Holy bubble! Churches struck down by foreclosures

Eastertime generates a number of interesting stories about the state of religion and congregations in the U.S. Reuters has a story describing the financial turmoil affecting Protestant churches.

Foreclosure proceedings against U.S. churches have nearly tripled since December 2007.

A growing number of U.S. churches, which are defaulting on loans, facing foreclosure and even declaring bankruptcy at an unprecedented pace.

"It's happening to virtually every church," said the Rev. Grainger Browning, senior pastor of Ebenezer. "At a recent meeting with the 100 top pastors in the country, it was amazing how all of us were facing some sort of challenge with the banks."

Long considered among the safest of borrowers, churches gambled on real estate at a time when credit copiously flowed and lenders were startlingly lax.

Spending on construction of religious buildings rose sharply in the late 1990s, climbing 70 percent from 1995 to 1999 to an annual rate of $7.3 billion. New building continued to tick up, eventually reaching an annual rate of nearly $9 billion in 2003 before leveling off, according to data from the U.S. Census Bureau.

ven the richest, most established churches have not been immune to this economic downturn. A study by the researcher Barna Group found more than half of U.S. churches said they have been hurt by the recession, with one church in six cutting staff.

The Episcopal Church in the United States, one of the wealthiest U.S. denominations, is feeling the pinch from a $1 billion loss in the combined investment portfolio for 2008, according to Kirk Hadaway, the head of congregational research for the Episcopal Church.


Catholic parishes have been equally impacted by the financial crisis, however, the closure of parishes means that the diocese takes the revenue from the sale of the buildings and land. There have been some stories about the Catholic church's canon law requiring the assets of a closed church to follow the parishioners to new parishes. That's a rarity, if it happens at all.

The likely outcome is that the diocese improves its own financial condition by parish closures.

Just one of the many glaring conflicts of interest when it comes to money inside the Catholic diocese's civil law corporate structure. Of course, there are few, if any, lay people/financial advisors to diocesan bishops who will demand that parish assets actually follow parishioners to new parishes. It's just not how money is handled by dioceses.

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