Over the past 10 years, more than a million leases to natural gas drillers have been signed by landowners, raising concerns from bankers and real-estate interests, Ian Urbina of The New York Times reports. The concerns are about land value and the lease agreements themselves.
Banks fear drilling could damage the land. One credit union in New York requires gas companies to agree to pay for any devaluing damage to its mortgaged property, Urbina reports. Another lending institution grants mortgages only to applicants who agree not to sign a gas lease as long as they are paying on the mortgage. Many mortgages current require homeowners get permission from the bank before signing a lease, but many landowners don't do that. While this will likely not result in foreclosures, it does constitute a "technical default," Urbina reports.
Some banks see drilling leases as violations of mortgage rules and anticipate the development of tougher rules. Jack and Carol Pytila of Tompkins County, New York, are among those finding it more difficult to obtain mortgages when they have a lease agreement. They had been working with Visions Federal Credit Union to refinance their acreage when the credit union denied their loan after learning of their lease agreement. The couple later found another lender. (Read more)
Banks fear drilling could damage the land. One credit union in New York requires gas companies to agree to pay for any devaluing damage to its mortgaged property, Urbina reports. Another lending institution grants mortgages only to applicants who agree not to sign a gas lease as long as they are paying on the mortgage. Many mortgages current require homeowners get permission from the bank before signing a lease, but many landowners don't do that. While this will likely not result in foreclosures, it does constitute a "technical default," Urbina reports.
Some banks see drilling leases as violations of mortgage rules and anticipate the development of tougher rules. Jack and Carol Pytila of Tompkins County, New York, are among those finding it more difficult to obtain mortgages when they have a lease agreement. They had been working with Visions Federal Credit Union to refinance their acreage when the credit union denied their loan after learning of their lease agreement. The couple later found another lender. (Read more)
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