Update on church lending and foreclosures

Christianity Today has a brief update on the church lending scene in their article Churches: The New Risky Bet.

The article starts with almost good news of a megachurch in Florida that will meet their requirement of a multimillion balloon payment this year, but only by selling their property to the city and leasing it back for Sunday and Wednesday services. 

A reasonable solution. Except they don’t own their property anymore.

Refinancing those balloon payments is a big issue for a lot of churches.

Informal conversations I’ve had with lenders usually include the comment they are loaning to churches that qualify. That conditional “if” is a biggie. That means churches must meet underwriting criteria. That is a major challenge for a lot of churches that are still hurting from the recession.

Second item mentioned in the intro is another megachurch that sits empty after the lender foreclosed on a $14M loan in 2008. Consequence of back-and-forth litigation is that the facility sits unused.

The church bond market is either a “black hole” or slightly improving, depending on your source.

For the first time I’ve seen the comment in print, ECCU is mentioned as making loans again after put a halt to lending for a while:

… ECCU … said the credit union has ended its two-year hiatus on new loans. In fact, for the first half of 2013, the ECCU ranked second among all credit unions in the country for the amount it lent in business loans, according to Thomson Reuters Bank Insight.

I’ve not looked at the NCUA filings, which are available on-line, so don’t know when the loan funding restarted. That comment by itself implies sometime in late 2012.

Their foreclosure activity is declining:

Although it {ECCU} initiated a dozen foreclosures in 2013, by August 31 only three remained active

That is a fraction of the foreclosure load from a few years ago.

CCCU is quoted as saying their delinquencies are declining.  They expect no foreclosures in 2013. The article has no mention of numbers. Again, that would be available from NCUA if someone was really interested.

Lenders quoted in the article include Capstone Church Bond Fund, Ziegler Investment Group, ECCU, and CCCU.  One major lender that I’m aware of who is active in Southern California that wasn’t quoted is Bank of the West.

If you are active in the church community, might be worth finding the full article. I rarely see any public discussion from the lenders to churches.  The link above is restricted to subscribers. Look for the November issue.

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