Fracking Could Raise New Issue Between Homeowners and Mortgage Companies

November 14, 2012 at 12:34 pm

The North Carolina legislature passed legislation legalizing fracking in July 2012.  Fracking, or hydraulic fracturing, is the practice of using highly pressurized liquids to extract natural gas or oil from the earth.  During the debates and discussion, there were many debates about the environmental and economic impact that this legislation may have on the state.  However, one issue that went largely not discussed is the potential impact that fracking could have on the state’s housing industry.

The impact on the housing industry mainly comes from the answer to: who owns your property’s mineral rights?  Mineral rights are usually transferred as part of the parcel of property at the closing.  However, in certain situations, some property owners retained the mineral rights in the property. (D.R. Horton recently returned retained mineral interests).  Other landowners sold or leased their interest in the mineral rights throughout the years.

Now, the sale of these mineral rights did not receive detailed attention for many years because they were not fully utilized.  However, with the rising interest in fracking in North Carolina, there is the potential that their owners may take an interest in enforcing their rights.  The problem arises where the utilization of these rights might impact the value and foundation of the mortgaged property (such as building roads, pipelines, drills, etc.).  There may also be issues with the regulations of Fannie Mae and Freddie Mac, who require that drilling and mineral leases be handled in certain manners.  Some mortgage companies have considered this issue and are refusing to lend to properties without the mineral rights, while most do not have this policy.  It will be interesting to see if more mortgage companies limit their lending to properties with their full mineral rights in the future.  More information on a homeowner’s rights can be found at RAFI-USA’s resource page.

Advertisements

Entry filed under: Uncategorized.

Fayetteville City Council votes against conducting a disparity study in contracting SBA says that bank bailout didn’t help small business lending


Categories

TSC Twitter

Error: Please make sure the Twitter account is public.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 36 other followers


%d bloggers like this: