Latest Issue: May 2012

Recession pain has hit widely and deeply among U.S. churches- driving down contributions and limiting budgets, according to surveys from two groups specializing in Christian research. Meanwhile, pleas for assistance has sharply increased. Churchgoers are placing their personal finances above their faith and holding back their dollars - up to $1.2 billion less in 2010, according to studies - and churches are feeling it. Many are faced with looming debt and foreclosure, or have shut their doors outright.

A national survey of Protestant pastors found:

• 28% reported raising less money
• 57% said the poor economy was hurting their church
• 70% reported increased requests from people outside their congregation for assistance
• 43% budgeted more money to help more needy people
• 3% were considering closing down their churches.

Historically, churches tend to recover financially when unemployment decreases, usually after the economy as a whole recovers.

The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance.

Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group.

In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before.

The church foreclosures have hit all denominations across America, black and white, but with small to medium size houses of worship the worst. Most of these institutions have ended up being purchased by other churches.

The highest percentage have occurred in some of the states hardest hit by the home foreclosure crisis: California, Georgia, Florida and Michigan.

"Churches are among the final institutions to get foreclosed upon because banks have not wanted to look like they are being heavy handed with the churches", said Scott Rolfs, managing director of Religious and Education finance at the investment bank Ziegler. 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."

The factors leading to the boom in church foreclosures will sound familiar to many private homeowners evicted from their properties in recent years.During the property boom, many churches took out additional loans to refurbish or enlarge, often with major lenders or with the Evangelical Christian Credit Union, which was particularly aggressive in lending to religious institutions. Then after the financial crash, many churchgoers lost their jobs, donations plunged, and often, so did the value of the church building.

Many local churches are struggling to survive. Some have put their buildings up for sale and others are renting their facilities to other groups and some dwindling flocks are blending in other congregations.

Pine Castle United Methodist Church, Hansel and Fairlane Avenues. The propery is up for sale with a price tag of $8,800,000. The church has signed a lien in lieu of foreclosure with CRM Florida Properties LLC, a subsidiary of SunTrust Bank