We signed a lease couple of years ago for our 5 acres of land,   Now trying to remortgage our home and was denied by Citizens Bank who hold our equity loan on home.,   We were told that their underwriting dept. requires that we terminate our lease with Range Resources to get the mortgage.  Are they crazy!  Has

anyone else heard of this or had problems acquiring a mortgage.   Thanks for any responses

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Thanks for your reply.   I am astounded that Citizens does not want service people in

Ohio, Pa. New York, etc. 

I read an article about this a few months back. As Debby says, use a local bank and you should be ok

i recently read about this practice;  the president of citizens and northern bank in troy was quoted that their bank DID write mortgages.  you might try there.

i will be moving in the not too distant future...i hate to even find out the current assessment of my home plus nine acres.  what a mess.  good luck to you...i also have a home equity loan on this property...it happens to be from citizens and northern but was acquired about three yrs ago....i was leased then, but no activity was going on and no royalties being produced then.

Yes, there are articles out there discussing this subject if you do internet searches. Pretty easy to find.

There is no reason to get angry at the bank and truth be told, the smaller/local banks charge more interest. It's a dilemma that we must face when we lease our land. The larger parcels seem to gain a bit of value while they are producing, but will decline in value when the resources are gone. The smaller parcels that are close to drilling do lose value. Hey, that's a fact and we all know it. It;s up to us to decide if what we are making with bonuses and royalties are worth it. I think it's something that should be discussed in more detail up front. I still leased, knowing that I may never be able to mortgage or sell my land. I have several friends that refused to lease after realizing this. It's a personal decision.

It's not the bank being mean or even the bank being against drilling. The fact is that the worth of your property is directly related to the amount they are holding on a mortgage and if all the mortgages lose value, that bank is going under.

If you do a "Residential Appraisal" on your property. There is no valuation difference between property that is leased or not leased for gas rights. Unless the property is in a unit and producing royalties to that homeowner, the values as far as the bank is concerned should remain the same. You can't put a value on speculation. It would be no different than if you owned 50 acres of land with tree saplings on it and claimed that in 30 years it's going to have timber value. The value is not there until you physically realize it. With the exception of larger tracts of land, a homeowner with less than 30 acres typically would not have a well drilled on his property, so there would be no surface disturbance. That would be the only reason a bank should be concerned about having a gas lease on your property which could have an adverse affect it's value. As far as smaller bank charging more interest, that is only true when they do in-house loans that are "non-conforming" loans, otherwise they give the same rates as the bigger banks when doing "conforming" loans where the mortgage is put on the secondary market for sale.

 You might think about contacting Range Resources about this. They might just have a investor bank that might just be more apt to see that their portfolio in the energy area grows. Years ago I had a a similar thing except the mortgagee would only allow drilling if they got the proceeds. The well had been started result hey oil company you deal with the banks get me a deal. Same day hours later I had a bank redo the whole thing! Money talks. 

Debby,   If you are in a low population area, Farm Credit Services would probably like to have your business. Call Alliance OH and see if  you can refinance through them. Over the years they dropped our interest rates 2 times which is unheard of in the banking business. Taking less money from a customer is something banks don't do.

As far as needing a bank in the future, with 5 acres in production you will be your own bank. You won't need Citizens Bank. Being a credit unioin member I've noticed that their savings rates are better than the banks. I plan on putting my money into credit unions and letting the banks do my dirty work, like checking.

Watch out for those who will try and share your minerals and Pipeline companies, they have a nasty contract.   Ron

 

 

 

If my property IS now receiving royalties, does that make it easier for someone buying it to  get a mortgage, then?  And how does value appraise if the mineral rights are kept by the original owner, the well is not on the property but in a 420 acre unit, and a pipeline crosses the property? 

i am so glad to see responses beginning here from more people/'experts' .

As a real esate appraiser, I have been dealing with this residentail lending issue since 2007.  Anti-drillers site articles written by other anti-drillers as the basis for mortgages being denid by lenders. In fact, both Fannie Mae & Freddie Mac have underwriting guidelines for residential mortgages in areas with active well drilling (oil & gas).  If the bank and the appraiser follow these guidelines Fannie and Freddie will buy the loan.  This assertion was restated in an October 26, 2011 letter to then Congressman Maurice Hinchey (D) NY from the General Counsel of the Federal Housing Finance Agency (FHFA).  FHFA oversees Fannie & Freddie.  However, the guidelines are easily followed in parts of the country (e.g. Texas) where mineral rights have been gone for generations.  This is not the case in most of the Marcellus Shale.  Our market is in-between and the property may or may not have the mineral rights.  To follow the Fannie/Freddie guidelines takes additional time and effort increasing loan origination cost.  So far, most banks have refused to address the issue properly. There are knowledgable lenders out there, just keep looking and read the fine print.

The Loan processer mentioned the reselling the loan through Fannie May as the reason.

Incidently, I was a meeting last nite and spoke with an attorney from Western Pa. regarding

this.  He had never heard of a bank rejecting a loan because of the gas lease.  Thank you

everyone for your response.   Someone from Citizen's in Pgh. is going to look into this.

Curious to see what will happen if anything.   I will post their reply.   After Xmas I will search for new "local" bank.   This won't make or break me, just wanted to get out from a variable rate.

Also, good suggestion to try Range Resources.    This is so silly over 5 acres!

This is what has happened to banking since the collapse.  Prior to 2008, banks were lending people money, mortgages, credit lines, etc., to anyone and everyone that could walk and talk and had a job.  Today, borrowing money is like pulling teeth.  I did a refi in 2010 that started in September and didn't close until December.  I only borrowed up to the amount of what my original mortgage was and we(wife & I) have a stellar credit rating.  The way the bank treated us, you would have thought we were upside down on our mortgage and out of work.  It was unbelievable.  The banking industry has gone from one extreme to the other; from giving money away to people who couldn't possibly repay to making people with excellent credit and good jobs jump through hoops to borrow.

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