Sunday, March 11, 2012

Foreclosures - Bank Targeting Churches

Many Lenders are foreclosing on church buildings across America in increasing numbers as banks lose patience with religious establishments that have stopped sending their loans.

The surge in church Mortgage foreclosures provides a unique wave of distressed property seizures prompted by the 2008 financial crash, with many banking institutions no longer inclined to grant distressed religious organizations forbearance.

Ever since 2010, 270 church buildings have been sold after defaulting on their commercial loan, with the majority of those sales happened after a lender triggered foreclosure.

A record number of churches were sold by lenders in 2011, as 138 churches were sold, with no indication that these religious foreclosures are slowing. Considering just 24 church sales in 2008 and only a small number in the 10 years before.

The church foreclosures have affected all denominations throughout America, but with smaller to medium size churches the worst hit. The majority of of these institutions have ended up being sold to other churches.

The highest percentage have taken place in some of the states hardest struck by the home foreclosure catastrophe: California, Florida. Michigan and Georgia..

Church foreclosures are different from house foreclosures. Most of the mortgages in question are not the typical 30 year mortgages but rather commercial loans which typically mature after five years when the full balance becomes due immediately.

Its typical practice for lenders to refinance such commercial loans when they come due. But lenders have become more and more reluctant to do that because of demand from bureaucrats to clean up their balance sheets.

The reasons leading to the boom in church foreclosures will sound familiar to millions of foreclosed homeowners forced out from their houses in recent years. During the great real estate boom, many churches took extra loans to refurbish or enlarge, often with major lenders.

With the economy went tumbling down, millions lost their jobs, donations plunged, and so did the appraise value of the church building.

No comments:

Total Pageviews