Police reportedly made the discovery after receiving reports in November of overcrowding in the multistory Victorian home in Colorado Springs.
When authorities showed up at the house, one officer allegedly heard music and the sounds of a child crying coming from the basement.
Faith told the cop there was no basement and that the children were playing at a park, according to the affidavit.
The officer apparently noticed a large stack of children's backpacks in a closet - but Faith claimed she was volunteering to clean the rucksacks for a soccer team, court docs allege.
Another officer arrived on scene and said he felt the wall move when he bumped into it, which led to the discovery of the fake partition.
The toddlers' parents allegedly had no clue their kids were being cared for in an unfinished basement - or that Faith was watching so many children.
Play Mountain Place was only authorized to care for six children, and the state Department of Human Services suspended Faith's license, according to the newspaper.
DHS forced Faith to close the doors of two other daycare facilities in November and said the agency was also investigating the operations of both.
Faith was arrested on suspicions of reckless child abuses without injury and attempt to influence a public servant, authorities said.
She posted $3,000 bond on Wednesday, and is set to appear in court on Jan. 2.