Money Line Parlay: How Did the Kavanaughs Afford Their $1,225,000 Home?
By: Greg Olear
Tags: Gambling, Brett Kavanaugh, Supreme Court, Finance, Mortgage

On 27 February 2006, at the height of the real estate bubble, Brett and Ashley Kavanaugh purchased a home in the village of Chevy Chase, Maryland, a tony suburb of Washington. The house, a handsome four-bedroom built in 1922, had a purchase price of $1,225,000 — half a million dollars more than the sellers had paid just six years earlier. As Steve Reilly has revealed, the initial mortgage on the property was for $980,000:

Montgomery County Circuit Court Land Records from 2006. Image courtesy Steve Reilly.

The family’s total stated assets at the time of the loan came to $121,000, with the bulk of that “vehicles and other personal property,” as opposed to liquid assets. Meanwhile, the Kavanaughs held $25,000 in credit card debt on their First USA/Bank One Visa card. Their net worth was $91,000 — less than half of what they somehow managed to produce for the closing.

So where did the $245,000 down payment come from?

When asked about this during his Senate questioning, Kavanaugh stated:

The Thrift Savings Plan loan that appears on certain disclosure reports was a Federal Government loan to help with the down payment on our house in 2006. That government loan program is available for federal government workers to help with the purchase of their first house. In our case, that loan was paid back primarily by regular deductions from my paycheck, in the same way that taxes and insurance premiums are deducted from my paycheck. That loan has been paid off in full.

This explanation fails to answer the question. In 2005, Kavanaugh disclosed that the total value of his Thrift Savings Plan account was $70,000:

See Fix The Court for all of Kavanaugh’s financial statements.

Seventy thousand, the amount of equity available to draw from on a loan, is less than a third of the down payment amount he wound up paying.

The following year, Kavanaugh disclosed that the outstanding debt on the TSP loan was between $15,001 and $50,000:

See Fix The Court for all of Kavanaugh’s financial statements.

Taken together, the two documents suggest that the original TSP loan was for around $45,000. If so, where did the other $200,000 come from?

The answer is not readily apparent. At the time of the home purchase, Brett Kavanaugh was a federal employee, drawing an annual salary of $62,026. (He’d been nominated for the federal judgeship but was still waiting to be confirmed.) Ashley Kavanaugh worked at the George W. Bush Presidential Library Foundation and the Community Foundation for National Capital Region, neither high-salaried positions. Her retirement plan was worth $1,000. There was no other income, and no gifts reported. As for investments, as Kavanaugh testified last month: “Since our marriage in 2004, we have not owned stocks, bonds, mutual funds, or other similar financial investments outside of our retirement accounts.”

It is true that mortgage brokers in the go-go early 2000s were notoriously laissez-faire when it came to loan approval. I recall being “pre-approved” for a loan amount of up to $425,000 back in 2003, when I was making about $40,000 a year, and I recognized, if the bank did not, that there was no earthly way I could have afforded that much house. High on the fumes of the real estate bubble, lending institutions were plainly cool with the risk of foreclosing on properties.

Even so, the Kavanaugh loan is a head-scratcher. At four percent interest, the mortgage payments would have been $4,600 a month, or $55,200 a year. In other words, the mortgage payments alone were more than what Brett Kavanaugh took home in 2006 after taxes. And that doesn’t include property taxes, homeowners insurance, or maintenance costs — the last of which, as he painstakingly explained in his Senate written testimony, and as I previously reported, cost a pretty penny:

Over the years, we have sunk a decent amount of money into our home for sometimes unanticipated repairs and improvements. As many homeowners probably appreciate, the list sometimes seems to never end, and for us it has included over the years: replacing the heating and air conditioning system and air conditioning units, replacing the water heater, painting and repairing the full exterior of the house, painting the interior of the house, replacing the porch flooring on the front and side porches with composite wood, gutter repairs, roof repairs, new refrigerator, new oven, ceiling leaks, ongoing flooding in the basement, waterproofing the basement, mold removal in the basement, drainage work because of excess water outside the house that was running into the neighbor’s property, fence repair, and so on.

Not only did the Kavanaughs buy a home well beyond what they could conceivably afford, but they bought an older home that was apparently a money pit. (That it needed so much work should have been made clear during the home inspection, required before lenders issue mortgages.)

Why would any bank with a functional abacus approve such a terrible loan? And why would Brett and Ashley Kavanaugh agree to it?