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Churches in the U.S. are shutting their doors in record numbers as the reckoning from the 2008 burst of the housing bubble catches up to religious institutions, Reuters reports.
According to data from the CoStar Group, 270 churches have been sold after a loan default since 2010, 90 percent of which were a result of foreclosure by a bank; 138 of those were in 2011, which is an annual record. Compare that with 2008, when there were only 24 church sales from default, and a "handful" more from the previous decade.
Like many property owners, churches across the country took advantage of the property boom. Church leaders took out additional loans for expansions or improvements on facilities, often to house growing congregations.
Now, those loans are defaulting, and churches are facing bankruptcy as donations dwindle and the value of their construction misses expectations. But apparently, banks have procrastinated on foreclosing on the institutions because they've "not wanted to look like they are being heavy handed with the churches," Scott Rolfs, managing director of Religious and Education finance at Ziegler investment bank told Reuters.
The Evangelical Christian Credit Union, whom Reuters calls a "particularly aggressive" lender in the property boom, has been previously reported on by Bloomberg. The ECCU was the largest evangelical lender in 2009, with more than $3 billion in mortgages initiated since 1999.
Churches take out commercial loans, which normally come due in full after 5 years. Usually, banks refinanced these loans, but that's no longer common practice in the foreclosure crisis. Banks are now losing patience and are foreclosing on the religious facilities that can't pay and aren't refinancing their loans.