Foreclosures Put 8 Million Children At Risk, Study Says

By Kerri Panchuk

The foreclosure crisis impacted the lives of 8 million American children, and has left them and their parents at increased risk of homelessness and poverty, a Brookings Institution report says.

A study by Brookings scholar Julia Isaacs said 2.3 million children lost homes during the first wave of foreclosures. Another 6 million could face foreclosure in the near future or an eviction from a foreclosed property.

The scope of the tragedy is recognized within the mortgage finance industry. In analyzing the Brookings report, Rick Sharga, executive vice president at Carrington Mortgage Holdings, said there's one major point missing from the study, though.

"It is very likely that those famlies who are being displaced are going to become renters," he said. "The policies they are talking about probably would be helpful, but the problem is we have 97 percent rental occupancy rates nationwide, which makes affordability worse. If you are a distressed family coming off a foreclosure, the last thing you need is escalating rental rates."

Sharga said some investors are already interested in acquiring REO properties and turning them into affordable rental homes.