WASHINGTON, D.C. – A new report released today reveals that an estimated 2 million children will be directly impacted by the subprime mortgage crisis as their families lose their homes due to foreclosures. As the first comprehensive analysis of how the crisis will impact kids, the report explains that this number will rise even higher when accounting for other populations, such as children being evicted from rental units that are going into default and those children whose parents default on conventional loans. These foreclosures will happen primarily during 2008 and 2009.

The report, which includes state-by-state estimates of the number of children that are directly impacted by this crisis, indicates that foreclosures often result in disruptions to a child’s education, as well as issues relating to their physical and mental health. Moreover, behavioral issues are more likely to arise in children who lose their homes, as positive peer relationships disintegrate when children are forced from their neighborhoods.

“We often hear about the impact that the mortgage crisis is having on the stock market and on the nation’s economy, but we hear little about the impact this crisis is having on the lives of two million of our nation’s children,” said Bruce Lesley, President of First Focus, a bipartisan children’s advocacy organization, who issued the report. “When families lose their homes, kids often lose their schools and access to services. Such changes not only impact their education but their physical and mental health as well.”

Based on racial/ethnic data reported under the Home Mortgage Disclosure Act, the report projects that 504,600 Latino children, 281,200 African American children, and 1.166 million White/Other children will be directly impacted by the crisis. The total number impacted is 1.952 million children.

In addition, the report finds:

  • Due to the increasing number of foreclosures, school districts across the country are experiencing increases in the number of homeless children entering their classrooms;
  • Children impacted by the mortgage crisis are likely to experience excessive mobility and as a result are only half as likely to be proficient in reading as their peers. Moreover, they are much more likely to be held back and eventually drop out of school;
  • Children forced from their homes experience behavioral problems, such as increases in violence;
  • The physical and mental health of displaced children can be severely compromised, as families losing their homes are less likely to have money available for items such as health care and health insurance.

Lesley added, “As the federal government continues to cut interest rates and take other actions to minimize the impact of the economic downturn, it is critical that they also address the needs of our nation’s children, who are innocent victims in this crisis. If nothing is done, children will continue to be impacted in a variety of respects that will have long term repercussions on their lives.”

The report was authored by Phillip Lovell of First Focus and First Focus Fellow Julia Isaacs of the Brookings Institution.

CLICK HERE to learn more information and to download a copy of the First Focus report, “The Impact of the Mortgage Crisis on Children”