Foreclosing a “House of God”

The Star-Telegram recently reported that High Point Church, a non-denominational Christian church in Arlington, Texas, may be losing its property — 423,000 square feet of building space and acres of undeveloped land — to its lender. The article states that the church has defaulted on $31.5 million in loans and that its property has been posted for a June 3 foreclosure auction on the steps of the Tarrant County Courthouse. The pastor is quoted as saying that the church was “shocked” about the foreclosure proceedings; he says the church was expecting a rollover loan instead.

texas foreclosureLoans are often secured by collateral. Basically, foreclosure is a legal procedure in which the lender terminates the borrower’s interest in the collateral so that the lender may gain title to it and/or force a sale to satisfy the debt secured by the collateral. Texas recognizes both judicial and non-judicial foreclosures. A judicial foreclosure requires a lawsuit, the presentation of formal evidence, and a judgment from the court. A non-judicial foreclosure, in contrast, does not require a court’s involvement. In Texas, non-judicial foreclosures are also sometimes called “strict foreclosures,” although these terms may not actually be synonymous here or in other states.

Lenders dislike the negative publicity that may result from foreclosing property of religious institutions. However, if a borrower doesn’t pay as agreed, then a lender may have little choice but to foreclose in order to be made whole or cut its losses. Sometimes there are alternative arrangements that can be made that appease both the lender and the borrower. Let’s hope in this particular case that wisdom and prudence guide the actions of everyone involved.

In our In the News series, we use an article or topic that has been featured recently in the news as a potential learning opportunity.

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