HUD May Not Loan on Homes Near Drilling and Pipelines

The only ones getting rich from all this natural gas development are Big Gas. Citizens will be stuck with diminished property values, clean-up of toxic air, water and soil and unending medical expenses.

The The Environmental Conservation Committee of The New York State Assembly issued a Draft Supplemental Generic Environmental Impact Statement governing natural gas drilling. This 3 page document is packed with great nuggets of information that people need to consider before opening the door to Big Gas.

Here’s something they never tell you when they show the picture of the gas well with only 2 tanks and landscaping.

First, the wells and the pipelines and compressors are joined at the hip.

As the song says: You can’t have one without the other… Recently, Range Resources convinced the Denton City Council differently, Denton Succumbs to Greed. Range Resources to Drill 5 Wells, but they weren’t telling the truth, of course.

Another thing they never tell you is how the most valuable asset you own will be rendered worthless.

In the U. S. Department of Housing and Urban Development HANDBOOK 4150.2:
Valuation Analysis for Home Mortgage Insurance for Single Family One- to Four-Unit Dwellings, July 1, 1999, page 20-21, 2-2 SPECIAL NEIGHBORHOOD HAZARDS AND NUISANCES:

A. UNACCEPTABLE SITES
FHA guidelines require that a site be rejected if the property being appraised is subject to hazards, environmental contaminants, noxious odors, offensive sights or excessive noises to the point of endangering the physical improvements or affecting the livability of the property, its marketability or the health and safety of its occupants. Rejection may also be appropriate if the future economic life of the property is shortened by obvious and compelling pressure to a higher use, making a long-term mortgage impractical.

D. OPERATING AND ABANDONED OIL OR GAS WELLS
Operating and abandoned oil and gas wells pose potential hazards to housing, including potential fire, explosion, spray and other pollution.
1. Existing Construction
No existing dwelling may be located closer than 300 feet from an active or planned drilling site. Note that this applies to the site boundary, not to the actual well site.

I have been placing calls to mortgage officers in Broome and Sullivan County in New York, Wayne County in Pennsylvania, and Sussex County in New Jersey who are experienced in FHA loans, and Fannie Mae and Freddie Mac. Of the ones I have been able to speak to, half were familiar with the language in the HUD Handbook and interpreted it to mean that residential structures for sale that are within 300 feet of the boundary of any property that is leased for natural gas drilling is not eligible for insurance for FHA financing.

I have also been placing calls to real estate brokers in each of these counties to get a sense of what percentage of the market relies on FHA financing. So far, it is a little all over the map: for homes in the middle of the market that go for anywhere between $110K to $210K the responses have been between 20% and 70%. Even if we accept only the lower figure, it is clear that this greatly reduces the pool of eligible buyers for these homes with a pursuant reduction in value of no small significance for the seller.

This becomes problematic in the context of an energy regulatory agenda that involves compulsory integration with horizontal wells running beneath people’s properties. And in case you don’t think drilling does not occur in urban or suburban
areas, I simply direct your attention to the Dallas/Ft. Worth area and Dish, Texas

So the people on Carter Ave. where Chesapeake wants to put a 16″ high pressure pipeline to carry unodorized, highly flammable, highly corrosive wet gas will not only be in grave danger and have greatly diminished property, they won’t be able to sell their homes with a HUD loan.