Frequently Asked Questions

First Mortgage Bonds
Churches often issue First Mortgage Bonds to finance construction, purchase property or refinance existing mortgages. Bonds allow churches to obtain fixed interest rate financing while avoiding variable interest rates, balloon payments or separate construction loans typically required by conventional lenders. First Mortgage Bonds represent an excellent fixed-yield, mortgage-secured investment alternative for investors seeking current income and preservation of capital.

Church bonds are secured by a first mortgage on the Church's real property (including land, buildings and fixtures) together with a security interest in the Church's personal property. The collective interests of bondholders are served by a bank or trust company which acts as "trustee" on behalf of bondholders. If for any reason the Church is unable to meet its obligation on its bonds, the trustee may foreclose on the Church's real property and/or sell its personal property to generate funds on the bondholders' behalf.

Attractive Yields/Quarterly Interest
First Mortgage Bonds earn average net effective yields higher than many alternative investments, while offering the security of being mortgage-backed. Bond maturities typically range from one to 25 years. Interest is paid to investors quarterly. This enables you to select the yield and maturity date that meets your investment objectives.

Financial Independence in Retirement
You can select bonds to mature during retirement years or, if you are already retired, bonds with staggered maturities can provide a continuous stream of monthly income to supplement other sources of retirement income.

Individual Retirement Accounts
Bonds can enhance the overall return of your IRA or Pension Fund by generating attractive yields in your tax-deferred accounts. We can also open new IRA accounts for you to hold your church bond investments.

No Sales Commission
As an investor, you pay no sales commissions. You are earning interest on your entire investment. Commissions are paid to the Underwriter by the issuing church.

Risk Management
The principals of American Investors Group, Inc. have an extensive track record in underwriting bonds of non-profit religious organizations. This reputation and the continued financial security of investors is of paramount importance to us. While every effort is made to minimize any possible risk to investors, as with any investment, bonds are not risk-free. Investors are encouraged to review the risk factors summarized in each Offering Circular before investing and to read the section on this webiste called "Risk Factors".

American Investors Group, Inc., Minnetonka, Minnesota, provides investment banking and general securities services to individual and institutional clients. The firm specializes in First Mortgage Bond financing for non-profit organizations, primarily churches. In addition, the firm offers a wide range of investment products through registered representatives located nationwide. American Investors Group is a member of the Financial Industry Regulatory Authority, Inc. (FINRA), Securities Investors Protection Corporation (SIPC) and National Association of Church and Financing Organizations (NACIFO), and is a registered broker-dealer with the Securities and Exchange Commission (SEC).

What are first mortgage church bonds?
Churches often issue mortgage bonds as a means to finance construction of their new worship facilities, schools or fellowship buildings, to purchase new facilities, or to refinance existing mortgages. Bonds are sold for churches by securities broker-dealers, or "underwriters," such as American Investors Group, Inc. The bonds are the church's promise to pay a set rate of interest until a specified maturity date, when the principal of each bond ($1,000) is repaid. The bonds are collectively secured by a first mortgage on the church's real estate. The issuing church makes weekly payments to a bond trustee, which distributes the interest quarterly to each bondholder until the bond matures, at which time the principal is repaid. Bond issues can range from about $500,000 to $10 million or more in size.

Why do investors purchase church bonds?
Investors buy church bonds because they offer exceptional taxable yields currently ranging from 5.50% to 9.00% annually, depending on maturity date, with interest paid quarterly to bondholders. Bonds are available maturing in from one to twenty five years. Church bonds are "mortgage-backed" which means that they are secured by a first mortgage on the Church's real estate, including their worship facilities. An investor pays no sales commission to buy a church bond. The sales commission is paid by the issuing Church. In addition to sound investment reasons, many investors purchase church bonds because they know their investment dollars are to be used by a Christian church to build, expand or purchase their worship facilities, which are then used to bring more people to know God.

What makes church bonds underwritten by American Investors Group different from other church bonds?
We underwrite bonds to our exacting public offering standards, designed to first and foremost protect investors' funds. Each church must meet our established qualification standards for the loan and complete a "due diligence" process. We require independently prepared audited financial statements of each issuing church, not simply financial statements compiled by the church without independent verification. We require that churches make weekly rather than monthly mortgage payments on their bonds. We require issuing churches to obtain title, casualty, and liability insurance on their property.

In addition, we obtain independent appraisals of the church property to serve as collateral for the bonds. We establish a cash reserve account for each bond issue that provides a buffer in the event the issuing church ever misses a mortgage payment, and we require a key-man life insurance policy on the church's senior pastor to protect bondholders in the unlikely event of his/her death.

Are there any risks to investing in church bonds?
While we do everything reasonably possible to protect investors, bonds inherently have certain investment risks. Church bonds represent a promise by the issuing congregation to repay the obligation. In the event the church encounters financial difficulty, there can be no assurance that it could meet this obligation, in which event the Bond trustee may need to foreclose on the church property to recoup bondholder's principal investment. Because church buildings are "special use" properties, there can be no assurance that the trustee could sell the property for a price sufficient to recoup the bondholder's entire investment.

Increasingly, churches today are "independent" organizations without a financial interdependency with a national denomination. Thus, there should be no presumption that a larger Christian organization or denomination would honor a bond issue obligation were the issuing congregation ever unable to. To make sure that you are familiar with these and other risks, as with all investments, we encourage you to read carefully the offering circular for each bond issue before investing!