The Church at South Las Vegas has filed for Chapter 11 bankruptcy after its lender refused to negotiate.
The church owes First Bank of St. Louis $7.7 million on a building now worth $2.4 million.
The church’s attorneys wrote in the filing,
“Given the vast difference between the outstanding principal balance of the note and the present value of the real property and the source of funding as voluntary donations of church members, it is simply impossible for the church to continue to sustain the monthly note payments of $51,929 and at the same time raise building donations for necessary expansion.”
According to Vegasinc., “In a June 21 response, attorneys for the church indicated the church had strategically defaulted on the mortgage after learning its real estate – a 23,635-square-foot office building housing the church…”
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Churches need to stop wasting money on buildings that are too large and expensive for the purpose that they are meant for. If this is not already happening around the country it will most likely become common in a year or so, that is churches losing their buildings.
There is an old saying – Bulls make money, Bears make money, Pigs go broke.
Even at 1% interest, the bank’s cost of carry is $77,000 per year. (At the current 0.5% it would be about $3000 a month. They could cut the mortgage to $24,000 a month and still be making an 800% return. I suppose they are too used to 50 to 1 leverage. So instead they chose to realize a $5 million loss. We’ll be in QE65 before they break even on this one.
Apparently we’re supposed to be totally surprised/shocked that a “church” would dishonestly skip out on its fair debt… or perhaps that a dastardly bank would savagely foreclose on ‘sacred’ property (??)
Of course, a “church” is an abstraction — only individuals can act. This “Church of South Las Vegas” seems to be a very recent invention of its ‘pastor’… who way over-extended his Christian marketing scheme & didn’t read the fine print in “his church” mortgage contract. Looks like a one-man operation and loan default… though the “church” was likely a formal “corporation” under the pastor’s control. Individual church members were, no doubt, innocent bystanders in the hustle.
The bank was smart to have that “receivership” clause in the mortgage — the “pastor” loses control of the property (eviction) immediately upon mortgage default… while the courts then take 1-2 years to process the foreclosure. Private homeowners who nowadays default on their mortgage usually get a long period of rent-free use of the property… until court foreclosure approval — not so for this pastor & his ‘church’.
Cheers for the bank…. raspberries to the “pastor”… and shrugs to the clueless congregation.
The bank does not want “just” to foreclose on the property since they are owed 7.7 million and the property is only suppose to be worth 2.5 million. They want to foreclose on the property and then still be able to after the organization for the rest of the millions that they feel they are owed.
Anyways walking away from a mortgage is not ‘dishonest’. They entered into a foolish agreement with the bank. The people that loaned the church the money is just as foolish as the church itself and both parties should take the hit.
The church losing it’s property to the bank and the bank eating the rest of the debt sounds like a fair deal to me.
You should be surprised. Church loans are hard to come by for the very reason banks don’t want the bad publicity of having to foreclose on a place of worship in the case of default. Its not surprising it was an out of town bank.
Great title Mr French! You are making a point.
Churches should go the Jeffrey Tucker way and invest in cheap but efficient technology instead of large and expensive buildings.
How about church video-conference ? How about a church party at the local restaurant ? How about Skype sunday school ?
There are online churches.
Probably not one of Jesus’ churches; too big: “For where two or three are gathered together in my name, there am I in the midst of them.”–Matthew 18:19-21
What if someone is lonely, a loner, celibate with no friends, stranded on a deserted island.
Does this mean that God will never be with him ?
Holy shit. You figured it out. That’s exactly what the bible meant.
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