12/23/08

WSJ: Bank forclosures on bankrupt churches go up as economy declines

Banks have no mercy during bad economic times, even on houses of god. The Wall Street Journal chronicles tales of woe from overextended churches that have been forced into bankruptcy and into foreclosure.

No mention in the story of synagogues or temples in foreclosure or bankruptcy. A Google search on that subject doesn't turn much up either. In fact, in a gutsy move, given the recession and the crisis in Jewish philanthropy resulting from the Madoff scandal, new construction just started on the expansion of the Rinat Yisrael shul in Teaneck.

From the WSJ:
...Church Foreclosures

"We are seeing more stress in churches than we have in modern history," says Mark G. Holbrook, president and chief executive of the Evangelical Christian Credit Union of Brea, Calif., which specializes in lending to churches. The credit union has moved to foreclose on seven of its 2,000 member churches this year, and Mr. Holbrook says he expects to take similar action against two more next year. Before now, it had foreclosed on only two churches in its 45-year history.

Church Mortgage & Loan Corp. of Maitland, Fla., another church lender, foreclosed on 10 church properties in the past couple of years. Unable to sell any of them, the company didn't have the funds to pay more than 400 bondholders the estimated $18 million it owes, says company lawyer Elizabeth Green. Church Mortgage filed for Chapter 11 bankruptcy protection in March.

Strongtower Financial of Fresno, Calif., says two of its 300 evangelical church borrowers are in default, compared with only one in the previous 15 years.

Dozens more churches are listed as delinquent on their loans, according to a search of county court records nationwide.

Churches were long considered good credit risks, lenders say. Weekly collections tend to be steady, even during recessions, and churches feel a moral tug to pay debts. Most of the nation's 335,000 churches carry little or no mortgage debt, and are based in buildings that were paid off long ago...more

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