Art of the Mortgage

If you're wondering why Houston Museum of Fine Arts director Peter Marzio hasn't shipped out to New York's Museum of Modern Art (or other class-act art barns reported to be eyeing his talents), you probably don't realize how sweet Pete's deal with the MFA really is. For starters, the 50-year-old arts star, who joined the MFA in 1982, has a steadily escalating salary, last measured on tax returns at $165,000 annually, in one of the cheaper cities in the country to live. Then there's an additional $8,000 annually from the museum for retirement benefits, not to mention a generous $72,500 expense account. And finally, as the piece de resistance, there's the innovative Museum of Fine Arts Home Loan Program, featuring rock-bottom interest rates and jumbo loans straight from the museum's endowment. But don't queue up at the museum offices hoping to finance your dream home. This was strictly a one-of-a-kind deal.

Marzio and his wife Frances got a $518,400, 20-year loan from the museum endowment in January 1988 for the purchase of a 2,400-square foot, three-bedroom, three-bath condo on the 17th floor of Bayou Bend Tower off Memorial Drive, snug by the late Ima Hogg's Bayou Bend mansion and gardens, which are supervised by the MFA. The loan, signed by MFA board chairman Isaac Arnold Jr., carried an interest rate of 8.3 percent (at a time when conventional 30-year mortgages carried rates of just under 10 percent).

North American Mortgage's John Gary says the MFA loan was a pretty package, any way you look at it. "Sounds like he got a pretty good deal," Gary says. "He got a loan at long bond cost, which is excellent. A loan of this size would be considered a jumbo loan, with higher rates. I'd say he got a helluva deal."

Marzio maintains the loan was "not uncommon, [but] I'm not saying it's standard," and he says he had a similar arrangement with his previous employer, the Corcoran Gallery of Art in Washington D.C. His deal from the MFA, he says, was "about the same" as a conventional mortgage, and, he adds, "It's all passed by the IRS." So if the terms weren't more favorable, why did Marzio tap the museum for a loan, rather than a regular home loan provider? "That's a good question," he replies. "I think early on when I came [to Houston] it just made entry a lot easier." Actually, the loan was made six years after his arrival at the MFA, when his Midas touch had boosted the museum's attendance and its endowment and Marzio had become a prime target of director snatchers at

other museums across the country.
A spokeswoman for the New York City-based American Association of Museum Directors knows of no other museum that has financed a home purchase for its director out of its endowment. But Gwen Goffee, MFA's assistant director of finances, says the loan was just a smart investment of endowment funds.

"It's just what most endowments do, invest in any kinds of profitable vehicles in real estate, oil and gas, stocks, bonds, you know," says Goffee. "[Marzio's home loan] seemed like a profitable investment where we could get a good rate of return." Goffe says it's not unusual for nonprofit museums "to invest in mortgage notes, and also to have mortgage note investments for their directors."

However, a source knowledgeable in the practices of local nonprofit organizations knows of no other such home purchase arrangements for employees of Houston nonprofits.

Goffee says the MFA has no other home loans currently outstanding from its endowment, though she was unsure whether one of Marzio's predecessors had such an arrangement. But, she hastened to add, "that's not to preclude that as a possible investment vehicle ... we're not advertising it, but mortgages are part of any endowment portfolios." We'd hasten to add that you'll probably be better off spending your time looking at the pictures at the MFA than trying to become part of its investment portfolio.