OneUnited Bank's plans to auction Charles Street African Methodist Episcopal Church in Roxbury on Thursday could be delayed or scrubbed altogether for any number of legal or financial reasons, according to real estate professionals.
OneUnited, one of the nation's largest black owned banks, recently moved to foreclose on the historic black church after the church could not repay a $1.1 million loan that came due in December. The bank has scheduled separate auctions of three church-related properties in Roxbury and Milton.
However, Charles Street AME Church has a number of options it can use to forestall the auction. For example, it could file for bankruptcy or bring a legal challenge to the foreclosure by questioning whether OneUnited correctly followed all the necessary steps to seize the properties. For instance, the church could try to argue that there are problems with either the original mortgages or the foreclosure paperwork, an increasingly common problem in the wake of the housing bust.
"We're confident, as we've always been, that we're not going to lose the church and we have plenty of options to avoid losing the church,'' said Ross Martin, a church lawyer.
OneUnited says it does not comment on individual loans. The bank's attorney, Bruce Miller of Pierce Atwood in Boston, and the auctioneer, Paul E. Saperstein Co. in Holbrook, did not return calls seeking comment.
But the bank itself could opt to delay the auction by giving Charles Street AME more time to either refinance the loan, find another lender, or work out another arrangement.
"I would put down money it will get postponed,'' said Justin Manning, co-owner of JJManning Auctioneers of Yarmouth Port, one of the area's largest professional real estate auction companies.
In addition to foreclosing on the one loan, OneUnited also sued the church for failing to repay a $3 million reconstruction loan for a nearby community center. OneUnited originally cut off financing for the project in 2009 after the financial crisis, leaving the building unfinished and the church saddled with significant debt.
The move to foreclose on a prominent church has pitted two significant institutions in Boston's minority community against one another and further tarnished the bank's reputation.
Community leaders have called for a boycott of the bank and organized other protests to try to stall the foreclosure. Also, a number of local politicians have intervened to try to help broker a solution.
Most recently, Governor Deval Patrick asked MassDevelopment, the state's quasi-public economic development agency, to work with the bank, church, and lenders to "help find a solution.'' The church, founded in 1818, was a key stop on the Underground Railroad and has roughly 1,000 members.
"These are two important institutions, with a long history of doing good work in Boston,'' said Kimberly Haberlin, a spokeswoman for the governor. "We'd like to see the two sides reach a fair agreement quickly.''
Though modestly profitable, OneUnited has faced financial problems of its own, potentially making it more difficult to forgive the debt. Regulators ordered the bank to boost its capital reserves and make other major changes four years ago, after OneUnited recorded heavy losses from its investments in failed mortgage giants Fannie Mae and Freddie Mac. The Boston bank also took $12 million from the US government's Troubled Asset Relief Program and has repeatedly missed dividend payments to the government. The Treasury Department has appointed a representative to monitor OneUnited board meetings.
In addition to the Roxbury church, the bank is also seeking to sell two other properties owned by the church, a smaller adjacent 4,260-square-foot office/retail building assessed at more than $285,000 and a three-bedroom former parsonage in Milton. The home is assessed at more than $376,000.
Even if the auction goes forward, it is unclear who would try to buy the church out from the under an existing congregation and immerse themselves in the controversy. Because the church has been used for religious purposes, it may be difficult for anyone other than another religious institution to use the building. And another church would probably be hesitant to evict the existing congregation.
"I can't imagine anyone in this market coming forward and buying the building'' at auction, said Saul J. Feldman, a Boston real estate attorney.
Feldman and others think it is more likely that another lender or wealthy benefactor will step forward to try to aid the church. Bain Capital executive Stephen Pagliuca, a co-owner of the Boston Celtics, and others offered to take over some of the church's debt nearly two years ago for a discount, but were rebuffed by the bank. And Feldman said another bank might offer to buy the mortgage to build good will.
Alternatively, OneUnited could end up taking the property itself if no serious buyers emerge, something that often happens in bank foreclosures. But OneUnited would still face the problem of finding a buyer and dealing with the church as a tenant.