News

Researchers from Clemson University have released a new report showing that areas of Pennsylvania where shale development is taking place saw dramatically lower rates of mortgage defaults than elsewhere during the “great recession.”  From a media release announcing the findings:

“The research, by Lily Shen, assistant professor of finance in the College of Business, examined data from 2004 to 2011 and found that mortgages originated in shale-gas fracking regions of Pennsylvania had a 58 percent lower default rate compared to the state’s average rate of default.” (Emphasis added)

Researchers looked at “nearly 372,000 residential mortgages originated in shale-gas fracking areas of Pennsylvania” and even found that “borrowers’ credit (FICO) scores showed a 40 percent increase amounting to an average score of 660” in regions of the state where shale development was taking place. The results led researchers to state:

“The research, the first to link fracking with mortgage performance, seems to debunk a widely held belief that fracking has devastating impacts on the mortgage market.”

Lily Shen, assistant professor of finance in the College of Business and lead researcher on the study said her findings demonstrate that nearby energy development creates extra incentives for homeowners to stay current on their mortgage. Also from the media release:

“When there’s discovery of a mineral resource, a property becomes more than a place to live. The mineral rights are tied to property ownership. If a person defaults on the mortgage and loses the property, they lose the mineral rights and the potential revenue they could have generated from those rights,” Shen said.

The results wil...