Church foreclosures reach record levels
posted at 3:25 pm on March 10, 2012 by Jazz Shaw
This is one of those titles which should have immediately lent itself to a discussion of a war on religion or some other social conservative prospect. But the reality turns out to be considerably more mundane. A recent study indicates that churches are being foreclosed upon in record numbers, but it doesn’t seem to have anything to do with the faith or denomination of the property owners in question. They just can’t make the loan payments.
Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group.
In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before.
The church foreclosures have hit all denominations across America, black and white, but with small to medium size houses of worship the worst. Most of these institutions have ended up being purchased by other churches.
The highest percentage have occurred in some of the states hardest hit by the home foreclosure crisis: California, Georgia, Florida and Michigan.
Many of the stories being told here don’t sound much different from the problems that homeowners have faced. This is particularly true of the Solid Rock Christian Church near Memphis, Tennessee. They took out a nearly $3M loan in early 2008 to construct a new, larger church as their congregation was expanding. Unfortunately, we all know what happened later that year. Another was the Charles Street African American Episcopal Church in Boston, who took out a long term loan. They made all the payments, but to get a low rate they structured the arrangement with the bank to include a million dollar balloon payment at the end, which came due last year. They are unable to make the large payment and are in pretty much the same situation.
While this doesn’t represent some sort of specific attack on churches by the banks, it does reflect the economy of the country at large. During periods of strong growth and plentiful jobs, if a church got into trouble, their economically sound congregants could pitch in to save the day. But when more and more of the faithful are out of work, they simply may not have the extra cash to donate and pay off the bank.
Everyone is feeling the pinch, and the banks can’t make many distinctions just because the borrower is a church. But I imagine selling off a church is more difficult than residential or standard commercial property. Tough situation all around.