The wave of foreclosures that has affected homeowners for the past three years has now spread to churches.
According to Reuters, banks were intially reluctant to foreclose on church properties but are now running out of patience. In 2011, banks sold a record 138 church buildings, compared to only 24 such sales in 2008 and a handful in the previous decade. Many of the buildings have been purchased by other churches.
Reuters explains that most of these defaults involve commercial loans which the churches took out to enlarge or refurbish their buildings. These loans typically mature after just five years, at which point the entire balance becomes due.
In the past, churches were generally able to refinance their loans, but with property values dropping, banks are increasingly unwilling to accommodate them. At the same time, with many parishioners out of work, the churches are receiving less in donations.
One of the most prominent examples is Boston’s Charles Street African Methodist Episcopal Church, which was founded in 1818 and played a historical role in the abolutionist movement.
The church has defaulted on a $1.1 million balloon loan and has also been sued over another loan by the minority-owned OneUnited Bank, which is having its own problems repaying a $12 million federal bailout. A few days ago, without any warning to the church, the bank advertised that it was about to foreclose on two of its properties.
A protest meeting last Sunday drew several hundred people to hear ministers, politicians, and community leaders denounce greed and injustice from the altar of the church and call on the bank to help the church refinance the loans or face the wrath of the community.
This video of the Charles Street AME protest is from Boston.com, March 5, 2012.