08/02/2011 07:59 pm ET Updated Oct 02, 2011

The Stories Statistics Don't Tell

A rather odd study from the Federal Reserve got a smattering of press coverage in recent weeks. The overall message seems to be that hey, foreclosure's not so bad. As the story on MSN Money put it, "For those forced to move, it's not always for the worse."

The study, based on statistics from a large sample of consumer credit information compiled by Equifax and the Federal Reserve Bank of New York, unintentionally confirms Mark Twain's quip, "There are three kinds of lies: lies, damned lies and statistics."

To hear Fed researchers Raven Malloy and Hui Shan tell it, for many people foreclosure is little more than an inconvenience. Most don't end up in significantly worse neighborhoods or more crowded living conditions. "In short," they write, "we find little evidence that many people end up living in larger households in order to defray living expenses. ... [I]t does not appear that post-foreclosure borrowers are moving to much less desirable neighborhoods."

But the real story is underneath the statistics, where the Fed's researchers don't look. Still, small hints do creep into their report: For example, while foreclosure victims end up living with roughly the same number of people they did pre-foreclosure, they're often different people. Therein lies a tale of families split up, children and siblings scattered, lives upended.

Charlie Swarthout, whose foreclosure nightmare was described in painful detail last year in the Oakdale Leader, has one such story: "Today Swarthout is a changed man. His family is splintered, his house is foreclosed and his dreams are shattered. It's hard to decide which pieces to pick up to fix -- everything is a mess."

Two and a half years ago, researchers from the University of North Carolina and the National Council of La Raza interviewed Latino families impacted by foreclosure and found a trail of financial and personal destruction:

"Spouses and partners often reported increased tension and discord in their relationships as a result of the foreclosure. This led to consideration of divorce or separation... Parents reported anxiety, arguing, and distance between them and their children... Overcrowding, affordability, and neighborhood safety topped the list of major concerns about the participants' current housing situation."

And that's just the personal side of foreclosure's impact. We've seen a massive drain of wealth from working American families, with communities of color feeling the most devastating effects. This unevenly distributed financial catastrophe was just underlined by shocking new Pew Center data showing that America's wealth gap has exploded: For every dollar a white family owns, the median Latino family now has roughly six cents and the median black family has a nickel. Pew explained, "The bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites." Unfortunately, the Fed report contains no racial/ethnic data breakdowns.

Yes, some people get through foreclosure with their lives relatively intact, but there is no reason at all to think that's the norm. There are human realities that statistics don't capture. And with the New York Times estimating that some four million foreclosures are either in process or "waiting in the wings," we would do well to remember that.