Two years later . . . foreclosure families still in homes

In a recent study by the Federal Reserve Board of Governors on post-foreclosure experience of U.S. households, authors found little evidence to confirm anecdotal suggestions that many people end up living in larger households in order to defray living expenses.

In fact, the extended foreclosure process seems to allow many to stay in their homes long after the foreclosure starts. About half of individuals have not even moved two years after the foreclosure starts, suggesting that the foreclosure process is frequently never completed. Additionally, migration was less likely in judicial states and in those where there was rapid house price appreciation.

Only about 20 percent of post-foreclosure borrowers move far enough to participate in a different labor market. Thus, it appears that post-foreclosure migrants may choose a new location that allows them to stay in the same local job market.

Although changing status from owner-occupancy to renting increases the chance a post-foreclosure household will live in a multifamily structure, the majority of these households still live in single-family housing units.

Also, authors Raven Molloy Huai Shan found that post-foreclosure individuals move to rental units in denser urban areas, but the new neighborhoods do not seem to be much less desirable.