Fracking boom could lead to housing bust [View all]

[dixiegrrrrl]

Key parts of this story:

While the media and environmental groups have focused on shale drilling’s potential to poison the soil, water, and air, they’ve largely overlooked its potential to poison the real estate market.

Lawyers, realtors, public officials, and environmental advocates from Pennsylvania to Arkansas to Colorado are noticing that banks and federal agencies are revisiting their lending policies to account for the potential impact of drilling on property values, and in some cases are refusing to finance property with or even just near drilling activity.

Real estate experts say another problematic trend is that many homeowners insurance policies do not cover residential properties with a gas lease or gas well, yet all mortgage companies require homeowners insurance from their borrowers.

Plus, there is this interesting aspect about Fannie Mae ( Fannie Mae bought millions of mortgages from the banks, remember??)

The Federal Housing Administration’s lending guidelines prohibit financing for homes within 300 feet of a property with “an active or planned drilling site.”
Fannie Mae and Freddie Mac also prohibit property owners from signing a gas lease.

May said many owners are now in “technical default” under the terms of their mortgage if they signed a gas lease without first getting consent from their lender.

Another clause in Fannie Mae and Freddie Mac mortgages prohibits hazardous materials on a residential property.
“It comes as a surprise to a lot of people. They weren’t aware that their mortgage came with those restrictions,”
May said.

http://grist.org/climate-energy/fracking-boom-could-lead-to-housing-bust/?source=Patrick.net

Thanks to DU member ms. smiler who found this story.