The article starts this way.
Tim Read, Reuters, 8 March 2012 (Hat tip: NC)
· Churches hit by credit bubble, some devalued.
· Churches faulting, struggling with "balloon" payouts
· Banks say church foreclosure last resort
LOS ANGELES, March 9 (Reuters) - Banks are foreclosing on America's churches in record numbers as lenders increasingly lose patience with religious facilities that have defaulted on their mortgages, according to new data.
The numbers they are talking about are not huge. They note 138 churches as defaulting in 2011, up from just 38 in 2008. These are not huge numbers.
Wake County, North Carolina (location of State Capital), one of a hundred counties in , lists 404 churches just by itself. The article states that there are over 300,000 churches total in the North Carolina . United States
Church defaults differ from residential foreclosures. Most of the loans in question are not 30-year mortgages but rather commercial loans that typically mature after just five years when the full balance becomes due immediately.
Its common practice for banks to refinance such loans when they come due. But banks have become increasingly reluctant to do that because of pressure from regulators to clean up their balance sheets, said Rolfs.
"A lot of these loans were given when the properties were evaluated at a certain level in 2005 or 2006," Rolfs said. "Banks have had to reappraise the value of these properties, whether it's a church or a commercial office building. Values have gone down, so the loans cannot continue in the same form."
I am sure that there are churches that have over extended themselves. And most of the time the bank doesn’t have much choice but to negotiate a deal: on the resale market, I am sure churches loose much of their values. But within the body of the story, you are hearing something similar to what was going on in the housing market.
"The bank has refused to negotiate and to this day I just don't know why," said Binita Miles, the church pastor.