Posted On: May 6, 2010
Church Foreclosures Triple
A lot of Florida homeowners facing foreclosure think they don’t have a prayer of keeping their home. And now houses of prayer all over the country are joining those foreclosure ranks in increasing numbers.According to a recent Reuters report, foreclosure proceedings against churches in the U.S. have tripled over the past three years. In addition, more than 100 churches have declared bankruptcy.
Churches emerged from previous economic downturns relatively unscathed, lenders noted. But the recent recession was preceded by an unusual boom in church building.
Spending on construction of religious buildings rose sharply in the late 1990s, climbing 70 percent from 1995 to 1999 to an annual rate of $7.3 billion. New building continued to tick up, eventually reaching an annual rate of nearly $9 billion in 2003 before leveling off, according to data from the U.S. Census Bureau.
As was the case in the residential housing market, the church property boom was accompanied by the rise of more specialized lending. Church lending was historically done by community banks, which sometimes have ties through a member of a congregation. Loans were often set at a fixed rate and for a set term.
Many of the loans made in recent years contained many of the same features that exacerbated the residential real estate crash, such as low-interest teaser rates, securitized loans and balloon payments.
As a result, bad loans are rising rapidly for those lenders that pushed aggressively into church finance. Delinquent loans at the Evangelical Christian Credit Union, which expanded its loan portfolio from about $225 million to more than $1 billion over the last decade, have risen to 7.4 percent of their loans from 3.6 percent a year ago. Until 2007, the lender did not have a loan in foreclosure.
If you need help in defending a Florida foreclosure, contact our Jacksonville, Florida foreclosure law firm.
Greg Gilbert
Keith Maynard
