Fracking leaves property values tapped out
The oil and gas extraction process can be lucrative for homeowners, but it can also jeopardize their mortgages and ability to sell their homes.
The one certainty about fracking, however, is that it doesn't exactly do wonders for property values.
As reported by The Atlantic, mortgage lenders are becoming more cautious about approving loans for properties near fracking sites. Lawyers, real estate agents, public officials and environmentalists have noted that banks and federal agencies are revisiting their lending policies to account for the potential impact of drilling on property values. In some cases they are refusing to finance property with or even near drilling activity.
That's particularly problematic, considering that many home insurance policies do not cover residential properties with a gas lease or gas well, though all mortgage companies require home insurance from their borrowers. Part of the problem stems from uncertainty over the effects of the process itself.
As MSN Money writer Charley Blaine explains, fracking is technically "hydraulic fracturing," which means using small explosions and lots of water and smaller amounts of chemicals to free up oil and gas resources locked in rocks far below the earth's surface. Fracking was largely responsible for a 14.4% jump in U.S. oil production in 2012 to 6.47 million barrels a day -- the most since 1995 -- and has set off a huge boom in natural gas exploration and production in Texas, North Dakota (pictured), Montana and the Appalachians.
As a result, the U.S. imported just 41% of its oil in the first five months of 2013, the Energy Department says, down from 65% in 2005. Some projections say the combination of new supplies from fracking and alternative sources and energy savings from conservation could make the U.S. energy self-sufficient by 2030, although the country will still be an oil importer.
Critics don't have to look very hard to find reason to fear the process, however. In the 2005 Energy Policy Act, the fracking industry was specifically exempted from violations under the federal Safe Drinking Water Act. State regulations weren't affected, but the question is whether state regulators have the will or resources to act.
A New York Times report documented a contamination in Jackson County, W. Va., in the mid-1980s. And a Vanity Fair magazine article documented groundwater contamination issues around Dimock Township, a small town in northeast Pennsylvania, from wells drilled by Cabot Oil & Gas (COG). The controversy was the basis for the anti-fracking movie "Gasland."
Brian and Amy Smith live across the street from a new gas well in Daisytown, Pa., just an hour south of Pittsburgh. Last year, when they applied for a new mortgage on their $230,000 home and hobby farm, they were denied. ABC affiliate WTAE notes it's the first case in western Pennsylvania of a homeowner being denied a mortgage because of gas drilling on a neighbor’s property.
Mortgage provisions prohibiting gas drilling, meanwhile, are becoming more common. The "mineral, oil and gas rights rider" on the loan paperwork at Sovereign Bank says the mortgage will be recalled automatically if the property owner transfers any oil or gas rights or allows any surface drilling activity. It also specifies that owners must "take affirmative steps to prevent the renewal or expansion" of a current gas lease.
The Federal Housing Administration's lending guidelines prohibit the financing of homes within 300 feet of a property with an active or planned drilling site. Mortgage lenders Fannie Mae and Freddie Mac also prohibit property owners from signing a gas lease or keeping hazardous materials on their property. Doing so puts their mortgages in "technical default."
While drilling companies tend to pay well for drilling rights, that's of little use to homeowners if the property they're sitting on can't be sold or isn't eligible for a mortgage if it does.
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I don't care whether you are on the left or the right, just that you have just enough commonsense to get we don't have a second EARTH to move to. We get it wrong, there is no Plan B. Putting profits for today over the future of tomorrow is just plain DUMB. If you can't see the proof and or research it on your own, then you are clearly beyond help, regardless of party. There are some choosing to be Dumb as we live in a ERA were everyone can get viable access to real information. Why some continue to be DUMB, that clearly points to Greed, darn everything else.
Now here's the true Irony, some of the same folks that cling to the Bible the Most are the very ones that don't believe in the effects of Polluting the Environment we live in. Maybe they need to review Revelations. Regardless of if you believe or not, it will certainly become a self fulfilling prophecy it we continue on our current path.
The Big Banks claimed no effects from their financial engineered scams yet we will be paying the price for decades to come. The effects over time might not be obvious today but are crystal clear usually when it's far too late. These folks want to play Russian Roulette with not just their life, but yours as well. Just because they are selfish greedy, you know what.
And I am sure that those noisy, towering 400ft industrial wind turbines that can be located in many towns to within 500 feet of a property line are adding value to the adjacent properties??! Funny how enviros see fracking and drilling as an enemy of the state but embrace the fallacy of a wind powered nirvana. (Plus it's just not easy being green....and these turbines are far from it) Like global warming that has now become climate change...If it doesn't fit some agenda, just change the name. I remember when the Pres was sighting how he wanted America to become more like Spain...I say mission accomplished..The only way to bring people out of poverty is to create jobs. Fracking is the only thing we have going for us right now so let's git er done! I live in NY and can see our neighbors to the South benefiting from the fracking going on there while our Gov wants to keep studying technology that is way more efficient today than it was when it started decades ago. What is it that the left has against prosperity?!
So many uneducated people. Most people that think fracking is the end of the world think it is a new process. Fracking is not new. It has been around for DECADES (as in 1940s and 1950s)! If it were half as bad as people say it is, Texas and Oklahoma would be uninhabitable by now. You might not have a desire to live in either state but it is habitable. They have water and it is perfectly safe to drink.
Don't be mindless robots and follow those that use fear as a tool to spread their agenda. Do your own research. Know the FACTS.
Frack all day, Frack all night, Frack the Arabs-
We need energy independence!
Here in Colorado this isn't the case. The article below comes from the Northern Colorado Business Report.
"Assessed property values in Weld County, long known for its affordable, rural lifestyle, have reached $7.1 billion this year, putting it on par with the wealthiest counties in metro Denver.
The increase in value is largely attributable to oil and natural-gas production, which makes up 55 percent of the county's total assessed value, Weld Assessor Christopher Woodruff said.
"In terms of what's driving the dollars, it's oil and gas," Woodruff said. "The other classes of property are not big enough or don't change enough to make enough difference into the actual tax dollars that are paid."
The largest increase came from the Wattenberg field, the area extending from north of Denver well into Weld County, which marks the sweet spot of Weld's oil and gas drilling boom."
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