EXHIBIT 10.5



                               SECURITY AGREEMENT

      THIS  SECURITY AGREEMENT ("Security Agreement") is made as of ____________
__, 2008, by American  Church Mortgage  Company,  a Minnesota  corporation  (the
"Company"),  in favor of Herring Bank, a state banking  institution,  as trustee
under the Indenture described below (the "Trustee").

      WHEREAS,  the  Company  has  entered  into an  Indenture  dated  as of the
approximate date hereof with the Trustee (the "Indenture"),  whereby the Trustee
has agreed to act as the indenture trustee under the Trust Indenture Act of 1939
for the  benefit  of the  holders  of those  certain  Series C Secured  Investor
Certificates issued by the Company (the "Securities"); and

      WHEREAS, under the terms of the Indenture the Company has agreed to pledge
certain  collateral as security for the payment of principal and interest on the
Securities.

      NOW, THEREFORE, the Company agrees with Trustee as follows:

      1.    Security Interest.  The Company hereby pledges to, and grants to the
Trustee a security  interest  (herein  called the "Security  Interest")  in, the
Collateral  (as  described  in  Section  2 below)  to  secure  the  payment  and
performance of the following  debts,  liabilities and obligations of the Company
(such debts,  liabilities and obligations being herein collectively  referred to
as the "Obligations"):

            (a)   the payment of principal  and interest on the  Securities,  as
      required under the terms and conditions of the Securities;

            (b)   the  Company's  obligations  under  the  Indenture,  and  this
      Security Agreement; and

            (c)   all  amounts  owed  under  any   modifications,   renewals  or
      extensions of any of the foregoing Obligations.

      2.    Collateral.   As  used  herein,  the  term  "Collateral"  means  the
following property:

            (a)   the promissory  notes,  church bonds, and investment  property
      described in Schedule A;

            (b)   such  Additional  Notes that are  designated by the Company as
      Collateral pursuant to Section 3 below;

            (c)   any  Substituted  Notes that are  substituted  by Company  for
      existing Collateral pursuant to Section 4 below;

            (d)   supporting obligations of the Notes described in (a), (b), and
      (c) above; and

            (e)   proceeds of any and all of the foregoing.

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      Each  of the items  described  in (a),  (b),  and (c) above is referred to
herein as a "Note" and the all of such items are collectively referred to herein
as the "Notes."

      The   Company shall within five (5) business days of the date hereof,  and
in any event  prior to the sale of any  Securities,  deliver to the  Trustee the
Notes  described in Schedule A,  together  with  endorsements  by the Company in
blank for such Notes.

      3.    Additional  Collateral.  Subject to the terms of Section  4.9 of the
Indenture,  the Company may at any time designate additional promissory notes or
similar  instruments or investment property  ("Additional  Notes") as Collateral
for the Obligations. The Company may make such designation by delivering (a) the
original  Additional  Notes and (b) an  endorsement  in blank for the Additional
Notes to the Trustee and upon the Trustee's receipt,  the Additional Notes shall
be deemed to be Collateral.

      4.    Substitution of Collateral.

            (a)   Provided  that  no  Event  of  Default  has  occurred  and  is
      continuing,  the Company shall have the right (and, under the terms of the
      Indenture,   in  certain   circumstances  the  obligation)  to  substitute
      promissory notes or other similar  instruments or investment property that
      meet  the  terms  and   conditions   of  Section  4.9  of  the   Indenture
      ("Substituted   Notes")  for  Notes   previously   pledged  as  Collateral
      ("Released Notes").

            (b)   The Company may make such a substitution  by delivering to the
      Trustee:

                  (i)   a written  notice to the Trustee  executed by an officer
            of the Company which contains (A) a description  of the  Substituted
            Note(s), (B) a statement that such Substituted Note has been pledged
            by the Company as Collateral  under this Security  Agreement,  (C) a
            certification by the Company that the representations and warranties
            regarding  Collateral  contained  in  Section  6 below are true with
            respect to the  Substituted  Note, (D) a description of the Notes to
            be released from the Security  Interest  (i.e., a description of the
            Released Note(s)),  and (E) a certification by the Company that upon
            the release of the Released  Notes from the Security  Interest,  the
            value of the  Collateral  shall be at  least  100% of the  aggregate
            principal  amount of the Securities then  outstanding  (the "Minimum
            Value");

                  (ii)  the original Substituted Note(s); and

                  (iii) an endorsement in blank for the Substituted Notes.

            (c)   So long as the  aggregate  value of the  Collateral  after the
      release of the Released Notes is at least the Minimum Value,  the value of
      the Substituted  Note(s) being substituted for the Released Note(s) may be
      less than the value of the Released Note(s).

            (d)   Upon the  Trustee's  receipt  of the  documents  described  in
      Section 4(b), the Substituted Note(s) shall be deemed to be Collateral and
      the  Released  Note(s)  shall be deemed to be released  from the  Security
      Interest  and  shall no longer be  subject  to the terms of this  Security
      Agreement.  The Trustee  shall  promptly  thereafter  return the

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      Released Note(s) to the Company,  together  with any  endorsement  of such
      Released Note(s) made by the Company.

            (e)   In the event that the  Trustee  has filed (or has caused to be
      filed) a financing  statement in order to perfect the Security Interest in
      a Note that has become a Released Note, the Trustee shall prepare and file
      a financing  statement amendment which releases the Released Note from the
      Security Interest and the Security Agreement (the "Release").  The Trustee
      hereby  authorizes  the  Company  to  file a copy  of the  Release  in the
      appropriate  filing office if the Trustee has not filed the Release within
      ten (10) business days of the Trustee's receipt of the documents described
      in Section 4(b). This  authorization  is intended to comply with the terms
      of Minn.  Stat.  Section  336.9-509 and no further  writing is required as
      evidence of the  Trustee's  grant of  authority to the Company to file the
      Release.

      5.    Representations,  Warranties and Agreements. The Company represents,
warrants and agrees that:

            (a)   The Company is a corporation  organized  under the laws of the
      state of Minnesota;

            (b)   The  Company's  exact  legal name is as set forth in the first
      paragraph of this Security Agreement;

            (c)   This  Agreement  has been duly and validly  authorized  by all
      necessary  corporate  action and the person  executing  this  Agreement on
      behalf of the Company has the requisite authority to act for the Company.

            (d)   Until the Obligations are paid in full, the Company will:

                  (i)   preserve  its  corporate   existence  and  not,  in  one
            transaction  or a series  of  related  transactions,  merge  into or
            consolidate with any other entity,  or sell all or substantially all
            of its assets;

                  (ii)  not change its name, its type of organization, the state
            of  its  incorporation  or  organization,   or  its   organizational
            identification number; and

                  (iii) not change its  corporate  name  without  providing  the
            Trustee with thirty (30) days' prior written notice.

      6.    Representations,   Warranties   and   Agreements   With  Respect  to
Collateral. The Company represents, warrants and agrees that:

            (a)   The Company has (or will have at the time the Company acquires
      rights in Collateral  hereafter  arising)  absolute  title to each item of
      Collateral  free  and  clear of all  claims,  security  interests,  liens,
      encumbrances,  and  restrictions on transfer or pledge except the Security
      Interest and will defend the  Collateral  against all claims or demands of
      all persons other than the Trustee.  Except as provided in the  Indenture,
      the Trustee

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      does not  authorize,  and the Company  agrees not to (i) make any sales of
      any of the  Collateral;  or (ii) grant any other security  interest in the
      Collateral.

            (b)   Each right to payment and each instrument,  document,  chattel
      paper and other  agreement  constituting  or evidencing  Collateral is (or
      will be when arising or issued) the valid genuine and legally  enforceable
      obligation,  subject to no defense,  set-off or  counterclaim  (other than
      those arising in the ordinary course of business) of the account debtor or
      other obligor named therein or in the Company's records pertaining thereto
      as being obligated to pay such obligation.  The Company will neither agree
      to any material modification or amendment nor agree to any cancellation of
      any such obligation without the Trustee's prior written consent,  and will
      not  subordinate any such right to payment to claims of other creditors of
      such account debtor or other obligor.

            (c)   The Company covenants that it will:

                  (i)   promptly  pay all taxes and other  governmental  charges
            levied or assessed upon or against any Collateral or upon or against
            the creation, perfection or continuance of the Security Interest;

                  (ii)  keep  all  Collateral  free and  clear  of all  security
            interests, liens and encumbrances except the Security Interest;

                  (iii) at all  reasonable  times,  permit  the  Trustee  or its
            representatives  to  examine  or inspect  any  Collateral,  wherever
            located,  and to examine,  inspect and copy the Company's  books and
            records  pertaining to the Collateral and its business and financial
            condition  and to send and discuss  with  account  debtors and other
            obligors requests for verifications of amounts owed to the Company;

                  (iv)  upon the request of the Trustee,  provide photocopies of
            any of the Collateral (or, to the extent that such Collateral is not
            of a tangible nature,  photocopies of  documentation  evidencing the
            Collateral);

                  (v)   promptly  notify the  Trustee of any loss of or material
            damage to any  Collateral  or of any  adverse  change,  known to the
            Company,  in the prospect of payment of any sums due on or under any
            instrument, chattel paper, or account constituting Collateral;

                  (vi)  not use or keep any Collateral,  or permit it to be used
            or kept,  for any  unlawful  purpose or in violation of any federal,
            state or local law, statute or ordinance; and

      If the  Company at any time fails to  perform  or  observe  any  agreement
contained in this Section 6(c),  and if such failure shall continue for a period
of ten (10)  calendar days after the Trustee  gives the Company  written  notice
thereof,  the Trustee may (but need not)  perform or observe  such  agreement on
behalf and in the name,  place and stead of the Company  (or,  at the  Trustee's
option, in the Trustee's own name) and may (but need not) take any and all other
actions which the Trustee may reasonably  deem necessary to cure or correct such
failure (including,  without limitation,  the payment of taxes, the satisfaction
of security interests, liens, or

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encumbrances,  the performance of obligations under contracts or agreements with
account debtors or other obligors, the procurement and maintenance of insurance,
and the procurement of repairs, transportation or insurance); and, except to the
extent  that  the  effect  of  such  payment  would  be to  render  any  loan or
forbearance of money usurious or otherwise illegal under any applicable law, the
Company shall thereupon pay the Trustee within fifteen (15) business days of the
Company's receipt of the Trustee's demand, the amount of all moneys expended and
all costs and expenses  (including  reasonable  attorneys'  fees for any purpose
relating  to  the  enforcement  of  the  Trustee's  rights  hereunder  including
consultation,   drafting   documents,   sending   notices  and/or   instituting,
prosecuting or defending  litigation or arbitration)  incurred by the Trustee in
connection  with or as a result of the Trustee's  performing  or observing  such
agreements or taking such actions,  together with interest thereon from the date
expended or incurred by the Trustee at the highest rate then  applicable  to any
of the Obligations.

      7.    Perfection of Security  Interests.  The Trustee shall have the right
to file,  from  time to time,  such  financing  statements  as the  Trustee  may
reasonably  require in order to perfect  the  Security  Interest.  To the extent
permitted by law, the Company hereby authorizes and empowers the Trustee to file
one or more financing  statements and any other  documents or instruments as are
necessary to perfect the Security  Interest,  all without the signature or prior
consent of the Company.

      8.    Events  of  Default.   Each  of  the  following   occurrences  shall
constitute an event of default  under this  Agreement  (herein  called "Event of
Default"):

            (a)   an "Event of Default" (as defined in the Indenture) shall have
      occurred and is continuing beyond any applicable grace or cure period;

            (b)   any  representation  or  warranty  by the Company set forth in
      this Agreement shall prove materially false or misleading; or

            (c)   the Trustee shall receive at any time after the date hereof an
      official  report from the  Secretary of State of the State of Minnesota or
      any other  state  where the  Collateral  is  located  indicating  that the
      Security  Interest is not prior to all other  security  interests or other
      interests reflected in the report.

      9.    Remedies upon Event of Default.  Upon the  occurrence of an Event of
Default under Section 8 and at any time thereafter, the Trustee may exercise any
one or more of the following rights and remedies:

            (a)   require the prompt delivery to the Trustee of an assignment of
      any  mortgage or other  supporting  obligation  in a form  sufficient  for
      recording of such assignment;

            (b)   notify any account debtor that the Company's  right to payment
      has been assigned or transferred to the Trustee and that all amounts shall
      be paid directly to the Trustee;

            (c)   exercise and enforce any or all rights and remedies  available
      upon  default  to a secured  party  under  the  Uniform  Commercial  Code,
      including but not limited to the

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      right to take possession of any Collateral,  proceeding  without  judicial
      process  (without a prior  hearing or notice  thereof,  which the  Company
      hereby  expressly  waives),  and the  right  to sell,  lease or  otherwise
      dispose of any or all of the Collateral,  and in connection therewith, the
      Trustee may require the Company to make the  Collateral  available  to the
      Trustee at a place to be  designated  by the Trustee  which is  reasonably
      convenient to both  parties,  and if notice to the Company of any intended
      disposition of Collateral or any other intended  action is required by law
      in a  particular  instance,  such  notice  shall  be  deemed  commercially
      reasonable  if given at least ten (10)  calendar days prior to the date of
      intended disposition or other action; or

            (d)   exercise  or  enforce  any or all  other  rights  or  remedies
      available  to the  Trustee by law or  agreement  against  the  Collateral,
      against the Company or against any other person or property.

      Whether or not an Event of Default has  occurred,  the  Company  shall pay
when due or reimburse  the Trustee on demand for all costs of  collection of any
of the Obligations and all other out-of-pocket  expenses incurred by the Trustee
in connection with the creation, perfection,  satisfaction,  protection, defense
or  enforcement  of  the  Security   Interest  or  the  creation,   continuance,
protection,  defense or enforcement of this Security  Agreement or any or all of
the  Obligations,  including but not limited to: (i) filing fees;  (ii) costs of
foreclosure;  (iii)  costs of  obtaining  money  damages;  and  (iv)  reasonable
attorney's  fees for any purpose  relating to the  enforcement  of this Security
Agreement including  consultation,  drafting  documents,  sending notices and/or
instituting, prosecuting or defending litigation or arbitration.

      If during a sale of Collateral  following an Event of Default, the Trustee
sells any of the Collateral upon credit,  the Company will be credited only with
payments actually made by the purchaser,  received by the Trustee and applied to
the indebtedness of such purchaser.  In the event the purchaser fails to pay for
the  Collateral,  the Trustee may resell the Collateral and the Company shall be
credited with the proceeds of the Sale. To the extent permitted under applicable
law, the Trustee may disclaim any warranty of title or any other  warranty  with
respect to any Collateral sold by the Trustee following an Event of Default.

      10.   Notice.

            (a)   Any notice,  document or other communication from one party to
      the other is duly given if in writing and delivered in person or mailed by
      first-class  mail  (registered or certified,  return  receipt  requested),
      telex, telecopier or overnight air courier guaranteeing next day delivery,
      to the other's address:

            If to the Company:

                  AMERICAN CHURCH MORTGAGE COMPANY
                  10237 Yellow Circle Drive
                  Minnetonka, MN 55343
                  Attention: President
                  Fax: (952) 945-9433

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            If to the Trustee:

                  HERRING BANK
                  1608 S. Polk St.
                  Amarillo, TX 79102
                  Attention: Corporate Trust Department
                  Fax:(806) 378-6655

            (b)   All  notices and  communications  shall be deemed to have been
      duly given: at the time delivered by hand, if personally  delivered;  five
      (5) business days after being deposited in the mail,  postage prepaid,  if
      mailed;  when answered  back, if telexed;  when receipt  acknowledged,  if
      telecopied;  and the  next  business  day  after  timely  delivery  to the
      courier, if sent by overnight air courier guaranteeing next day delivery.

            (c)   Each party, by notice to the other,  may designate  additional
      or different addresses for subsequent notices or communications.

      11.   Miscellaneous.

            (a)   This Agreement can be waived, modified, amended, terminated or
      discharged and the Security Interest can be released, only explicitly in a
      writing  signed by the Trustee.  A waiver  signed by the Trustee  shall be
      effective  only in the  specific  instance  and for the  specific  purpose
      given.  Mere delay or failure to act shall not  preclude  the  exercise or
      enforcement of any of the Trustee's rights or remedies.

            (b)   All rights and remedies of the Trustee shall be cumulative and
      may be exercised singularly or concurrently,  at the Trustee's option, and
      the exercise or  enforcement of any one such right or remedy shall neither
      be a condition to nor bar the exercise or enforcement of any other.

            (c)   This Agreement  shall be binding upon and inure to the benefit
      of  the   Company   and  the   Trustee   and   their   respective   heirs,
      representatives,  successors and assigns and shall take effect when signed
      by the Company and delivered to the Trustee, and the Company waives notice
      of the Trustee's acceptance hereof. The Trustee may execute this Agreement
      if appropriate  for the purpose of filing,  but the failure of the Trustee
      to execute  this  Agreement  shall not affect or impair  the  validity  or
      effectiveness  of  this  Agreement.  All  representations  and  warranties
      contained in this  Agreement  shall  survive the  execution,  delivery and
      performance  of  this  Agreement  and  the  creation  and  payment  of the
      Obligations.

            (d)   To facilitate execution,  this Agreement may be executed in as
      many separate  counterparts as may be convenient or required. It shall not
      be necessary  that the  signature of each party,  or that the signature of
      all persons required to bind any party,  appear on each counterpart.  Each
      counterpart  when so  executed  and  delivered  shall be  deemed  to be an
      original, and all counterparts taken together shall constitute but one and
      the same  instrument.  It shall not be  necessary  in making proof of this
      Agreement  to  produce  or  account  for more  than a  single  counterpart
      containing  the  respective  signatures  of, or on behalf of,  each of the
      parties, hereto. Signature pages from any

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<PAGE>

      counterpart  may be detached from the  counterpart and attached with other
      signature  pages to a single copy of the Agreement to physically  form one
      document.

            (e)   This  Agreement  shall be governed by the internal laws of the
      State of Minnesota.  If any provision or  application of this Agreement is
      held  unlawful  or  unenforceable  in  any  respect,  such  illegality  or
      unenforceability  shall not affect other provisions or applications  which
      can be given  effect  and this  Agreement  shall  be  construed  as if the
      unlawful  or  unenforceable   provision  or  application  had  never  been
      contained herein or prescribed  hereby.  Any term not defined herein shall
      have, to the extent applicable,  the definition set forth in Chapter 336.9
      of Minnesota Statutes.

                  [Remainder of page intentionally left blank.]

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      IN WITNESS  WHEREOF,  the  Company  and the Trustee  hereby  execute  this
Security Agreement as of the date first written above.

                                        COMPANY:

                                        AMERICAN CHURCH MORTGAGE COMPANY

                                        By:
                                           -----------------------------------
                                              Philip J. Myers, President

                                        TRUSTEE:

                                        HERRING BANK

                                        By:
                                           -----------------------------------
                                              Catana Gray
                                              Vice President

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                                   SCHEDULE A

                              (Initial Collateral)

 Date of                     Original Principal    Outstanding Principal
  Note      Loan Recipient          Value         Balance as of   , 2008
---------   --------------   ------------------   ----------------------

                             ------------------   ----------------------
                                              $                        $