The 2008 crash of the real estate bubble and the ensuing Great Recession have victimized not only homeowners, but their houses of worship as well, as banks foreclose on churches in record numbers. As AllGov previously reported, foreclosures against churches nearly tripled between December 2007, when the recession began, and late 2010. Now, according to real estate information firm CoStar Group, in 2010 and 2011, 270 churches were sold after loan defaults, 132 in 2010 and 138 in 2011 (the latter is an annual record) with no sign of improvement on the horizon. Of those sales, 243 (90%) were the result of a bank foreclosure. In contrast, only 24 such sales occurred in 2008 and just a handful in the ten years previous.

 

The surge in church foreclosures was ushered in by an historic boom in spending on church construction, which rose 70% from 1995 to 1999 to an annual rate of $7.3 billion, reaching nearly $9 billion in 2003 before leveling off. Just as with the housing bubble, Wall Street played a role in inflating the church lending bubble. Evangelical Christian Credit Union (ECCU), America’s Christian Credit Union and Strongtower Financial began rapid expansion, while traditional church lenders like American Church Mortgage and Bank of the West struggled to compete. Lenders stretched lending guidelines and encouraged churches to take out ever larger loans, and many of the recent loans contained the same features that worsened the housing crash, such as low-interest teaser rates, securitized loans and balloon payments.

 

As was the case with more secular lenders, the executives of Christian finance companies took home large paychecks. Mark G. Holbrook, the CEO of ECCU, received compensation of $943,797 in 2008, while two other ECCU executives, Scott Vandeventer and Mark Johnson, made more than $700,000 each.

- Matt Bewig

 

Banks Foreclosing on Churches in Record Numbers (by Tim Reid, Reuters)

Christian Credit Union CEO Earned Nearly $1 Million (by Teri Sforza, Orange County Register)

Church Foreclosures Triple in Less than 3 Years (by Noel Brinkerhoff, AllGov)