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"Foreclosure and Kids: When Losing Your Home Means Losing Your School,"

by Vicki Been, Ingrid Gould Ellen, Amy Ellen Schwartz, Leanna Stiefel & Meryle Weinstein March/April 2011 issue of Poverty & Race

While researchers, policymakers and the popular media have given considerable attention to the causes of the foreclosure crisis and its impact on communities, we know little about its impact on individual families and children. Yet, as a result of foreclosures, many children around the country are being forced to leave their existing homes and many are likely leaving their schools as well.

To explore how foreclosures have affected children, the Open Society Foundations funded research in three cities. The Urban Institute studied the relationship between foreclosure and student mobility in Washington, DC, the Baltimore Neighborhood Indicators Alliance focused on Baltimore, and New York University’s Furman Center for Real Estate and Urban Policy and NYU’s Institute for Education and Social Policy examined the issue in New York City. We summarize key findings from New York here. Specifically, we review whether children in New York City who live in properties entering foreclosure were more likely than their peers to switch schools and how the new schools the children attended after moving differed from their original schools, in terms of student demographics and performance. Researchers have found that changing schools is often damaging to children’s academic performance, and moving to a lower-quality school may be particularly problematic. Our research focuses on elementary and middle school students who attended New York City public schools in the 2003-04 and 2006-07 school years.

Foreclosures in New York City

While New York City may not have been hit as hard by foreclosures as such cities as Cleveland and Detroit, it has experienced a significant spike in recent years. The number of properties receiving a notice of foreclosure (lis pendens or “LPs”) each year more than doubled between 2000 and 2010. By the 2006-07 school year, 17,282 properties received a notice of foreclosure. Because so many properties entering the foreclosure process in New York City contain multiple units, more than 35,000 households lived in these properties.

Most of the properties receiving foreclosure notices in New York are located in the boroughs outside of Manhattan, especially Brooklyn and Queens. Within those two boroughs, foreclosures are heavily concentrated in predominantly black and nearly exclusively majority-minority neighborhoods in North-Central Brooklyn and Southeastern Queens.

Foreclosure notices can lead to various outcomes, each of which is likely to have a different effect on the mobility of children and families living in the property. Some properties receiving foreclosure notices go all the way through the entire foreclosure process, ending at auction. When properties go to auction, generally all residents are forced to move, and many will likely end up in new neighborhoods and school zones.

Other owners are able to resolve the delinquency by either becoming current on their loans or selling their properties to pay off the mortgage. If owners sell the property to pay mortgage debt, children of owners must move and children of tenants will likely—but not necessarily—be forced to move as well. Again, these residential moves also may precipitate school moves. If owners pay the arrears or receive a mortgage modification, they may be able to stay in their homes but may be forced to make significant lifestyle or budgetary changes to afford the payments. Similarly, when owners of rental properties become current on payments and avoid foreclosure, they may have to cut back on maintenance or utility payments, and tenants may move out as a result.

In New York City, between 2002 and 2005, a relatively small share of properties entering foreclosure ended up at a foreclosure auction. Fewer than 10% of lis pendens issued in those years went to auction in the subsequent three years. Half of the properties that received foreclosure notices were transferred to new owners, either through an arms-length sale or through other means. (Additionally, 17% received a subsequent lis pendens notice, and 27% had no subsequent outcome in the three years following the initial notice.) However, the share of properties going to auction has increased in recent years, with close to 20% of properties in 2006 that entered foreclosure ending up at foreclosure auction by 2009.

A Growing Number of Children Affected by Foreclosure in New York City

Given both the increase in foreclosure notices and the increased proportion of buildings in foreclosure with multiple housing units, it is not surprising that the number of public school students living in buildings entering foreclosure increased between the two study periods. During the 2003-04 school year, 12,067 students lived in properties entering foreclosure; by the 2006-07 school year, this number had risen to 20,453 students, an increase of 69%. This represents 2% of the 1.1 million children attending New York City public schools.

Most of the students living in properties in foreclosure lived in multifamily buildings. Almost two-thirds of students lived in 2-4 family homes and about 10% lived in larger apartment buildings; these students’ families most likely rented their homes. Just 28% of the students living in properties that received foreclosure notices during the 2006-07 school year lived in single-family homes. Given that 85% of single-family homes in New York City were owner-occupied in 2007, these families likely owned the homes that were foreclosed.

Black Children More Likely to Live in Foreclosed Homes

The largest difference between students who lived in properties entering foreclosure and those who did not was clearly race. Students whose buildings entered foreclosure were far more likely to be black than other students in the school system. In 2006-07, 57% of students living in buildings entering foreclosure were black, compared to 33% of students whose homes did not enter foreclosure. Students living in buildings entering foreclosure were significantly less likely to be white, Asian or Hispanic. Only 29% of students in buildings entering foreclosure were Hispanic in the 2006-07 school year, as compared to 39% of other students.

Children Living in Properties in Foreclosure Were More Likely to Switch Schools, but Stay in the NYC School System

We capture student mobility by looking at whether students switched schools between the base study year and in the following school year (i.e., between 2003-04 and 2004-05 and then between 2006-07 and 2007-08). In both school years, children living in buildings in foreclosure were more likely than their peers to switch schools within the public school system. For example, 13% of children in grades 1-4 who lived in buildings that entered foreclosure in the 2006-07 school year attended a different school in the subsequent school year, compared to only 10% of students who did not live in buildings in foreclosure.
Interestingly, while children experiencing foreclosure were more likely than their peers to move to a new school within the New York City system, they were less likely to leave the city’s public school system altogether. In a given school year, 7-8% of students exit the school system because their families leave New York City or because they switch to private or parochial schools. Among students living in buildings entering foreclosure, only about 3% exited the public schools. This may imply that a foreclosure causes families who would otherwise move away or possibly send their children to private school to remain instead in New York City and continue to rely on the public school system. This hypothesis is bolstered by the fact that white and non-poor students were more likely to exit the school system than black and poor students, which suggests that these exits are more likely to be affirmative moves made by households with means to choose other alternatives.

These mobility patterns hold up even when we account for student characteristics such as race, poverty, gender and grade which may be associated with mobility by using regression analysis. Controlling for these factors, we find that students who lived in buildings entering foreclosure were more likely than those whose buildings did not enter foreclosure to change schools, implying that differences in mobility rates are not driven by differences in the underlying populations. The regression results also reveal that students living in 2-4 unit and larger multifamily buildings were more likely to move after a foreclosure notice than those living in single-family homes. Children living in properties that went to a foreclosure auction experienced particularly high levels of school mobility.

Students Who Move After a Foreclosure Notice Attend Lower- Performing Schools

Students that moved to new schools after a foreclosure notice tended to move to lower-performing schools. On average, children who experienced a foreclosure notice moved from a school with a math proficiency rate of 74% to a school where 68% of students were proficient in math. On average, children living in buildings entering foreclosure ended up in schools with reading proficiency rates that were two percentage points lower. The racial and ethnic composition of schools students attend after a foreclosure-related move were nearly identical, though, to those of their original schools. Notably, the change in school quality was more dramatic for students who lived in 2-4 unit buildings that entered foreclosure, as compared to students living in other types of buildings entering foreclosure.

While this shift to lower-quality schools should be of concern to policymakers and parents, the change in school quality associated with foreclosure-related moves was no more dramatic than that experienced by other students who moved schools.


Foreclosures in New York City have increased in recent years, and they have disproportionately occurred in majority-minority, and in particular, largely black communities. As policymakers begin to understand the broader costs that foreclosures impose on these neighborhoods, it is important to consider their effect on students and schools.

On balance, foreclosures seem to increase student mobility, and we find that when they move, students end up in lower-performing schools. Foreclosures also appear to decrease the rate of departure from the school system, which may have implications for school crowding, particularly in those lower-performing schools that a large number of students living in buildings in foreclosure attend. Educators and policymakers should be vigilant about identifying social or academic problems resulting from mobility increases. With support from the MacArthur Foundation, we are continuing to study this issue, focusing in particular on the impacts of foreclosures on individual student performance.


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Vicki Been is the Boxer Family Professor of Law at New York University School of Law, Associate Professor of Public Policy at NYU’s Wagner School and Faculty Director of the Furman Center.
Ingrid Gould Ellen is Faculty Co-Director of NYU’s Furman Center for Real Estate and Urban Policy and Professor of Public Policy and Urban Planning at NYU’s Wagner School.
Amy Ellen Schwartz is Director of the Inst. for Education and Social Policy and Professor of Public Policy, Education, and Economics at the Wagner School and Steinhardt School, NYU.
Leanna Stiefel is Associate Director of the Inst. for Education and Social Policy and Professor of Economics at the NYU’s Wagner School and Professor of Economics and Education Policy at the Steinhardt School.
Meryle Weinstein is Assistant Director of the Inst. for Education and Social Policy at NYU.

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