Church foreclosures

December 30, 2008

By now everyone’s seen the New York Times article by Louise Story; it talks about church foreclosures in general, and uses the story of Seabreeze Church in Huntington Beach, California to hold the piece together. The bigger story, about church foreclosures generally, is compelling because it suggests that a church is just another business, and it flies in the face of the conventional wisdom that religious people are more generous when times are tough, rather than less. The smaller story, about Seabreeze Church is compelling in some circles because of doctrinal differences, or because the church had help in the past from Saddleback Community Church, home of Rick Warren.

Unfortunately, according to John Sexton the connection between Seabreeze and the current economic climate doesn’t make sense: he says Seabreeze is in trouble because of pastoral malfeasance:

  • In the first of two articles yesterday he places the blame squarely on pastor Bevan Unrau, for his authoritarian teaching and management style, for firing staff who disagreed with him and for driving away people who attended (and we assume gave money to) the church.
  • In the second article he takes issue with an article in the Orange County Register by Anne Burris, questioning the way the financial numbers are presented in the article.

At the heart of Sexton’s contentions in the second article is a claim that attendance at the church fell from 850 people to current levels of about 700; Sexton says that on the way attendance reached 1050; if true this supports his claim that some event inside the church caused a growing church to stop growing and contract.

Also mentioned in the story is the Evangelical Christian Credit Union, which according to the article wrote Seabreeze’s original mortgage and arranged for emergency refinancing when Seabreeze couldn’t meet its obligations under the original loan. They are probably an important player to watch as the larger story progresses, as they likely have many church mortgages on their books.

Which brings us back to the larger story: given the current recession, and the fact that it is about a year old, shouldn’t we see lots of church foreclosures in the news? Here’s what I found online:

  • May 2008: Blessed Trinity Missionary Baptist Church in South Memphis, a tiny church with 30 in attendance at their last Sunday service, is sold at auction as part of foreclosure proceedings arising from an $85,000 mortgage.
  • January 2007: the Atlanta Journal-Constitution reports on the foreclosure by BB&T on Cathedral at Chapel Hill for debts of “about $1 million.” At the heart of the foreclosure is pastoral misbehavior: Earl Paulk’s attorney admits Paulk had a sexual relationship with church member Monica Brewer.
  • November 2004: New Life Worship Center, North Little Rock, Arkansas defaults; no details.
  • Yesterday: Our Father’s House Baptist Church, Disney Oklahoma, faces foreclosure owing $400,000 on a construction loan; fire destroyed their former building two years ago. No other details appear to be available, so we can’t sensibly ask financial questions about e.g. insurance.
  • November 2008: Without Walls International Church defaults on a $12 million mortgage, again written by Evangelical Christian Credit Union. Weblog posts here and here. This is one of the ministries being investigated by Charles Grassley, Senator from Iowa, and pastors Randy White and Paula White announced their divorce last year.

And finally, Suzanne Sataline of the Wall Street Journal offers an omnibus article on church foreclosures; here are the highlights:

  • St. Andrew Anglican Church, Easton, Maryland. Also covered in Louise Story’s article above; a congregation of fifty people, they borrowed $850,000 in 2005 to buy a building as part of the ongoing Anglican/Episcopal conservative/liberal breakup.
  • Evangelical Christian Credit Union has begun foreclosure proceedings against 7 of its 2000 member churches this year; Mark Holbrook, President and CEO of ECCU expects to foreclose on two more next year. Had foreclosed on two churches in the previous 45 years.
  • Church Mortgage & Loan Corporation has foreclosed on 10 churches in the past couple of years; unable to liquidate the properties, it filed Chapter 11 this year.
  • Strongtower Financial says 2 of its 300 evangelical church borrowers are in default, compared with only one in the previous 15 years.
  • “Dozens more churches are listed as delinquent on their loans, according to a search of county court records nationwide.” This is kind of soft; I wish Sataline had given a number here.
  • Mount Calvary Missionary Baptist Church, Jacksonville, Florida, borrowed about $2.6 million in 2002 for “an education wing, a reflecting pool, and a tower.” It filed for bankruptcy protection this year to avoid a $3.3 million foreclosure judgment.

Of the six churches we can find here where the foreclosure took place during the current recession (since December 2007), two are tiny churches, one had a fire, one has a Senator asking questions about their finances (and the pastor has divorced), one had a shortfall of $1 million in pledged donations, and the sixth is Seabreeze. There’s no clear pattern here, and we don’t know much about the 21 churches in the bullets above, but it might be reasonable to suggest that the current recession has had an impact on small churches, which are especially vulnerable if an economic downturn reduces the giving ability of a handful of donors, but the larger churches seem to be more susceptible to questionable judgment on the part of their leaders.

Update 1: April 2008: Ambassador Family Church, Oceanside, California: Evangelical Christian Credit Union also involved, terms not disclosed. Church peaked at 800 people, fell to 200. Building delays were blamed, as was the pastor, Barry Cook. He and his wife Terri separated in 2006, divorced in 2007.

Update 2: I did some more digging and found this article at Street Prophets/Daily Kos. I can’t figure out who the author is; the author link dangles. The author mostly summarizes Sataline’s article and forecasts a radical shift in how Americans go to church. I might humbly suggest that forty foreclosures in a nation with several hundred thousand churches does not yet justify that prediction.

This begs the question, though: how many churches have mortgages or building loans? Nobody seems to know: both of the articles from the major news sources talk about foreclosure counts and how many churches there are in America, but neither of them puts the foreclosure number in the context that would be helpful: if every church in the country defaulted on its mortgage, how many churches would that be?

Update 3: See also my later post here for more details and analysis.

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One Response to “Church foreclosures”


  1. As a significant participant in the church mortgage business for the last 8 years, I can tell you that while churches are more vulnerable in tougher economic times (just as busnesses are), the vast majority of foreclosures result from mismanagement (over-leveraging, incompetence, internal conflict, infidelity, etc.). In tough times, the lack of surpluses creates a thinner margin for error, and some churches don’t survive the hits. Churches rarely default strictly as a result of recessionary downturns in giving. Even in this recession, it will surprise me if church morgage defaults come anywhere near the levels of commercial mortgages in general.


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