A bankruptcy court is scheduled to hear a case between the $1.2 billion Evangelical Christian Credit Union and Lehman Brothers Inc. on a foreclosed property in limbo as the investment firm revises its Chapter 11 bankruptcy plan.
Evangelical Christian in Brea, Calif., has filed a lift stay motion against Lehman regarding a $6.6 million matured loan secured by 22 acres in Riverside. The land is owned by Life Church of God in Christ. The credit union is contesting that even though the property was appraised for $2.38 million, Lehman's subordinate mortgage has no value.
At a May 18 hearing, ECCU planned to ask the bankruptcy court to revise the lift stay motion so that it can proceed with foreclosing on Lehman's subordinate mortgage and the church's ownership interest in the property.
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Credit unions and banks are seeing a growing number of churches struggling to make their loan payments leading some to foreclosures. In 2008, ECCU foreclosed on seven of its 1,100 loans in Mark Johnson, executive vice president, told USA Today in a 2009 article. At the time, it had reworked a loan agreement with a Florida church. Two more church foreclosures were expected in 2009, Johnson said. A Texas church that filed for bankruptcy in February 2007 also owed Evangelical Christian nearly $2.8 million at the time of the article ran.
Johnson told the publication at the time that the CU has "done a really good job" evaluating loan applicants. However, the recession has triggered the rise in foreclosures.As recently as February, Solid Rock Church in Tennessee said its building is fighting foreclosure initiated by ECCU. The $2.9 million construction loan is in default. The church's pastor said it will fight the foreclosure.
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