Reuters reports that banks are foreclosing on churches in record numbers these days as lenders lose patience with churches that can’t pay their mortgages. Analysts say churches are typically the last facilities to get foreclosed upon because banks do not want to appear “heavy-handed” with them. But the recession and the home foreclosure crisis has hit churches hard, particularly small- to medium-sized ones and those in the states most distressed by the turmoil: California, Michigan, Florida, and Georgia.
When property values were high, many churches took out additional loans for building remodels or enlargements, but after the housing crash donations plummeted as congregants lost jobs due ot the recession. “A lot of these loans were given when the properties were evaluated at a certain level in 2005 or 2006,” said Scott Rolfs, director at investment bank Ziegler. “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.”
According to real estate information company CoStar, 270 churches have defaulted on their loans and were sold since 2010, and in 2011, 138 were sold by banks, a record number. There were only 24 in 2008 and just a few in the years before that.
Read some of the stories of troubled churches here.
