Replies to This Discussion

Permalink Reply by KT on August 25, 2008 at 15:13

Sounds like you got a civil servant at Wells Fargo..., ask that person if they've worked for the Dept. of Motor Vehicles. Its either that or they're trying to collect BS fees for BS work.

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Permalink Reply by Snake Stewart on August 25, 2008 at 15:23

chuckle , chuckle !

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Permalink Reply by Joel on August 25, 2008 at 15:41

What does your mineral lease say about it - does it require anything about your mortgagor approving?

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Permalink Reply by burt whitten on August 25, 2008 at 15:50

i belong to a coalition the pinecroft group, who have stated that we need to contact our mortgage lender to see if they have released me or will release me my mineral rights? that's the only reason I contacted my mortgage company at all.

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Permalink Reply by Joel on August 25, 2008 at 15:57

Hmmm.... would think the bank branch manager might be interested in keeping good relations with folks who ...might... become much better customers in the near future.... maybe ask someone on your group's board to have a 'lil chat' with the bank on behalf of those in the group .... these days a bank might want some good publicity with a group of potential customers.

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Permalink Reply by burt whitten on August 25, 2008 at 16:07

yes I have decided to do nothing until I talk with the group leaders because this in insane. O h by the way we have not signed anything yet and we have over 2000 members

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Permalink Reply by jkw3 on August 25, 2008 at 16:20

You aren't going to like this...

If a landowner's property was mortgaged prior to his executing an oil and gas lease then the oil and gas lease is subject to that mortgage the mortgage is superior to the lease). Should the landowner default on the loan and the mortgage holder successfully forecloses on the mortgage, the mortgage holder will take title to the land unburdened by the oil and gas lease. In other words, the oil and gas lease from the mortgaged landowner is ineffective.

Before an oil and gas company commits to drilling a very expensive well on the property, it will require that the mortgage either be released by the mortgage holder or the mortgage holder subordinate its mortgage to the oil and gas lease. Simply put, there is still a mortgage on the property, but if the property is foreclosed, the oil and gas lease will still be valid. The oil and gas company's investment in the lease is protected. However, the mortgage holder will get the royalties, if any, not the original lessor.

Don't expect to get a release out of a mortgage holder. Depending upon circumstances, the mortgage holder may subordinate the mortgage, but there may be a price. At best there will be a processing fee for preparation and execution of the mortgage subordination, plus recording fees in the parish records. In some cases mortgage holders have required that any bonus and royalty be paid to the mortgage holder and applied against the mortgage.

With urban drilling there is the possibility hundreds of lots in a drilling and production unit. In Shreveport and Bossier City there could be tens of thousands of requests for subordinations from mortgage holders. With a flood of new requests for subordinations (on top of the thousands still pending with the large mortgage holders fom Barnette Shale wells in the Fort Worth area) there could be a problem in getting timely response for subordinations and there could be a significant rise in the processing cost for a subordination, if granted at all.

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Permalink Reply by burt whitten on August 25, 2008 at 16:30

well fargo said they will not subordinate their lien to an oil and gas lease for any reason. ok now what?

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Permalink Reply by burt whitten on August 25, 2008 at 16:38

can't i just refinance with my credit union who would most likely release my mineral rights to me and then put the money in their bank?

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Permalink Reply by Robert on August 26, 2008 at 1:38

Yes you could refinance with another company that would release your mineral rights. I would also suggest that you file a complaint with the BBB about Wells Fargo also.

Unless you are behind on your payments there is no reason for them to refuse to release your mineral rights. I actually do Real Estate Appraisals and know a few really good Loan Officers around town that are beginning to get well versed in Mortgages verses Mineral Rights and everything. If you would like to email me privately I can give you a name or two you could call and speak with them about doing a refinance with a company that would not have any problems allowing you to lease your minerals. My email address is Robert318@gmail.com.

No promises on anything, just can help put you in touch with some people that could help.

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Permalink Reply by jkw3 on August 25, 2008 at 16:49

...and you thought the oil and gas companies were devious? The large mortgage holders can put them to shame, and they already own superior liens under their mortgages.

Actually, the operator can choose to pay royalties to the lessor/mineral owner even if the property is mortgaged, but the operator risks not being able to recover royalties paid to lessors who are subsequently subject to a foreclosure....and the mortgage companies will be demanding all the royalties for the foreclosed property back to first production whether they were paid to the lessor or not!

Maybe if the oil and gas companies exerted some of their influence on the mortgage holders....it would be better PR than "Citizens of the Shale" or "Shale TV".

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Permalink Reply by Grice on August 25, 2008 at 17:45

Doesn't subordination only apply to real property?

If a landowner holds a acre lot (average lot size for residential development), and local laws does not permit surface operations upon said property, then the requirement to subordinate the mortgage is invalid. Only if the lease affects the real property, would subordination be required.

Mineral rights are not considered real property, and would not be subject to subordination. Only in the act of surface consumption (ie. placement of a drill site) would subordination of a mortgage be required. And, even then, partial subordination (depending on the lender) would be necessary.

Please let me know if this is incorrect. Thanks.

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