'Don't have the house of the Lord in sub-prime loans'

When my wife and I sold our condo two years ago and returned to LA, we looked at homes but decided to sit on the sidelines and wait for the market to settle. Good decision. What a mess that beautiful bubble has become. The median-priced home sold in Los Angeles in September was $25,000 lighter than in August and the number of sales was down 30 percent!

The downturn has been fueled by sub-prime loans, which, obvious to anyone in California, were used not just by the poor but also those who wanted to stretch for a bigger home. Even Christian lenders got involved in the sub-prime market, though not as commonly as other mortgage companies, and I've got a piece about how the tailspin is affecting these financial institutions in the current issue of Christianity Today.

HomeBanc Corp. brought a Christian ethos to the seemingly lucrative market of sub-prime home loans. Flush with a staff of believers, the Atlanta-based company opened meetings in prayer and counted a megachurch founder its head of human resources.

But in mid-August, the company, which Fortune magazine ranked the 67th-best to work for earlier this year, filed for bankruptcy, reportedly laying off most of its 1,100 employees and closing 22 branch offices.

HomeBanc's demise was brought on by the same factor that led to its rise—a housing market that expanded, then shrank, on the back of risky home loans. Other Christian lenders felt the pinch, too. But unlike HomeBanc, most weathered the storm well, buoyed by the security of limiting loans for homebuyers.

The Evangelical Christian Credit Union, the largest Christian lender (and, with more than $1 billion in core assets, a rival to the largest secular lenders to nonprofits), never entered the home market. Other Christian lenders protected their home loans by staying away from sub-prime lending.

"Because of what we stand for and because of who we serve, we can't afford to put people into those loans," said Linda Tashiro, chief operating officer of the San Dimas, California-based Christian Community Credit Union. "We have to sleep at night."