patrick.net

Hello,

I just read an article in the NYTimes that was disconcerting and even frightening.

http://www.nytimes.com/2008/11/02/business/02global.html"> http://www.nytimes.com/2008/11/02/business/02global.html

According to the article, school districts, municipalities, and just about every governmental entity that either has money to invest or borrows money could potentially end up getting sucked into the credit crisis. That means that there could be countless ticking time bombs across the United States in the form of pending financial shortfalls and bankruptcies that will further depress home values in towns and cities across the country.

Imagine buying a home at what seems like a bargain price, only to find that the local school district or government is on the hook for a couple hundred million dollars in losses because a few unsophisticated board members fell for what's turned out to be a global investment scam. Once the word gets out, the town's home values will nose dive. After all, it's the local tax payers who will eventually have to pay the pipers.

The Wisconsin school board in the article might not only lose the $35 million dollars earmarked for teachers' pensions, they're liable for an additional $165 million that the board borrowed on their behalf. Where does a town that can't afford to lose $35 million in the first place come up with another $165 million? What happens to the teachers who lose their pensions? Who wants to buy a home in an area where the schools are forced to lay off teachers, cut programs, and cant afford to purchase books or supplies?

Is there any way to find out what municipalities and school boards are in potential trouble? Can a potential home buyer request relevant information from a town or city? Is there a website that contains this type of information?

As a prospective home buyer I'd have to say that this concern belongs at the top of the list of reasons to postpone buying a home in this market.

Charles