated that children who change schools tend to have lower levels of math and reading achievement compared to their more stable peers. Also, frequent changes in school are associated with higher dropout rates in high school.

The report analyzed the impact of foreclosures in different states and found that Alaska and North Dakota had the lowest rate, with 2 percent of children affected. Nevada led the country at 19 percent. Other states with high rates of affected children were Florida (15 percent), Arizona (14 percent), California (12 percent), and Michigan (10 percent). The report makes several suggestions to combat the issue and highlighted a program called McKinney-Vento Education for Homeless Children and Youth, which provides schools with tools to help homeless students stay in school. Loan modifications were also stressed, and the report called for bolder steps to improve the performance of modification programs, including national mortgage servicing standards, the resurrection of 2009 legislation that would amend bankruptcy laws to allow judges to modify residential mortgages, and principal reductions for homeowners under certain circumstances

FHA Mortgage Insurance Premium Increase

Starting next Monday on April 9, FHA upfront mortgage insurance premiums will rise from 1 percent to 1.75 percent of the base loan amount, and the annual mortgage insurance premium will rise by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.

Even if one hasn’t applied for a loan just yet, Dan Green, loan officer with Waterstone Mortgage in Cincinnati and author of themortgagereports.com, said by getting an FHA loan registered by April 9, one can avoid paying those premiums.

“To register an FHA loan simply means to have an FHA Case Number assigned to it. You don’t have to lock a mortgage rate and you don’t even have to choose a particular lender to work with,”