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Appraisal, Debt Ratio Still At Issue in Kerry Campaign

Appraisal, Debt Ratio Still At Issue in Kerry Campaign

$158k annual salary inadequate to pay $15k monthly payment

March 5, 2004


In late December Democratic presidential candidate John Kerry made a bold financial decision that probably saved his campaign.Kerry, a 20-year U.S. Senate veteran, was running out of money and trailing other Democrats in Iowa and New Hampshire, states that held the first votes of the 2004 primary election.

Kerry’s wife, Teresa Heinz Kerry, is an heiress to the Heinz food products fortune and worth an estimated $500 million. But she couldn’t help. Federal campaign laws ban her from giving more than the $2,000 limit any individual can contribute to a candidate.

So Kerry did what millions of other Americans do when they need ready cash. He took out a second mortgage.

Kerry borrowed $6.4 million against the $12.8 million home he and his wife own in Boston’s swanky Beacon Hill neighborhood. Under finance laws he was allowed to tap half the equity in his half ownership of the home.

The move has been heralded by pundits and political watchers as the boost Kerry needed. With money to spend Kerry went on a roll, winning state primaries and caucuses across the country.

The momentum culminated in the Super Tuesday contests with Kerry emerging as the Democratic nominee to run against President George W. Bush this fall.

But now questions are being asked about the loan by reporters, opponents and political watchdogs. Did Kerry get a favorable investment and sweetheart deal? And how, on a Congressman’s salary of $158,000, will he be able to make the $15,000 monthly interest payments his campaign has confirmed?

“A lot of questions have been raised,” Larry Noble, executive director of the Washington political watchdog group Center for Responsive Politics, said in an interview.

“One issue is the house worth enough to take about a $6 million mortgage based on only half the value of the house,” Noble said.

Noble said several published reports show that according to the Boston’s Assessing Department, the homes’ assessed value was $6.6 million in 2003 and $6.95 million in 2002.

The Boston Herald reported that Kerry received the loan from Mellon Bank of New England, a subsidiary of Mellon Bank in Pittsburgh. Kerry’s wife has a long history with the bank, the paper reported.

Kerry’s campaign did not respond to numerous requests for interviews from But campaign spokesman Michael Meehan told The Boston Herald that the bank appraised the property at $12.8 million and the mortgage complied with all federal election laws.

Meehan also pointed out that a home rarely sells for the appraisal value.

“Every homeowner in Massachusetts will understand that,” he reportedly said.

Noble said to clear up any misconceptions, Kerry should release all the loan documents — but so far the campaign has refused to do so.

Questions have also been raised about how Kerry can and will pay off the mortgage, Noble said.

The campaign has previously confirmed that under terms of the loan, Kerry is required to make an interest-only payment of $15,000 each month for the first 10 years of the mortgage. Kerry followed federal election laws in using campaign funds to make the first payment.

Noble said campaign funds can continue to be used until late July, when Kerry will officially become the party’s nominee at the Democrats national convention.

“Under the new campaign finance laws, after the convention he can only use money raised by the campaign before the convention and no more than $250,000 raised after the convention,” Noble said.

“The cleanest way would be before the convention collect enough money to pay off the loan,” he said.

But if Kerry’s wife pays off the loan with her money “you’re dealing with a potential campaign contribution violation,” Noble said.

An anti-Kerry Web site has posted an open letter to Kerry, saying it is “shocking that despite requests, you have refused to release documentation” about the mortgage.

“There are questions surrounding the appraisal …(which) was nearly double the assessment by the city of Boston,” the letter states. “An inflated appraisal of that home would allow you to obtain more money for your campaign coffers and skirt the intent of the (campaign finance) law.

“It is important that you release all these records, as President Bush did when questions were raised about his National Guard Service, so you can put any appearance of impropriety behind you.”

Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at:

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