Arab Today, arab today banks foreclose on churches in record numbers
Last Updated : GMT 15:39:54
Arab Today, arab today
Arab Today, arab today

Banks foreclose on churches in record numbers

Arab Today, arab today

Arab Today, arab today Banks foreclose on churches in record numbers

New York - Arabstoday

Banks are foreclosing on America\'s churches in record numbers as lenders increasingly lose patience with religious facilities that have defaulted on their mortgages, according to new data. The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance. 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. \"Churches are among the final institutions to get foreclosed upon because banks have not wanted to look like they are being heavy handed with the churches,\" said Scott Rolfs, managing director of Religious and Education finance at the investment bank Ziegler. Church defaults differ from residential foreclosures. Most of the loans in question are not 30-year mortgages but rather commercial loans that typically mature after just five years when the full balance becomes due immediately. Its common practice for banks to refinance such loans when they come due. But banks have become increasingly reluctant to do that because of pressure from regulators to clean up their balance sheets, said Rolfs. \"A lot of these loans were given when the properties were evaluated at a certain level in 2005 or 2006,\" Rolfs said. \"Banks have had to reappraise the value of these properties, whether it\'s a church or a commercial office building. Values have gone down, so the loans cannot continue in the same form.\" The factors leading to the boom in church foreclosures will sound familiar to many private homeowners evicted from their properties in recent years. During the property boom, many churches took out additional loans to refurbish or enlarge, often with major lenders or with the Evangelical Christian Credit Union, which was particularly aggressive in lending to religious institutions. Then after the financial crash, many churchgoers lost their jobs, donations plunged, and often, so did the value of the church building. Congregations in trouble Solid Rock Christian Church near Memphis, Tennessee, took out a $2.9 million loan with the Evangelical Christian Credit Union at the beginning of 2008, to construct a new, 2,000 seat, 34,000 square-foot building to house its growing congregation. In the middle of construction, the economy crashed. The church raided its savings to finish the project, but ended up defaulting on the loan. The ECCU foreclosed and put the church up for auction. \"We are still fighting this,\" a church spokesman told Reuters. \"We have filed for bankruptcy to stop this foreclosure and to restructure our debt.\" At the iconic Charles Street African American Episcopal Church in Boston, Massachusetts, churchgoers and clergy accuse the bank of being unwilling to negotiate. The church is being threatened with foreclosure and a March 22 auction by its lender OneUnited bank, America\'s largest black-owned bank. The bank says the church, which was founded in 1818 and played a major role in the anti-slavery movement, has defaulted on a $1.1 million balloon loan that came due in December 2011. A balloon loan is a long-term loan, often a mortgage, that has a large, or balloon, payment due upon maturity. They often have very low interest payments and require little capital outlay during the life of the loan due to the large end payment. \"We want to refinance and we want to pay. It\'s doable, we have the means to do it but we can only do it if they actually sit down and talk to us,\" said the Rev. Gregory G. Groover Snr, the church\'s pastor. Ballooning loan Groover said the church did not default by missing monthly payments, but is in trouble because the loan ballooned.

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