Drilling for natural gas is a problem for mortgage holders

Energy company representatives have been meeting with homeowners in states such as Texas, Pennsylvania and New York to persuade them to grant permission for the companies to drill on their land for natural gas. Major New York banks, however, are becoming more reluctant to grant mortgages on properties that have been leased for gas drilling, fearing the leases signed by owners will allow the drillers to work in ways that violate rules in the landowner's mortgage agreements.

The New York Times reported that homeowner's mortgages also require they get permission from lenders before they sign such a lease, which rarely happens. At least eight state and national banks do not even issue mortgages on properties being drilled. A credit union in upstate New York requires gas companies to pay for property damage caused by drilling that devalues the lot, while another will only work with borrowers who sign an agreement not to lease to gas companies.

In addition to drilling, homeowners have to worry about underground oil leaks. The Republic reported there are about 120,000 oil tanks buried beneath residential properties in New Jersey, threatening to leak and cause major pollution and damage to homes. More homeowners, however, are removing the tanks and switching to natural gas heat.

Having an oil tank below a house can decrease its appeal to potential buyers, the news source reported. And many homeowners do not even know if a tank is resting below their property. Homeowners should hire inspectors to find out if there is tank, and whether it has been abandoned or is fully functional. If a tank is found, homeowners could spend up to $2,000 removing it if it is not leading.

More News