By Ellen J. Silberman and Jack Meyers Thursday, February 26, 2004 The $6.4 million mortgage U.S. Sen. John F. Kerry [related, bio] used to revitalize his presidential campaign will put him in a financial bind this summer - just as Democrats are preparing to face-off against the well-funded Bush campaign. Kerry - under campaign finance reform laws he supported - can only use campaign contributions to pay off the hefty note until the Democratic National Convention opens at the FleetCenter on July 26. After that, the bulk of the payments must come out of Kerry's pocket since the 2001 McCain-Feingold campaign finance reform law limits post-election payments on personal loans to $250,000. The new rules mean Kerry will either have to siphon money from his war chest at the height of the presidential campaign - perhaps troubling donors who want their cash to go to defeating President Bush [related, bio] - or foot the bill himself. Kerry's $150,000 senatorial salary won't cover the annual loan payments. The Herald reported yesterday that Kerry used an appraisal pegging the value of his Beacon Hill townhouse at twice the amount listed on City Hall records in order to get the $6.4 million loan. Kerry owns the house with his millionaire wife, Teresa Heinz Kerry, but under federal law can only tap his half of the value to fund his presidential campaign. The Kerry campaign says the senator has not yet decided how he will pay off Mellon Bank of New England, which granted the December mortgage. ``He'll make the decision each month,'' said campaign spokesman Michael Meehan. In January, Kerry used campaign funds to make his first $15,000 loan payments. But Larry Noble, director of the Center for Responsive Politics, a watchdog group, said, ``It doesn't look like he has the money (to pay off the loan) out of his own pocket. If she ends up paying it, then he has a problem - she's made an illegal campaign contribution.'' Mellon Bank performed two different roles in the transaction, one as the lender and the other as a trustee of the real estate trust that holds title to the Kerrys' Louisburg Square property. As the lender, the bank has a duty to ensure the $6.4 million loan is likely to be repaid. As long as the collateral is worth at least $6.4 million, the mortgage is secure. cw-3However, as a trustee, the bank follows the direction of the beneficiaries - in this case, the Kerrys. In December, John Kerry [related, bio] wanted as much money as possible to jumpstart his presidential effort. The higher the appraisal, the more Kerry could borrow. Mellon Bank spokesman Ron Gruendl said both laws and company policy forbid releasing a customer's banking information to anyone but the customer, but the bank's role on both sides of the Kerrys' mortgage was a common practice for high net worth individuals. ``Mellon being both a trustee on the property and a mortgage holder, that's not unusual. It's permissible, it's appropriate, there's no conflict at all,'' said Gruendl. link He will probably just use additional raised campaign funds to start paying back the 15,000 a month mortgage.