Credit unions and banks are seeing a growing number of churches struggling to make their loan payments leading some to foreclosures, USA Today reported.
According to the March 19 article, delinquencies and foreclosures are on the rise. The $1.2 billion Evangelical Christian CU had to foreclose on seven of its 1,100 loans in 2008, Mark Johnson, executive vice president, told USA Today. The Brea, Calif.-based CU recently reworked a loan agreement with a Florida church. Two more church foreclosures are expected this year, Johnson said. A Texas church that filed for bankruptcy in February 2007 also owes Evangelical Christian nearly $2.8 million.
Atlanta-based Reliance Trust, the trustee for many church bonds in the U.S., has also seen an increase in delinquencies, according to the article. Temple Beth Haverim in Agoura Hills, Calif. owes more than $7 million after it filed Chapter 11 bankruptcy last July. The California Baptist Foundation's Strongtower Financial said 10% of its $119 million in outstanding church loans were in default as of March 31, 2008, the most recent required reporting data.
Johnson told the publication that the CU has "done a really good job" evaluating loan applicants. However, the recession that hit 18 months ago has triggered the rise in foreclosures, he said.