Historically, churches were wary of debt, and many old-line congregations have owned their buildings free and clear for decades. But borrowing by churches became more common in the 1990s, reaching $28 billion nationwide in 2006, including mortgages, construction loans and church bonds, according to Lambert, Edwards & Associates, a consulting business in Grand Rapids, Mich. New companies and nonprofit organizations focused on church lending sprang up, as did real estate investment trusts and other bundles of church loans, which were sold to investors.
The rise of nondenominational churches and a resurgence in the evangelical movement also led to more religious institutions seeking to borrow. Churches were often founded in storefronts or school auditoriums, but as they grew, they built sprawling edifices, including so-called mega-churches. At the same time, some older churches lost members as young people went elsewhere, and had to borrow to survive.
Some in the church lending industry say aggressive lenders pushed church mortgages, too.
“Some of the mentality that you saw taking hold of the residential marketplace probably shifted into the church,” said Dan Mikes, executive vice president of the church banking division of Bank of the West, a subsidiary of BNP Paribas. “Lenders loaned far too much, they loaned into lofty projections of future growth, and they just saddled the churches with far too much debt.”
At least a quarter of religious properties have mortgages, according to an analysis of property and mortgage filings in 115 United States counties completed for The New York Times by First American CoreLogic, a data provider in California.
Geez, maybe someday you'll able to start a temple of your own in some abandoned megachurch.