Fracking Lowers Mortgage Lending Chances

According to MPA, real estate lenders across the United States have a low approval rate of mortgages for properties located near hydrochloric fracturing.  Hydrochloric fracturing, or fracking, is the fracturing of rock by a pressurized liquid.

Individual mortgage institutions are enacting policies to protect themselves even more, as Federal Housing Administration (FHA) and Department of Housing and Urban Development (HUD) will not support if surface or sub surface gas rights have been leased within 300 feet of a residential property or property boundary lines.

MPA reports that New Jersey’s Sovereign Bank started to include Mineral, Oil and Gas Rights Riders with their loan packages for locations where fracking is already happening.  If the property owner transfers any of the rights or allows any surface drilling activity, the rider states that the mortgage will be automatically revoked, and they must prevent renewal or growth of current lease from the time of signing the contract.  A mortgage default could likely happen by signing a gas lease without lender consent.

Please share your thoughts and experiences with us on fracking and/or real estate investing.