March 10th, 2012
Econintersect: Tim Reid reports for Reuters that banks are foreclosing on churches in America at an unprecedented rate. For the decade ending in 2007 only “a handful” of church properties went through foreclose. In 2008 the number jumped to 24, then to 132 by the year 2010 and a new all-time record 138 in 2011. These foreclosures are for loans in the same category as commercial mortgage loans for businesses, typically five years in duration and customarily rolled over into a new five-year note at maturity. With the collapse of the economy and fewer church members working, revenues for churches have fallen at the same time real estate values have declined.
Follow up:So even though church properties do not have mortgages of the same type as residential real estate, they are suffering the same consequences as homeowners – loss of income and lower market value. Especially hard hit are churches that took out mortgages 2005-2008 often for the purpose of expansion. These were done against appraisal values at the peak of the boom and five years later, when the mortgage balloon is due, the property values have fallen and the post-bubble value is no longer sufficient to cover the roll-over loan needed.
The five year window for overvalued loans probably extends for those issued through 2008 so this year and next are likely to see continued high church foreclosure numbers.
The following video discusses how churches in Georgia are dealing with foreclosure problems. As of February 2011, Georgia had more than 90 churches dealing with potential foreclosure. Some have completed the process and have had title transferred to lenders.
Some may turn to the Bible for understanding. From The New Testament (King James version):
12And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves, 13And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves. (Matthew 21:12,13)
Nearly 2,000 years later the money changers are reclaiming the temple and reestablishing the den of thieves. Should the people reading this passage and looking at the current news now turn to Revelation?
- Banks foreclosing on churches in record numbers (Tim Reid, Reuters, 09 March 2012)
- Churches face foreclosure in recession’s wake (theGrio, 08 February 2011)
- Matthew 21, King James Version (Biblos)
Hat tip to Roger Erickson.