At the height of the housing market boom, Cornerstone United Methodist Church in Elgin took out a loan to expand its building to support a growing congregation. It seemed to be doing everything right, paying their monthly mortgage payment on time and giving 100% of its apportionments each year. Then the economy bottomed out and new homes halted shortly after Cornerstone finished its building. Then 21 months ago, its bank said it would not renew their loan and sold it to Church Loans and Investment Trust in Texas. The finance committee felt their backs were up against the wall.

“We contacted 15 banks and couldn’t come to an agreement that was reasonable to us,” said Dick Kostka, Cornerstone’s financial secretary. “It was frustrating with a lot of paperwork and wasted time.” Currently, Cornerstone is paying a high variable, interest only mortgage payment, month by month with Church Loans and Investment Trust. “At this rate, we will never be able to pay off the debt,” said Kostka.

In 2002, Hinckley First United Methodist church refinanced a $1.3 million dollar loan which was used to build a new building. Their interest rate is variable and has gone as high as 8.75%. Their mortgage holder is telling them to find a new lender. “I understand that, especially in a small town, a church mortgage can really be a liability to a local bank,” said the Rev. Laura Crites, Hinckley First UMC Pastor. “Yet, if we are to be faithful in doing important ministry in the community and the world, how do we grow if we can’t expand and improve our facilities?”

Northern Illinois Conference treasurer, Lonnie Chafin says this, unfortunately, is a similar story for many churches. He says since the financial crisis, many banks have been unwilling to renew or refinance existing loan agreements with non-profits and churches. “Despite perfect payment histories, churches have been unable to capture the savings of historically low-interest rates.”

Thanks to the new Red Door Refinance Program, overwhelmingly approved by members of Annual Conference at a special session on Mar. 16, 2013, up to 30 NIC churches will be able to refinance existing loan agreements at 4.5% for 20 years under a collective (up to) $25 million dollar mortgage through Wintrust Bank. A reserve fund will also be established to assist with cash flow, to offset any interest rate jumps and for any unforeseen circumstances.

“Having a guaranteed interest rate through the Conference will really help us plan ministry more confidently,” said Crites. “Rather than our enthusiasm for missions and service being constantly dampened by anxiety about our mortgage, we will truly be able to concentrate on where the Holy Spirit is leading us!”

More than 600 people registered for the special session to discuss and vote on this complex resolution. Annual Conference members asked many questions especially around what was being offered as collateral, which includes the Conference camps, the campus ministry building in Evanston, and the investment accounts of the annual conference.

Curtis Verschoor of Barrington UMC introduced an amendment to make sure no assets collected to support the pensions of NIC active and/or retired clergy are used for the Red Door program. An amended amendment passed. Chafin explained General Board of Health and Pension funds, accounts, annuities and the clergy fund will not be used for collateral and under the Discipline cannot legally be done.

Churches need to apply to participate in the program and a 7-9 member board of directors will be making decisions quickly to help churches resolve impending final loan terms. Five applicant churches face balloon payments in 2013 and several churches report their loan terms will expire in 2014.

Chafin says the participating churches could save $500,000 a year, freeing up money for ministry and mission. “This will lighten the load on local churches making them stronger and therefore making the Conference stronger,” said Chafin.

The Board of Trustees, CCFA and Cabinet backed the program saying as a connectional church, the NIC can collectively negotiate for better terms and help this group of churches facing uncertain financial security. “I was impressed with the Conference’s ability to analyze a very complex initiative and choose a reasonable risk for ministry,” said Chafin following the special session vote of 392 in favor, 97 against and 19 abstained. “The choice was to do nothing or to do ministry. We chose to do ministry. I think that speaks well to the heart of the conference.”

Kostka says the program is a saving grace for Cornerstone and was relieved after it passed. He says, if they’re approved, it will help the church become financially secure and able to focus on its real purpose. “We are anxious to get this behind us and get on with building our mission,” he said.