This week, we have looked at the advantages of a short sale over a foreclosure from five different perspectives: Sellers’, Neighborhoods’, Banks’, Prices and the Children. – The KCM Crew
We were recently troubled by the findings of a research paper authored by Julia Isaacs of the Brookings Institute for the organization First Focus which was 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:
- Families receiving foreclosure notices are much more likely to move than other families. Children who move frequently do less well in school.
- Homeowners receiving a foreclosure notice are under a lot of financial and psychological stress. Parents under financial distress sometimes engage in harsher and less supportive parenting. This can lead to negative behaviors on the part of children, making it harder for them to interact well with peers and in school.
- Foreclosures 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.
- 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.
The Official Journal of the American Academy of Pediatrics just published a report on the impact of the housing crises on child abuse. Their conclusion:
“Multicenter hospital data show an increase in pediatric admissions for physical abuse and high-risk traumatic brain injuries (TBI) during a time of declining all-cause injury rate. Abuse and high-risk TBI admission rates increased in relationship to local mortgage delinquency and foreclosure trends.”
If you find that one of your clients is at risk of foreclosure, explain their options. The new National Mortgage Settlement might give them a pathway to stay in their home.
You can get information on the opportunities the settlement offers here.
However, if they have exhausted all their options and now must decide between a short sale and foreclosure, help them analyze what is the best decision for themselves and their families.
In most cases, a short sale will be the better option for them and their children as they will be able to have some control over the moving date and the move itself. This will create a level of dignity in the move that will alleviate some of the pressure on the parents and as a result lead to more effective parenting.