Panel Paper: Spare the Home, Spare the Child? Foreclosure and Child Welfare Outcomes

Saturday, November 10, 2012 : 9:30 AM
Preston (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Lawrence Berger, University of Wisconsin - Madison, J. Michael Collins, University of Wisconsin and Timothy Smeeding, Institute for Research on Poverty

Housing and family outcomes have long been associated. Stable housing with safe conditions have generally been associated with better home environments and positive child development. But economic distress can impact families in many dimensions, including eroding the stability of housing. A job loss might result in an inability to make housing payments and ultimately an involuntary move. Even staying in a home might introduce stress if housing costs rise and the ability to pay for housing is weakened. This might result in psychological stress, reduced parenting activity and lower levels of emotional and physical support for children. Such distress might be manifested in school performance, mental or physical health or even in an extreme case abuse and neglect of children by their parents.

Using a unique administrative dataset from the State of Wisconsin, we are able to match households—both by name and address—in court records for evictions and foreclosures to state reports to child protective services. We are also able to link the data to earnings and employment, as well as applications for public benefits such as food support (SNAP) and unemployment insurance (UI). While court judgments for evictions of renters are relatively rare, any lender seeking remedy for a mortgage default in the State of Wisconsin must file in court. Thus, the dataset captures every initial foreclosure filing for 2008-2010 in the state (approximately 50,000 unique filings). 

Based on these data we are able to observe the chain of events that might include a job loss or earnings reduction, applications for UI and other state administered benefits, mortgage foreclosure filing and, in some cases, reports to Child Protective Services (CPS). About 5 percent, or 2,500 families, appear in multiple administrative systems, allowing us to assemble a timeline of events, including the ultimate outcomes of the CPS filing and foreclosure proceeding.

We hypothesize that foreclosures are associated with increased reports to CPS, especially the month of the filing and during any moving/transition months where households are forced to downgrade into lower-cost and quality housing. While the causal link between foreclosure filings and CPS reports might be confounded by economic and martial distress in general, we are able to observe non-foreclosure CPS cases, as well as prior CPS activity for clients before any housing problems began. While still in preliminary stages we remain optimistic that the sample size is robust enough to be able to conduct matching and other methods to compare child and family outcomes over time.

The policy implications of this work are potentially important. CPS, UI and foreclosure systems are not well integrated. To the extent UI and foreclosure filings appear associated with negative child outcomes, more targeted programs could be developed to prevent abuse and neglect for families entering the system.

This project was generously funded by the MacArthur Foundation Housing Matters Initiative.