President Clinton and first lady Hillary Rodham Clinton hope by next week to complete a new financing arrangement for the home they are planning to buy in suburban New York--relying this time on a conventional mortgage rather than on a loan guaranteed by Democratic fund-raiser Terence McAuliffe.
The Clintons, according to sources, are weighing options from several lending institutions to pay for their pending purchase of a $1.7 million home in Westchester County. All the plans would allow the first family to disengage themselves from an earlier, $1.3 million loan from Bankers Trust that had sparked controversy.
The Clintons' current, unorthodox financing plan eliminates the risk to Bankers Trust with a requirement that McAuliffe personally back the loan by placing the full amount of the mortgage, in cash, in an account with the bank. That drew criticism from public interest groups, who said that it effectively was an improper gift from McAuliffe--a close friend of the Clintons who also has extensive business and political dealings in Washington.
After publicity about the arrangement, sources said, several people helping the Clintons with the sale received numerous offers from other potential lenders. The lenders said there was no reason the Clintons--despite having several million dollars in legal debts incurred during their White House years--could not be eligible for a conventional loan, using only the new house itself as collateral.
The Clintons tentatively plan to apply for a new loan within days, although White House lawyers Cheryl Mills and Bruce Lindsey are still reviewing the possible arrangements.
For all the criticism the McAuliffe-backed loan spurred, some sources cautioned, the White House may yet decide it raises fewer questions than a new mortgage would. Critics, they said, might ask whether another bank, eager for a high-profile deal, is offering a loan that is more attractive than what an average person might be able to secure.
The search for a new lender was first reported in yesterday's Wall Street Journal.
The deliberations underscore how routine transactions for any couple--such as finding a place to live--are anything but when one partner is a sitting president and the other is a prospective Senate candidate in the state to which they are moving. Originally, the Clintons' loan was to be secured by former White House chief of staff Erskine B. Bowles. But Bowles backed out at the last minute because, according to associates he has spoken with, he did not want to be subjected to the publicity offering such help would bring. McAuliffe, who has helped the Clintons raise money for numerous projects, offered to step in.
If the Clintons do change their financing before the planned Nov. 1 closing, it would not be particularly unusual. In New York's hot real estate market, a purchase bid is often uncompetitive if it is contingent on getting a loan. (In the case of the house the Clintons bought, sources said, there were several other competing bids.) Often, a buyer arranges different financing after an offer has been accepted.
Kathy Sloane, an agent with Manhattan-based Brown Harris Stevens who worked with the Clintons in their house search, declined to comment on the first family's pending purchase. But she said her firm routinely helps customers who have pre-approved loans search for better options before closing.
"We suggest options for them," she said. "We are constantly bombarded by mortgage companies offering their products."
In any event, the Clintons would have to get a new loan if Hillary Clinton wins election to the Senate--because Senate rules do not allow a loan of the sort the Clintons are planning with McAuliffe.
McAuliffe, who rode with Clinton back to the White House from a speech to Democrats yesterday afternoon, said he remains ready to help or step aside as requested.
"I'm there if the president and first lady need me," he said. "However, at the end of the day, if the guarantee is not needed, I'm sure there will be plenty of people to help me figure out how to spend my money--including a few Democratic politicians."