LCC East District CEF: When Churches Fail to Pay

Reading Board meeting minutes is usually a pretty routine affair for anyone interested in such things – policies are debated and adopted, decisions are made, and sometimes there’s a difficult issue that needs to be dealt with and it falls to the Board to clean up the mess. For the most part an effective Board works to make sure all the gears are meshed together and working well, provide guidance as to the way forward, and when things aren’t going well they take steps to set things aright again.

Of the three Districts, only the East District BOD has a web page for its meeting minutes for which they are to be commended, and cautioned when they wander astray.  One such case is the BOD Meeting of September 26 & 27, 2017 meeting that raised my eyebrows a bit:

The board discussed the situations where congregations are not making the required loan payments and may only be covering the interest. There is no policy on how these situations should be handled. Sometimes the Business Manager contacts the pastor to discuss the problem. The board indicated that the congregation (not just the pastor) needs to be informed when there are problems.

The East District CEF has been in operation for quite some time – that it never developed a policy for cases where churches fail to make their mortgage payments is both surprising and concerning. Surprising because you’d think a CEF that’s been running as long as the ED CEF has would have all its policies nailed down and finely tuned. The absolute last thing you want to have happen is to find yourself faced with a delinquent loan and not have a well-thought out policy for how to deal with it. It’s concerning because if the ED CEF never established a fundamental policy like this, what else have they missed?

In this matter they’re taking steps to deal with this question:

By consensus is was agreed that the DfF and the business Manager need to develop a written policy to address how and when loan arrears are reported and the congregation notified and what action should be taken.

Hopefully they’ll conduct a policy review to ensure there’s no other holes that need to be plugged.

The reason policies like this are important is because they provide well-thought out answers to questions like the one that was raised in the January 15/16 2018 BOD meeting:

Questions were raised regarding instances where CEF property on which churches have mortgages are to be sold and the anticipated moneys from the sale would not cover the cost of the outstanding mortgage. Is the congregation still expected to repay the loan? The DFF needs to review this situation and report back on a policy for these situations.

I’d encourage you to read that again, then imagine a person like you or I going to the bank, getting a loan, buying a property, then selling it for less than the face value of the mortgage. Do you think the bank would give you a smile and tell you “not to worry about it?” Or would they encourage you to get off your keister, keep the commitment you made to them, “or else”?

I have a high regard of the East District BOD and generally how they do things, but in this regard this question shouldn’t  even be on the table. That money belongs to the depositors – not the Board, not the borrowing church, and it needs to be returned in accord with the commitment everyone made to that end.

This also raises questions about how closely the CEF Executive is keeping tabs on the financial situation of the congregations they’re giving loans to, the valuation of the underlying asset that’s securing the loan, and the like. That a situation arose where a property was valued at less than the outstanding mortgage should result in an end-to-end review of how the ED CEF manages the lifecycle of a loan.

On the lighter side, there was one comment in the Jan 15/18 report that gave me a chuckle:

By consensus it was agreed that all of these restricted funds should be reviewed individually to decide what should be done with them before restructuring begins in 2019.

Except…as far as Synod is concerned the Districts will effectively cease to exist on Jan 1, 2019. That means restructuring is done by that date, not started.

Oooops. 🙂

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