Oct. 20, 2011: Natural Gas Extraction Threaten to Create Real 'Toxic Assets"
Congressman Releases Queries to Fannie Mae, Freddie Mac, Others Following New York Times Report on Gas Leases and Mortgages
WASHINGTON (October 20, 2011) – Following a New York Times report that says mortgage lenders and borrowers are facing new risks and conflicts when natural gas extraction occurs on mortgaged land, Rep. Ed Markey (D-Mass.) today released the investigative letters he sent to Fannie Mae, Freddie Mac, the Department of Housing and Urban Development, and the Department of Veterans’ Affairs. In the letters, Rep. Markey asks the agencies for information regarding the inclusion of risk from natural gas extraction on government-sponsored mortgages.
The natural gas extraction technique commonly known as “fracking” has come under increasing scrutiny by Rep. Markey and many others due to the potentially-toxic substances that some drilling companies have used, as well as the radioactive materials that have been unearthed during the process of retrieving trapped fuel and then improperly released into rivers and streams. As stated in the Times report, the risk of contamination or damage to private land is causing mortgage lenders to reassess the risks in granting mortgages or refinancing. Mortgage holders are also coming into conflict with lenders when they do not report new gas leases, including “technical defaults” on mortgages.
“The dangerous chemicals used by some drilling companies and the radioactive elements that are sometimes unearthed in natural gas extraction means some of these mortgages could become literal ‘toxic assets’ for owners, borrowers, and even taxpayers,” said Rep. Markey, who is the Ranking Member of the Natural Resources Committee and a senior member of the Energy and Commerce Committee.
“Today’s report underscores the need for the natural gas and mortgage industries to come up with solutions that don’t put homeowners in the position of unknowingly violating the terms of their mortgage when they subsequently agree to allow natural gas drilling to occur on their property. Without such action, both homeowners and taxpayers unnecessarily face both financial and legal risk if drilling activities result in environmental damage or contamination,” continued Rep. Markey.
“The report also shows that better natural gas drilling practices that don’t involve the use of hazardous materials and which prevent any contaminated wastewater from being released into the environment need to be standardized by all drilling companies. Adoption of stronger safety and environmental standards by the industry would help ensure that homeowners do not face the type of risks that have lead lenders to balk at lending to those who have drilling operations occurring on their property, or to refinancing existing mortgage for such properties. This situation also underscores the need for the EPA to move quickly to adopt new standards for treatment and disposal of wastewater from shale gas drilling operations,” said Rep. Markey.
The letters from Rep. Markey are linked below: