Federal State Of Emergency Declared In Flint, Michigan Over Contaminated Water Supply
A handyman explains the new water filter to Terrence Tyler at his residence in Shiloh Commons on January 21 in Flint, Michigan.  Photograph by Sarah Rice—Getty Images

Flint Facing More Pain as Mortgage Firms Require Proof of Safe Water

Feb 04, 2016

Flint residents have a new wrinkle to worry about after learning that their drinking water had been poisoned with lead.

Mortgage lenders including Michigan Mutual are now demanding that prospective home-buyers prove that a property is free of contamination in order to receive a loan, according to The Wall Street Journal. The demand could further bring down home prices across the economically depressed city.

President Obama declared a national state of emergency in the city, which lies just outside Detroit, in January. In a 2014 move designed to cut costs, Flint detached from the Detroit water supply and began drawing water from the Flint River. The river water corroded Flint's lead pipes, resulting in lead levels that, in some cases, exceeded the necessary criteria to be considered toxic waste. The city was reattached to the Detroit water supply in October 2015, but with its infrastructure of pipes damaged, the water is still not potable.

It's common for banks to require that a house meet basic standards of livability in order to offer a mortgage on it. But since most Flint residents were hooked up to the contaminated supply, mortgage lenders have been alerting local loan officials that borrowers would need to obtain a test proving the potability of their water. The government agency that backs mortgages to borrowers with poor credit, the Federal Housing Administration, also requires that houses have drinkable water.

Fortune has contacted Michigan Mutual for comment and will update this story if it responds.

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