Effect of drilling and other fossil fuel activities on insurance and mortgages

www.fleased.org

•

fleasedny@gmail.com

 •

607-539-7133

 P.O. Box 27, Slaterville Springs, NY 14881

Hi everyone,

We’d like to share with you some updates about how a gas lease may be affecting homeowners insurance and loan and mortgage requests.

Updates About Insurance

Fleased has recently learned that individuals in Madison County, NY could not get homeowner’s insurance due to the presence of a traditional vertical gas well on their property. As insurance companies learn more about the effects of gas drilling, multiple underwriters are not covering homes or properties with wells or gas leases A large insurance company we spoke with that covers an area from the Southern Tier north to Watertown said they have NO insurance underwriter who will write a homeowner’s policy for any property that has an existing well or even a gas lease.

Mortgage lenders require homeowner’s insurance so the inability to obtain such insurance would make it impossible to get a loan.

Remember, that even if you have homeowner’s insurance, this type of insurance does not cover (and never has covered) potential damages related to gas drilling. Read more at:

http://www.scribd.com/doc/166771976/Insurers-Fracking-related-damages-not-covered-by-standard-policies

It would be wise not to let your current homeowner’s insurance lapse, but to renew if possible and be sure to check the fine print on your homeowners insurance if you’ve got a gas lease.

Landowner Denied Loan in Pennsylvania for Well Across the Street

Insurance is not the only issue lessors are noticing. Banks are beginning to question landowners about fracked wells and impoundment lakes on (and even near) properties when owners seek to obtain a mortgage or home equity loan. A property owner in Pennsylvania was recently denied a mortgage. In an email, Quicken Loans told the property owners, “Unfortunately, we are unable to move forward with this loan. It is located across the street from a gas drilling site.” Two other national lenders also declined to make the loan.

Learn more at:

http://grist.org/climate-energy/fracking-boom-could-lead-to-housing-bust/

Sovereign Bank’s New Mortgage Provision

As more is learned about high volume hydraulic fracturing, banks and federal agencies are revisiting their lending policies to protect themselves and account for potential impacts on property values. Sovereign Bank, a major national lender, has added a rider to their mortgages that states that “the mortgage will be automatically recalled if the property owner transfers any oil or gas rights or allows any surface drilling activity.” It also says owners must “take affirmative steps to prevent the renewal or expansion” of any current lease.

Thanks,

Ren and Ellen