Cornerstone Fund helps UCC church in Baltimore gain leverage in renewing loan

Cornerstone Fund helps UCC church in Baltimore gain leverage in renewing loan

When the loan held by Heritage United Church of Christ in Baltimore came up for review, the Rev. Julius Jefferson and his congregation found themselves in a bind.

Enter the UCC's Cornerstone Fund.

"The Cornerstone Fund came to our rescue when Wachovia Bank refused to renegotiate terms on a loan and a line of credit totaling $260,000 that was secured on property that was valued at more than $1 million," said Jefferson. "In less than six months, (Cornerstone Fund President) Gordon Gilles worked with us to ensure that we would not lose our sanctuary and education center to a lender who was more concerned with seizing property than working with a borrower who had never been late with a payment."

The Cornerstone Fund helps churches explore refinancing options free of charge.

"If your church has a real-estate-secured loan with a bank or other lender, we recommend that you carefully review the loan documents to determine whether your loan may be coming up for review within the next 12-18 months," said Gilles. "Even if your lender offers a renewal, a commitment from the Cornerstone Fund can give the church additional leverage in negotiations with your existing lender."

As the economy begins to show signs of recovery, many churches continue to face financial challenges, Gilles said, expressing concern that those with commercial bank loans may be in for further challenges as commercial real estate values weaken.

Although loan terms vary, most lenders give borrowers a minimum 30- to 60-day notice before calling a loan or making substantial changes in the terms and conditions, said Gilles.

"But the minimum notice period may not afford sufficient time to make alternative arrangements," Gilles said. "Churches should be proactive because a 30- to 60-day notice is not enough time if you don't like the terms and conditions."

Even churches offered a loan renewal may be required to agree to undesirable terms and conditions, including officers' personal guarantees, he added.

Gilles said that because one-third of all commercial loans - including bank-held church loans - will be up for renewal in the coming year, many churches are likely to face a "perfect storm" of lower market values, heightened credit requirements and lenders simply unwilling to renew outstanding loans.

Contact the Cornerstone Fund: 216-736-3829; or toll free 1-888-822-3863. Email Cornerstone; or visit the Fund's website.

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