Homer Zoning Committee Hears About Impact of Gas Leases on Residential Mortgages
Wednesday, September 12, 2012
The Town of Homer Zoning Advisory Committee, which is looking at the development of local zoning regulations for natural gas drilling continued its review last night. The committee heard from a local residential mortgage lender on the impacts drilling is having on that industry.
Greg May Vice President of Residential Mortgages at Tompkins Trust Company spoke before the 11-member committee last night. May reiterated several times he does not speak about the issues surrounding natural gas drilling as either for or against it, but merely to educate decision makers about the impacts the industry is having on mortgage lending.
May says that property owners who lease their mineral or surface rights to gas companies may have difficulty securing refinancing for renovations, or when it comes times to sell their property, prospective buyers may have a tough time getting financing for the leased property because fewer lenders will provide mortgages for residential properties with gas leases.
May said gas drilling has the potential to drive up costs in the residential mortgage industry, New York State does not require gas leases to be recorded by local governments, that means lenders and their attorneys face the prospect of title searches to find lease agreements, those costs are then passed to borrowers.
Another issue is that secondary market mortgages companies like Freddie Mae, Suny Mae, and F-H-A which are often the lenders for low income borrowers will not write mortgages for properties that have leased surface or subsurface rights within 200 feet of a home.
Insurance companies are also walking away from providing coverage on residential properties where drilling is taking place.
May says the State needs to establish setback requirements for residential properties that are consistent with what the financing agencies have established.
May also talked about compulsory integration, when a majority of land is leased around a non-lease holder, their mineral rights are automatically leased and they are offered compensation for that.
The Homer Committee plans to bringing more speakers on various topics associated with drilling and will then make a recommendation on a possible zoning update to the Homer Town Board.
Meanwhile the State D-E-C is expected to release its revised drilling regulations later this year, committee members felt confident that the revised rules will not address local zoning issues related to drilling such as the location of well pads, compressor stations, and other elements that go along with the actual drilling operation.
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