How The Fracking Mess Is About To Make The Mortgage Mess Worse
Kurt Cobb | May 21, 2012 02:15AM ET
One fact ought to tell you all you need to know about the risks faced by homeowners signing leases for natural gas drilling on their property: Wells Fargo & Company, both the One more twist has been the sale by a major homebuilder of entire subdivisions of new homes stripped of their mineral rights . Obviously, the homebuilder hopes to make a second fortune by leasing those rights should they become valuable. Naturally, the newly aware homeowners worry about the possible loss of value in their homes should that come to pass. It's no wonder. Homebuilder D.R. Horton's energy subsidiary has been given “the perpetual right to drill, mine, explore … and remove any of the subsurface resources on or from the property by any means whatsoever."
Now, we come to who will ultimately pay for any cleanup on abandoned, underinsured properties contaminated and otherwise made uninhabitable or at least, undersirable. Perhaps you've already figured out that it will be in almost all cases U.S. taxpayers who now own the two largest mortgage companies in the country, Fannie Mae and Freddie Mac. When these mortgage giants finally take possession of all the contaminated and impaired properties, they will be obliged to clean them up and simultaneously bear the losses in the value of the mortgages issued on those properties.
In this way, the average citizen will be subsidizing the natural gas industry by bearing the costs associated with devalued property and hazardous waste cleanup. When all of this starts happening in a big way, you can count on those in charge saying that nobody saw it coming.
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