Heard about the latest foreclosure victim? The Lord Almighty himself. That’s right, this time it’s churches that are being scooped up and repossessed by the lenders, as more and more Houses of God fall behind on their mortgage repayments and incur the wrath of the Devil (the banks).
According to a report in Reuters, banks are growing fed up with granting forbearance to struggling churches, saying that it’s time for religious organizations to pay what they owe or bite the bullet and face foreclosure.
Last year, 2011, a record 138 churches were sold after being repossessed by banks, a sharp rise from the 28 churches that were foreclosed upon in 2008, according to data from the CoStar Group.
CoStar Group further reported that if anything, the number of troubled churches could be set to grow. Small and medium-sized churches appear to be most at risk of going down, with the states of California, Georgia, Florida and Michigan recording the highest number of church foreclosures. Perhaps unsurprisingly, these states are among the worst in the country for residential foreclosures as well.
Church foreclosures are different from their residential counterparts, reports Reuters. Instead of the standard 30-year mortgage which is taken out on a typical family home, church loans tend to be commercial ones that mature after an average of just five years, at which time the full balance has to be paid off.
During the years before the housing crisis, churches across the country took advantage of the easily available credit to borrow money for refurbishments or enlargements. Indeed, this was nothing new - churches had been doing so for years from organizations such as the Evangelical Christian Credit Union, typically refinancing these loans once they matured.
However, since the housing crisis, lenders have become reluctant to allow anyone to refinance, including churches. Banks are feeling the pressure from regulators to tidy up their outstanding balance sheets, and so churches are paying the price.
Scott Rolfs, managing director of Religious and Education finance at Ziegler, commented that “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.”
But now it seems, there time has come.