I know I’m late getting this posted but I was super busy when the NY Times article, Rush to Drill for Natural Gas Creates Conflicts With Mortgages was published. I’m just now starting to comb through the juiciest stuff that is in the documents posted with the article.
Certain important items were specifically pointed out by someone who is smarter than I am.
- Many borrowers aren’t getting permission from lenders/Fannie Mae, Freddie Mac, Farmer Mac before signing gas leases. There are potentially undisclosed risks if a mortgage has a gas lease, especially if these mortgages are sold on the secondary market. It seems like lenders or mortgage services companies should have an interest in keeping close tabs not only on how many borrowers have signed leases, but also on environmental damages done to property by drilling companies. Check out this legal research memo from Congress and this letter from a real estate attorney to the FHFA.
- The use of surface rights seems like another huge issue. Drilling has only just begun in many places. For example, in Pennsylvania, there have been a few thousand Marcellus shale wells drilled so far, but companies plan to drill 50,000-plus more over the next two decades, according to the PA DEP. That’s a lot of wellpads, wastewater pits or tanks, tanks of flammable natural gas liquids, volatile organic compounds, pipelines, access roads etc. The question is not just how that impacts people’s ability to sell the land before, during and after drilling, it’s also whether just signing a lease that allows these activities is a breach of a borrower’s mortgage. Realtors in New York are just starting to pay attention to these issues. Believe it or not, even some Texas Realtors are tuned in.
- Property value and appraisals: It seems like the extent of a bank’s exposure to these problems could hinge on the specific terms of the oil and gas lease. Does it grant surface rights? Is there a buffer zone between a well and a home in the lease? Fannie Mae has rules about how the impact on property values should be evaluated. There’s also a guide to doing appraisals after a lease is signed that is really interesting, says appraisers should be consulting with geologists and engineers to figure out the value of a leased property:
- There’s more to figure out, of course. This report gives a really full overview of possible trouble-spots.
About Sharon Wilson
Sharon Wilson is considered a leading citizen expert on the impacts of shale oil and gas extraction. She is the go-to person whether it’s top EPA officials from D.C., national and international news networks, or residents facing the shock of eminent domain and the devastating environmental effects of natural gas development in their backyards.
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Kim Feil says
Tonight there is an Arlington City Council meeting to decide on 6 more wells at the Steeples site at Bowman Springs and Shorewood. In just looking at three adjacent roads, there is 17 homes for sale. Any real estate agent should fight to stop this development because every time the rig is up, people notice these things….I’m not sure how much liability the agents have in disclosing the proximity of these toxic, industrial sites when the rigs are not up and the buyers find out later via, odors, spills, health effects. My son’s music teacher bought a house on Denham Dr in DW Arlington downwind from a compressor station. When I told her that she should try to get out of the deal, she said that explains why since they moved there, even the cats have been having teary eyes and allergys. Now she is fighting 4th stage bone cancer…just found out four months ago. She also taught school downwind from five wells that were fracked in Pantego. Connect the dots people.
Arlington is a disaster! That’s so horrible about your son’s music teacher. I just wonder how many people living close to drilling are sick and don’t even know that it could be caused from the drilling.
Zoe Nance says
It’s a lot Sharon and Kim.
It saddens me every day.
The DRs don’t even know what to do, except treat with anti depressants and steroids. I saw 6 women around town who were clearly losing their hair.
My Dr here says he doesn’t want me to come home.
He said, “If you’re having visual disturbances before you even get home, I can’t guaranty or tell when or which trip will be fatal.”
I’ve been back for 10 days and I’m almost healed back up.
Our “neighbors” have a $1,252,000.00 mortgage on their property drawn on Fannie Mae/Freddie Mac loan(yes, I have the whole document from the good ‘ole Denton County courthouse). When the lending bank was notified about the violation of the terms of the note when the owners allowed an operator to begin preparation for 5 wells, they did absolutely NOTHING. It has always been up to all of us to be the watch dogs and spend our time & money to catch these people. Stay vigilant. Not one damn elected person or agency is going to help us, it is still up to, “We, the People”. Thank you Sharon & everyone else for all you do to keep the alarm bells ringing.