also depend on whether a judicial or non-judicial foreclosure process was used. In some states, there is a redemption period for commercial properties. A right of redemption after a trustee sale/foreclosure sale allows the borrower who just lost their property at the foreclosure auction the opportunity to buy it back from the bank (or winning bidder), usually at the same price as the highest bid at the trustee sale. To avoid losing the building when in default of a loan, a common consensual resolution is loan restructuring. A church must come up with mutually agreeable terms based on its current cash flow and create a realistic payback of the loan with the understanding the principal will likely not be reduced. Another option is a deed-in-lieu of foreclosure. Acceptance of this option relieves from personal liability all persons who may owe payment, or the performance of other obligations secured by the mortgage except to the extent that person agrees not to be relieved in an instrument executed contemporaneously. A third option is consent foreclosure, which forecloses the interests of the mortgagor and any other lien claimant,
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other than the United States (which can be foreclosed only through a judicial sale).
Other things to consider It is important to retain consultants knowledgeable in the legal and lending arena to protect the church’s interest to negotiate a resolution and keep the building. Far too often, the church leader walks alone in the process, becomes overwhelmed with the financial issues, neglects the spiritual issues and ends up leaving the ministry. Stay away from residential mortgage modification “specialists.” And maintain constant, honest and direct communication with a lender. Do not lie. Do not run away from calls, meetings or other communications with your lender. Provide all requested information and supplement financials to give the lender a clear picture of what is happening at the church. Most lenders want to work with religious borrowers in modifying loan agreements. However, if the church fails to communicate or is not honest in its dealing with the bank, expect swift, expensive and difficult foreclosures to occur. CE Daniel Dalton is the cofounder and partner of Dalton & Tomich PLC, Bloomfield Hills, MI. [www.daltontomich.com]