The Clintons crunch numbers as they hunt for a house

WASHINGTON -- Since the first days of her house-hunting tour through the hamlets of Westchester County, N.Y., Hillary Rodham Clinton has worried that she and her husband may not be able to afford the seven-figure showplace homes they have inspected.

The Clintons are the least affluent couple to occupy the White House since Jimmy and Rosalynn Carter lived there 20 years ago. They have not owned their own home since 1983.

At the same time they are viewing million-dollar-plus houses, President and Mrs. Clinton are also deep in debt. They owe a battery of lawyers $5.5 million, a sum that far exceeds their net worth of approximately $1.5 million.

While the Clintons are weighing whether to place bids on Westchester properties, the administrators of the Clinton Legal Expense Trust are mailing out new appeals for donations and are expressing concern that they will not be able to erase the Clintons' debt before the president leaves office.

Yet an analysis of the Clintons' finances shows that the first family can still afford to purchase a property in the price range of the ones they toured on Sunday, from a seven-bedroom, $1.7 million house in Edgemont, N.Y., to a 4.14-acre property in Rye Brook, N.Y., that is listed at $2.3 million.

If the Clintons make a 20 percent down payment of $440,000 on a $2.2 million house, a 30-year mortgage, at a fixed rate of 8.75 percent, would mean their monthly payment would be $13,845, said Seth Cohen, the managing director of Home Mortgage Acceptance Corp. in Manhattan. Cohen estimated that the Clintons would also owe about $25,000 a year in property taxes and about $500 a month on insurance. "That comes to a monthly nut of about $16,645," Cohen said. He said that the Clintons would need to earn about $525,000 a year to qualify for that particular mortgage. Based on the Clintons' 1998 income, the couple would qualify now for such a mortgage.

Friends and supporters said that the Clintons had not decided whether to buy or rent a home, but they seemed to be leaning toward making an offer and applying for, as one friend described it, "a super-jumbo mortgage."

If Mrs. Clinton wins election to the Senate from New York in November 2000, her annual income will be $129,619, or 35 percent less than the president's current $200,000 annual salary.

When he leaves office in January 2001, Clinton could become his family's predominant bread-winner for the first time since the early 1980s. His friends say he has strong potential to earn millions of dollars from book deals, speaking engagements and, possibly, serving on corporate boards.

"He'll do great," said James Carville, a political strategist and a close friend of the Clintons. "His book advance alone will be enough to pay off the balance of a large mortgage."

Other former presidents, including Gerald Ford, have served on corporate boards. Former President Carter has done well as an author. Former Presidents Reagan and Bush have earned high speaking fees abroad, including a $2 million fee paid to Reagan by a Japanese corporation.

If Mrs. Clinton loses or abandons her bid for the Senate, she, too, would likely be in demand. She has already written a best seller and several publishing executives have said they think her memoirs could fetch more than the president's. Corporations would likely compete for her service on their boards.

Mortgage experts say that a couple with an annual income of $500,000 can easily qualify for a mortgage for a home costing $2 million. Of course, most couples do not have the Clintons' legal debts, but then those who have such debts do not have a legal defense fund raising contributions to erase it. But mortgage experts said that most lenders will not penalize the Clintons for their enormous debts unless a civil lawsuit was filed to recover it, a possibility that is highly unlikely.

"If they wanted to do 80 percent financing on a $2.2 million house, there will be banks lining up to offer the Clintons a mortgage, as long as there are no judgments or liens filed against them," said Melissa Cohn, president of Manhattan Mortgage, a top broker for luxury homes.

Cohn said that banks would certainly also consider Clinton's future earning potential after he leaves office. "They'll be more than willing to gamble on his ability to earn solid income because of who he is," Cohn said. "And they won't hold it against him that he is about to become unemployed."

The Clintons estimated their net worth to fall somewhere between $1.2 million to $5.57 million in their most recent annual financial disclosure form released in May. The biggest chunk -- worth more than $1 million but less than $5 million -- came from a blind trust of securities held in Mrs. Clinton's name. The forms require only a range of figures rather than precise numbers, but White House aides said that the trust was worth slightly more than $1 million. Thanks to the bull market, the blind trust's value has grown substantially in the past five years, friends say.

The Clintons' adjusted 1998 gross income of $504,109 came from the $200,000 salary Clinton receives as president and $200,318 from securities from a blind trust they sold shortly before they paid $850,000 to settle the Paula Corbin Jones sexual misconduct lawsuit against Clinton. They also reported $16,665 in taxable interest, $16,736 in dividends, $1,329 in a state income tax refund from Arkansas and $74,289 in royalties from Mrs. Clinton's best-selling book, It Takes A Village.

Mrs. Clinton herself has worried aloud about whether a multimillion-dollar home is within her family's reach. She pronounced a $3.8 million house beyond her family's price range.

"If I can afford it, I'd buy," the first lady told reporters last month, "but I probably will end up renting."

But in recent days, friends say the Clintons have felt more confident about making an offer on a home because of the expectation that the president will soon be earning a much larger income.

In the 1980s, Clinton was one of the lowest-paid governors in the nation, earning $35,000 a year, while Mrs. Clinton pulled down a six- figure income as a partner at the Rose Law Firm, one of Little Rock's most profitable.

Worry over the magnitude of their legal debt has also receded.

"It's not like a Mastercard," Carville said of the still-unpaid legal fees. "There's no interest, and the lawyers are not going to sue the president."

Still, the Clintons' unpaid legal fees are substantial, and they continue to escalate, even now as Kenneth Starr nears the conclusion of his five-year-old inquiry. According to their 1998 disclosure report, the Clintons reported owing more than $1 million each to the Washington law firms of Williams & Connolly and Skadden, Arps, Slater, Meagher & Flom. The Clintons also reported owing $100,000 to $250,000 to the Little Rock firm of Wright, Lindsey & Jennings and $250,000 to $500,000 to Mayer, Brown & Platt.

Earlier this year, friends say, the Clintons had to sell more of their securities to help pay the $850,000 settlement to Paula Jones.

A little more than half of the settlement, $475,000, came from an insurance policy against civil liability that the president held with Chubb Group Insurance. Most, if not all, of the remainder was withdrawn from the blind trust held in Mrs. Clinton's name. A White House official said that although both Mr. and Mrs. Clinton held blind trusts in separate names, they were, in effect, joint accounts.

Aides and friends said they did not know how much those costs reduced the first family's net worth. More recently, a federal judge in Little Rock ordered the president to pay $90,000 for a contempt of court fine for Clinton's misleading answers in a deposition in the Jones lawsuit. Friends said they did not know how the Clintons' have paid that fine.

To come up with the cash for a down payment, the Clintons could sell a portion of their blind trusts. Clinton has a blind trust estimated to be worth $100,000 to $250,000, his disclosure report says. But most mortgage brokers said that the Clintons would not be required to put down a large down payment.

Last year, several close friends of the Clintons' discussed the possibility of buying a home for the first family, and leasing it to them, an arrangement similar to one made by friends of the Reagans when they retired to a $2.5 million ranch-style house in Bel Air, Calif. "We talked about it pretty seriously," said one friend, who insisted on anonymity. "But with Hillary's run for the Senate, it's impossible."

Strict Senate gift rules would make it impossible for Mrs. Clinton, if she wins the New York Senate seat in November 2000, to accept gifts of more than $50. Federal ethics rules would also prevent lawyers from forgiving the debt owed by the Clintons, because such a move would constitute an impermissible gift to a federal officeholder.

Copyright 1999
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