Christianity Today

Pastor Johnny Murillo had often empathized with his congregation members at Christian Worship Center in Sacramento, California. But when one member came to his office during the 2006 Christmas season, panicked and desperate to keep his home from foreclosure, it hit too close to home.

"Dude, I know what you are going through," Murillo told him. "There is a way out."

He really believed there had to be a way out. The only problem was that at the time, he didn't know what it was. Unbeknownst to anyone else, Murillo was also facing foreclosure. But not only was his house threatened: the church was struggling to pay its rent.

In California as well as a handful of other states, home foreclosure rates are spiking as prices slump. This fall, prices nationwide dropped 11 percent from one year ago, triggering a boom in distressed sales of single-family homes. In Sacramento, the situation is much worse than in other areas. Homes are selling for about 37 percent less than a year ago, and foreclosure rates are more than three times the national average. The Sacramento area has had 29,000 foreclosure filings since 2007, climbing to 3,640 in October 2008 alone.

Christian leaders around the nation admit they were not well prepared for either the burst housing bubble or the credit crunch. Nobody was, in fact. But many of them have discovered during this season of pain how the church as the body of Christ functions as an agency of last resort (even for its own clergy and members) in times of financial emergency. This seems to be about the only thing giving these leaders a new sense of hope.

"Like Job said, I came naked into the world," Murillo says. His first father was an alcoholic drifter who was run over by a train. His next father was in and out of jail as a member of the Mexican mafia, and was murdered when Murillo was 11. Murillo and his brother joined a local gang, Barrios Libre Locos, before becoming believers. Then, Murillo told his brother, "We're done with the gang thing—let's lead our guys to Christ." Several of the gang members eventually became pastors.

The young Murillo became a youth minister, and after 22 years of ministry planted Christian Worship Center, a church for Sacramento's poorest of the poor. He and his wife received support from a San Jose megachurch, which connected them with a mortgage broker associated with World Savings Bank. Murillo and the broker were friends, and in 2003, Pastor Murillo leased a large structure for Christian Worship Center. One year later, Murillo went back to his friend to get a loan from World Savings to buy his first house.

A church plant in a poor neighborhood is not the surest of investments for a bank, but getting the loan was not a problem. And World Savings was offering flexibility: Murillo had options for making monthly mortgage payments. He could make a set minimum payment, pay interest only, pay as if it were a 15-year adjustable rate mortgage, or pay as if it were a 30-year adjustable rate mortgage. Murillo's first minimal payments had an emphasis on minimal, since the initial rate was so low.

Murillo's broker friend warned him about the dangers. The accruing interest could be higher than his minimum payments. If Murillo did not keep up, the unpaid interest would be added to the principal balance, resulting in dramatically higher payments down the line. (These types of loans, called "option ARMS" or "pick-a-payments," were a hallmark of World Savings Bank, the country's second-largest savings and loan before Wachovia bought it in 2006. In November 2008, the Justice Department announced that it had begun investigating whether Golden West Financial Corp., which ran World Savings, engaged in predatory lending.)

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