​Standing Rock and How Completion Will Hurt Condo Loans

By: Stephanie Diana Wilson
Normally this blog is socially and politically neutral but; the topic of protecting water and environment is near and dear to me.  The topic of environment also has the possibility to hurt not only mine and much of the US economy’s bottom line and the future health and financial well fare of the children who will become future home buyers.  Lets for a moment forget about the financial facts that more money is there to be made and more jobs can be created by the use of green tech and alternative energy resources such as solar and wind.  Ignoring these facts but paying attention to the facts that oil spills, can cause water and soil contamination.  

The reason I bring this up is because all the major lending agencies have very strict guidelines regarding environmental hazards within land that condos and single family homes.  This blogs focus is in condo guidelines and it could cause a project to become unwarrantable.  As we have noted on numerous occasions always check with your mortgage advisor and underwriter with questions on specific properties.  However, if we look online at Fannie Mae’s underwriting guidelines (keep in mind that the guidelines change frequently and again check with your underwriter) environmental hazards can be researched in section B4-2.1-03, 04, and 05.  This can be seen on the Fannie Mae guidelines online at https://www.fanniemae.com/content/guide/selling/index.html.  

In the underwriting guidelines it details everything from legally acceptable amounts of radon and other soil contamination, water contamination and seismic issues.  However, even if a lender’s condo department does not catch these issues the news advertising an environmental hazard will drop appraisal values.  This was observed during the gas leak in Porter Ranch, California.  The LA times wrote an article in April about how the gas leak had dropped home values in that area.  The article can be seen online at http://www.latimes.com/business/realestate/la-fi-porter-ranch-sales-20160406-story.html.  Even before these Porter Ranch loans of any kind came to underwriting many lenders may have been cautious about doing loans there because of the underwriting issues that come with environmental hazards.  

Another example of environmental hazards hurting the real estate market is Flint Michigan.  Michigan was hit hard as a whole state after the financial crisis of 2008.  Now that the city has been without clean drinking water since 2014 the housing prices have dropped to around $14k!  CNN documented how the people in that community have been hurting with the financial crisis that the water contamination has caused.  Please see link to CNN’s article at http://money.cnn.com/2016/03/04/real_estate/flint-housing-water-crisis/.  Many residences cannot move because, they can’t sell their home to afford to move.  Which is causing a real estate crisis throughout the country as more pipelines are being pushed through despite a stop ordered by the US government.  

At Standing Rock which are trying to protect not just the land that the pipeline is being built which is actively used native burial grounds but; the river that supplies water to the local reservation. There the Water Protectors are protesting the possibility that a pipeline might rupture.  Unlike in Lycoming County Pennsylvania where they have recently had a pipeline burst.   NPR wrote an article when it happened https://stateimpact.npr.org/pennsylvania/2016/10/21/sunoco-gas-pipeline-ruptures-in-lycoming-county/.  Also we cannot forget how New Orleans and Texas suffered during the oil spills in 2010 and how it harmed their housing prices as well.  https://www.clearcapital.com/newsroom/press-releases/clear-capital-impact-of-bp-oil-spill-reaches-beyond-gulf-coast/.   

This comes as more pipelines are being built across the country and as reports come in not stopping in North Dakota even though the government has halted their approval of the project on the land.    Even though using the Bush concept of asking for forgiveness being easier than permission has been showing not to be the case.  Going against the wishes of the native people has cost the NDPL reps more money than expected and brought to light the issues they are causing around the country.  

Although the issue of property values dropping due to environmental hazards is being published and this is being done across disciplines.  Such as the US National Library of Medicine published an article on home prices that have been effected by plants being opened or closed near properties.  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4847734/. There is even an article on Jstor.org from the University of Wisconsin Press on how the building of pipelines has hurt property values.  https://www.jstor.org/stable/27647732?seq=1#page_scan_tab_contents. You can also find the same article at http://le.uwpress.org/content/82/4/529.short.  Some environmental hazards can be abated or monitored to fit within agency guidelines.  Such as the information detailed in one of my earlier blog posts on Meth being the new four letter word in mortgage.  Though in the case of an oil spill not only does it cause a issue with housing prices and value but for gas prices.  https://insideclimatenews.org/news/20131125/neighborhood-shattered-families-emptying-out-oil-hit-arkansas-town.  

With all the homes and condos all along the Mississippi the construction of pipelines throughout the country is becoming costly to the American People and the businesses that sponsor them.  The Department of Energy in the US has a website for people to find all the wonderful jobs in green energy including those in the labor and construction aspects of the industry.  Links to that info can be found at https://energy.gov/eere/education/clean-energy-jobs-and-career-planning.  

I get this is a highly political issue regarding treating and social economical discrimination and racial discrimination along with corporate and governmental corruption.  But, if all parties sit down and see how these actions are hurting both the American Dream of home ownership and the financial stability of the nation and its real estate industry which ends up hurting everyone’s pocket books change can be attained.  These companies investing in green energy instead of oil will increase their profits, put them in line with the rest of the world which is going or has already gone totally green.  It would also starve a potential national financial collapse by not polluting soil and ground water causing numerous homes property values to plummet.  This ability to plan ahead and adapt to an ever changing world is what made America great in the first place.  If we want to keep America great investments need to be shifted to account for geo political changes and environmental changes.   This will create jobs and raise the real estate values and the financial industry as a whole.  All parties need to look at this issue much like financial planning for a child while planning a will for ourselves.  We want to make sure we leave our kids with a sound financial footing and room for them to grow that way as well.  Our children and the economy cannot thrive if we have unrest and massive pollutants hindering financial and physical growth.   


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