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STUDY EXAMINES FORECLOSURE'S IMPACT ON CHILDREN FIVE NEW FIRMS SELECTED TO HELP OVERSEE SETTLEMENT AGREEMENT Oversight recently chose five new firms to serve as its eyes and ears on the ground as the $25 billion servicer settlement grinds forward. The new secondary professional firms— The Office of Mortgage Settlement including BKD, LLP; Baker Tilly Virchow Krause, LLP; Crowe Horwath, LLP; Grant Thornton, LLP; and McGladrey, LLP—will assist settlement monitor Joseph A. Smith Jr., over the next three-and-a-half years. According to a release, each firm will assist see it as a nightmare, a broken promise of the American Dream. Many might try to hide the stress and the effects of foreclosure from their children to keep them from worrying. However, researchers from the Children's Hospital of Philadelphia (CHOP) say children may actually suffer because of foreclosure more than anyone. According to a study conducted by CHOP's Parents going through foreclosure may An estimated 2.3 million are living in homes that have already been foreclosed, and another 6 million live in rented or owner-occupied homes at risk of foreclosure. Isaacs says because her report is based on outdated loan performance information for mortgages between 2004 and 2008, the 8.3 million estimate is "conservative." Physical abuse is not the only issue faced PolicyLab and published in the Journal of Pediatrics in July, there's a strong relationship between the rate of child physical abuse and local mortgage foreclosures. The study, titled "Local macroeconomic trends and hospital ad- missions for child abuse, 2000 to 2009," found that overall physical abuse increased by 0.79 percent per year in the period between 2000 and 2009, while traumatic brain injury increased by 3 percent in the same time. This data, based on reports pulled from 38 children's hospitals, stands in contrast to national child welfare data, which shows a decline in physical abuse. "We were concerned that health care providers and child welfare workers anecdotally reported seeing more severe child physical abuse cases, yet national child protective services data indicated a downward trend," said Joanne Wood, MD, MSHP, an attending physician at CHOP and lead author of PolicyLab's report. "It's well known that economic stress has been linked to an increase in child physical abuse, so we wanted to get to the bottom of the contrast- ing reports by formally studying hospital data on a larger scale." Researchers found that each 1 percent in- by children whose families are dealing with foreclosure. Isaac's report cites research dating as far back as the Great Depression, which shows financially distressed parents are more likely to engage in harsher and less supportive parenting, making it more difficult for children to interact with others. Furthermore, studies found higher rates of emergency room visits in ZIP codes with high foreclosure rates, pointing to the physical toll taken by stress and the need to postpone medical expenses. Analyzing the data of Isaac's report and the BDO Consulting, a division of BDO USA, LLP, and the primary professional firm respon- sible for evaluating servicers Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. "Each secondary professional firm has a high level of expertise that will bring the detailed, independent attention we need to monitor this settlement," Smith said in the release. He said he worked closely with BDO to select the final list of firms. "I am confident that these six accounting firms make up the blend we need to fully implement the settlement," he added. Appointed by state attorneys general, Smith leads the office as it oversees servicers' compli- ance with the terms of the historic settlement reached earlier this year. KNOW THIS Pediatrics study, Wood and the PolicyLab team called for more collaboration between child welfare agencies and hospitals so that both gain a better understanding of the extent to which abuse occurs in communities hit hard by foreclosure. They also noted that public agencies working with vulnerable children and families would be better equipped to prevent abuse if they had better working knowledge of the risk factors. "Two major themes emerge from this study," crease in 90-day mortgage delinquencies over a one-year period was associated with a 3 percent increase in hospital admissions due to child physical abuse and a 5 percent increase in admis- sions due to traumatic brain injury suspected to be caused by abuse. According to another report written by researcher Julia Isaacs for First Focus and the Brookings Institution, foreclosure affects more than 8 million children in the United States. 20 Wood said. "First, we see a clear opportunity to use hospital data along with child welfare data to ensure a more complete picture of child abuse rates both locally and nationally. Second, the study identifies another economic hardship— mortgage foreclosures—that is associated with severe physical abuse." Wood added, "As the foreclosure crisis is projected to continue in the near future, these results highlight the need to better understand the stress that housing insecurity places on families and communities so that we can better support them during difficult times." The Mortgage Bankers Association expects refinance volume to rise 9.0 percent in 2012 and purchase originations to fall 2.5 percent.

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