Foreclosures' financial strains take toll on kids

Another study found that working families that spend more than half their income on housing have less money available than other families to pay for health care and other crucial needs, according to a July 2007 report by the Center for Housing Policy in Washington.

Melody Morrow, a sales rep for a semiconductor company, never thought foreclosure would strike her middle-class family. But as her employer struggled financially, Morrow, a divorced mother of three, says she had to absorb repeated pay cuts. Eventually, she couldn't pay her homeowners insurance. Then she put her home up for sale. She hasn't found a buyer, and now it's entering foreclosure.

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"I'm trying so hard right now not to cry," says Morrow, 43. "My daughters are going through a lot. They're feeling the stress of everything. They ask questions out of frustration, like, 'Mom, why did you get us into this situation?' I just say, 'God, what lesson do you want me to learn from this?'

"The girls are scared of what will happen. They don't want to leave their school and go to an apartment. There's a lot of guilt. I have days I cry and sob and say, 'Why is this happening?' and they see that."

Sense of stability important

Researchers at First Focus and the National Association for the Education of Homeless Children and Youth say that while younger children might not be able to articulate their distress, they are just as affected as teenagers. Birth to age 4 is a critical time in the brain development of children, and significant stress and upheaval can lead to higher rates of developmental delays and a lag in motor skills. Security and a sense of stability are vital to kids that age.

Ramona Garcia, 38, of Corona, Calif., says she did everything she could to ease the effects of her foreclosure on her young children, Sophia, 4, and Isabella, 5. Garcia and her husband, Dominic, both real estate agents, saw their business crash as the local housing market toppled.

The family struggled to pay their mortgage and moved to a rental after losing their home to foreclosure in November. In March, Ramona began selling jewelry as a sales rep for a company that she says gave her flexible hours so she could lend her girls some sense of security during a wrenching time for the family. Dominic, 41, found a job as a site-acquisition rep for cellphone companies.

The new job "lifted my spirits and gave me a sense of contributing again," Ramona says. "I was really focused on keeping the transition as smooth as possible for the children. We didn't even tell them we were moving until we were really close. We knew it wasn't going to be easy going from a big home with a pool to a smaller home."

Many children who are forced to move because of foreclosures often wind up leaving their neighborhoods and school districts, which can threaten their educational progress. Third-graders who have changed schools frequently are more likely to repeat a grade than their peers are, according to a Government Accountability Office report.