Where's the Story?

A story in yesterday's Washington Post seems to imply that there is something nefarious (or at least newsworthy) about the fact that Barack Obama financed the purchase of his Chicago home with a mortgage loan that Northern Trust extended at an interest rate that was "below the average" interest rate offered at the time for 30 year fixed rate loans. He paid 5.625 percent while the average was 5.93 percent.

As this response points out, interest rates are determined in part by creditworthiness. Senator Obama, with a good job, the recent sale of a condo, a recently signed book deal that promised to give him more than the price he paid for the house, little debt, and (presumably) a strong credit history, was extraordinarily creditworthy. So where's the story?

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    Well (5.00 / 2) (#2)
    by Ga6thDem on Wed Jul 02, 2008 at 01:30:38 PM EST
    Obama can release the paperwork related to the purchase can't he? If this article is a problem I would think that he could solve it by doing that.

    isn't transparency (5.00 / 1) (#8)
    by Edgar08 on Wed Jul 02, 2008 at 01:40:26 PM EST
    his middle name?

    You, as borrower, do not get any information (5.00 / 5) (#30)
    by scribe on Wed Jul 02, 2008 at 01:58:27 PM EST
    on how your lender decides which interest rate to offer you.

    Indeed, every lender's methodology for deciding which rate to give any particular borrower is almost certainly a proprietary algorithm, a/k/a a trade secret.

    While your mortgage broker might be able to say "if you can get rid of this bill, we can knock you down a half a percent" or "if you pay an extra point, we can knock you down a half a percent", the broker can only do that because the mortgage company would provide (assuming you asked for it) a menu of options.

    Such a menu would likely say "x points at 6.5", "x-1 points at 6.625" and so on.

    You, as borrower, would then have to decide whether paying those points, the potential tax benefits from them, and the cost of amortizing them made sense vis-a-vis the decrease in interest rate you'd get from taking them.

    Frankly, the only borrower I've ever seen with a credit situation better than Obama's was a middle-aged immigrant professional who'd worked hard and long, saved religiously, spent sparingly, never took out credit cards, ate in, paid everything immediately, and had enough cash on hand as a result to buy the house without needing a mortgage.  It took about an hour and a wall chart of how mortgage interest would give her a huge tax break and of how by taking the mortgage, she'd have her savings and the house, too.  She seemed the type who took this "neither a borrower nor lender be" message about one step too far.

    Pity, when we've grown so perverse that a prospective President's personal fiscal responsibility is to be turned into a negative.

    BTW - did the McCains ever catch up on their delinquent property taxes?  Or did those places go to tax sale?


    What about points? (none / 0) (#52)
    by Maria Garcia on Wed Jul 02, 2008 at 02:28:59 PM EST
    I only know from my personal experience, but I am surprised that as a black family they got a decent rate without paying points. But I guess there is something unusual about a black family getting a good deal. Shame, isn't it?

    All they're likely to really care about (5.00 / 1) (#76)
    by scribe on Wed Jul 02, 2008 at 02:50:18 PM EST
    at the lender are the following items:
    Gross loan amount
    Loan to Value Ratio (LTV)
    Gross income
    Existing Monthly debt load and whether part of that comes from an existing mortgage (i.e., are you selling one house to move to another?  are you buying a second house?)
    Credit score

    Indeed, if one were to go for a no-income-verification loan, all they'd really care about would be Gross loan amount, LTV and credit score.

    The broker (originator) might be able to nudge it one way or another, but a nudge toward a lower rate or lesser points would be far less likely than one upping the rate or increasing the number of points.  This, because the broker gets paid more for writing a loan with a higher rate.

    As I mentioned elsewhere, if a borrower asks for it when applying, the lender will usually give a menu of choices, these choices being a combination of interest rate and number of points the borrower will have to pay.  The more points you pay, the lower the rate you will get.

    I suspect that, in regard to the potential for a racial issue, that's a non-issue.  Unscrupulous lenders usually try to work out their racism on uneducated or poorer people of color because they are deemed less likely to be able to hurt the unscrupulous.  Fill in the line for "occupation" with "attorney", especially for both spouses, and the "don't mess with" flag goes up in the processors' cubicles.  The same with favoring someone political - smart lenders know there is no upside in that, because there's always someone looking at a politician.


    I suspect its because he's a senator.... (none / 0) (#106)
    by Maria Garcia on Wed Jul 02, 2008 at 03:12:09 PM EST
    ...my husband is African American and believe me we always got bad deals on interest rates for cars, houses, anything...no matter how educated we are or what our credit rating was. We got screwed big time by Countrywide right before that big class action lawsuit was filed. We were always hit with the old bait and switch. But that's another story. Believe it or not, the only bank we found that seemed to be color blind was Bank of America. I know that Bank of America is as full of it as any other financial institution, but for some reason they have always given us the best rates for just about anything once we qualified as premier banking customers.

    Nah (5.00 / 0) (#122)
    by squeaky on Wed Jul 02, 2008 at 03:26:18 PM EST
    Income and credit score account for his better than average rate. Also using another bank's competing offer evidentially helped to bring down the rate. I have used mortgage brokers and they do this all the time, they also loooooove Jumbo mtgs because they get big commissions from the bank.

    Yeah I'm just bitter because we've been.... (none / 0) (#124)
    by Maria Garcia on Wed Jul 02, 2008 at 03:29:25 PM EST
    ...screwed so many times. There's no "there" in this. All I'm saying is that when you put down US Senator as your occupation, I'm sure the bank would be more than careful not to try to screw you over, thus he got a fair deal.

    Maybe (none / 0) (#127)
    by squeaky on Wed Jul 02, 2008 at 03:34:19 PM EST
    But it would probably depend on which senator you were. Biden would most likely get rejected for a similar deal that Obama got.

    It is about the particular property, credit score and income. The loan is secured against the property, so a first class property, good income and good credit score are much more tantalizing to banks than simply being a Senator.


    LOL about Biden. (none / 0) (#130)
    by Maria Garcia on Wed Jul 02, 2008 at 03:43:16 PM EST
    Out of curiosity (none / 0) (#163)
    by Montague on Wed Jul 02, 2008 at 04:49:25 PM EST
    how do you know the bad deals on rates were due to your husband's race?  I know hundreds of white people who have the exact same complaints you have listed here - bait and switch, bad deals on interest rates, constant runaround.  Hell, for all I know, I could have had a better interest rate on my house if I'd been a guy.  I'm not going to whine too much, though, because I got a decent rate.  Not as fab as Obama's, of course - and I don't have a jumbo loan, either - but close.

    Well it was countrywide in the 90s (none / 0) (#177)
    by Maria Garcia on Wed Jul 02, 2008 at 06:37:05 PM EST
    ...and they lost a big ole lawsuit for giving worse deals to minorities. They approved us for a mortgage with 10%down on paper, but when we had to go in and fill out the forms "in person" suddenly they decided that we had to put 20% down, which wiped us out re cash flow. Our real estate agent and our buyer's real estate agent were both shocked and mortified because it was obvious what was going on.

    Similar thing happened with a car loan. We didn't even know we had a bad rate (young and naive) until we told some white friends what our rate was and they were flabbergasted cause they had a car loan for 3% less than us from the same bank and we made more money than them and had basically the same credit history. So....

    Both these incidents were in the early 90s, so maybe that kind of thing doesn't go on so much anymore.  


    I do understand (5.00 / 1) (#187)
    by Montague on Wed Jul 02, 2008 at 11:43:03 PM EST
    Believe it or not.  

    My mom could not have gotten a bank loan for love or money when I was a kid.  In the 90s I had an unpleasant experience in car-buying, and I helped a couple of female friends and experienced the same disgusting behavior on the part of the salesmen, but I'm happy to say that six years ago I bought a car from a male salesman and he was totally great.  He was also very young.  Things do improve.  I never tried buying a house until I was over 40, so probably got spared the woes of being an unmarried female wanting to buy a house in her own name.  (The nerve.)

    There has indeed been plenty of discrimination, but I believe things have improved greatly.  Hey, same with gay marriage.  When I was in college I thought I'd never see it in my lifetime in the U.S.


    Race again? (none / 0) (#114)
    by vml68 on Wed Jul 02, 2008 at 03:20:05 PM EST
    They may be a black family but they are an extremely wealthy black family, so very different rules apply. Not to mention he was a congressman and I am sure that played a part.

    Race again? (none / 0) (#117)
    by Maria Garcia on Wed Jul 02, 2008 at 03:23:09 PM EST
    Well yeah, my point is that the story here is that as a black  man you have to be a fricking US Senator to get a decent mortgage rate. That's what I find unusual. That's my POV, sorry if you don't like it.

    HAVE to be a Fricking US Senator...... (none / 0) (#132)
    by vml68 on Wed Jul 02, 2008 at 03:48:32 PM EST
    ...Mmm, No.
    But HAVE to have a lot of money/income...definitely.
    Marcia I am sorry you felt I was accusing you of playing the race card. I have just become hypersensitive to any connection between "race" and Obama. Speaking as a "brown" girl, I have found that having money means not having to feel the sting of racism. IMHO.

    Your right about money.... (none / 0) (#175)
    by Maria Garcia on Wed Jul 02, 2008 at 06:28:12 PM EST
    ...but for us brown people, it always needs to be just a little more money than average. ;-)

    I believe every financial transaction (none / 0) (#58)
    by Edgar08 on Wed Jul 02, 2008 at 02:36:51 PM EST
    must come under scrutiny.  Thats what we learned from the primary.  

    Just gotta see the documentation that's all.

    Wouldnt want to get a reputation for being secretive.


    McCain taxes (none / 0) (#93)
    by delandjim on Wed Jul 02, 2008 at 03:00:15 PM EST
    Your last statement is a non-story.
    The bill was being sent to the wrong address.
    It is paid now.
    It was the trust not the family.

    For four years? (5.00 / 0) (#99)
    by MKS on Wed Jul 02, 2008 at 03:04:53 PM EST
    No one noticed for four years that the taxes weren't being paid?......Pretty neglient....

    And we're supposed to trust someone (1.00 / 1) (#104)
    by scribe on Wed Jul 02, 2008 at 03:11:59 PM EST
    that negligent with his own real estate and taxes, to be in charge of the whole frickin' economy?

    Oh, right.  It belonged to Sugar Momma the Rodeo Queen.



    I know, right? (5.00 / 0) (#108)
    by Maria Garcia on Wed Jul 02, 2008 at 03:13:16 PM EST
    ...shouldn't such a rich guy have a better accountant than this?

    I do not see this as a big deal. Failure to pay (none / 0) (#116)
    by FLVoter on Wed Jul 02, 2008 at 03:21:28 PM EST
    property taxes happens more often than you think and it is usually just an oversight.  One tax bill can be easily overlooked if you own multiple properties.  Problem is once you miss one year, the same property can be missed over and over again.  Additionally, if the tax bill is sent to the wrong address, it really complicates matters for both the property owner and the taxing authority.

    Well I would notice it because..... (none / 0) (#119)
    by Maria Garcia on Wed Jul 02, 2008 at 03:24:22 PM EST
    ...I look for EVERY tax deduction I can find.

    Good point, he overpaid his taxes (5.00 / 1) (#125)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 03:30:08 PM EST
    for 4 years because he didn't take the prop tax deduction for 4 years.

    Sounds like such selflessness would be good reason to vote for him.


    I can't tell you if he overpaid or underpaid his (none / 0) (#126)
    by FLVoter on Wed Jul 02, 2008 at 03:33:09 PM EST
    taxes, but I can say from practical experience that property taxes, when you own mulitple properties can be overlooked.  I see this as a non-story. If you want to make more of it then do some digging, just like the WaPo needs to do some digging if they want to make the Obama loan a story.

    Thanks, sorry, I was being sarcastic. (5.00 / 1) (#166)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 05:10:12 PM EST
    This is a non-story.

    As I only own my home and one rental property, it (none / 0) (#123)
    by FLVoter on Wed Jul 02, 2008 at 03:27:33 PM EST
    is easy for me to keep track of it.  But I have clients that own literally hundreds of properties under various entities. I can see how the property taxes may have been overlooked by the McCains.

    C'mon now. (none / 0) (#109)
    by indy in sc on Wed Jul 02, 2008 at 03:13:57 PM EST
    No need to name call the Mrs...

    Well, from what I've seen (1.00 / 1) (#112)
    by scribe on Wed Jul 02, 2008 at 03:16:57 PM EST
    her biggest accomplishment in life, after being born into a wealthy family (and having kid(s)), was being a rodeo queen.

    And funneling money to her husband, i.e., being a sugar momma.

    Seriously, her husband, dependent on her wealth, has called her far worse.


    You put "having kids" in parens (5.00 / 1) (#137)
    by angie on Wed Jul 02, 2008 at 03:52:30 PM EST
    like that isn't a big deal -- I personally think it is a very big deal, and probably considered by most mothers to be their most important accomplishment.  
    Furthermore, I've heard that she is very involved in charities and even adopted a little girl with a sever deformity after meeting her while visiting Mother Teresa. I'd rank that higher then Rodeo Queen. And yes, I'm defending Cindy McCain here, as I will defend Michelle Obama against sexist attacks by anyone, whether they like to think of themselves as "progressives" or not.

    Raising Children IS A Big Deal (5.00 / 1) (#164)
    by daring grace on Wed Jul 02, 2008 at 05:04:17 PM EST
    I know nothing about Cindy McCain beyond the headlines--rodeo queen etc. but aside from raising a family, I think being married to an ambitious man, especially one whose ambitions put you and your family so much in the public eye is hard work too.

    I'm not crying for her, but I do extend a lot of slack to these women for the effort that goes into their role.

    I'd say 'married to an ambitious person' in the interests of gender equity except in our most recent example of husbandly dutifulness, the husband had the chops down since he'd been there and done that and always seems at home on stage. ;)


    taxes (5.00 / 1) (#168)
    by CHDmom on Wed Jul 02, 2008 at 05:17:33 PM EST
    Wasn't this the property/condo she bought for her elderly Aunt to live in?

    Thank you. (none / 0) (#182)
    by ghost2 on Wed Jul 02, 2008 at 07:44:07 PM EST
    That's garbage. (5.00 / 1) (#181)
    by ghost2 on Wed Jul 02, 2008 at 07:42:36 PM EST
    There is no reason to be unfair to her.

    She was a teacher for special needs kids.  She founded a charity to help those in need in developing countries, and she brought 2 little girls over, one of whom she adopted, and her friends adopted the other.

    Yes, she had a choice to be a rich spoiled kid, but she didn't go that route.

    She is also a pilot, and a mother of a marine who was (perhaps still is) deployed to Iraq.  Did you know that?

    I have lots of respect for Cindy McCain. But I guess, only Mr. Community Organizer should get credits for things he has or hasn't done (like Bills others worked on, but he managed to get the credit for.)


    I guess (none / 0) (#113)
    by indy in sc on Wed Jul 02, 2008 at 03:19:46 PM EST
    truth is a pretty good defense! ;)

    Works for me. (none / 0) (#118)
    by scribe on Wed Jul 02, 2008 at 03:24:21 PM EST
    Not an excuse (none / 0) (#111)
    by Lou Grinzo on Wed Jul 02, 2008 at 03:15:55 PM EST
    Ed Schultz had the tax guy from the relevant county (San Diego?) on his show, and he said the law explicitly states that it's the responsibility of the property owner to pay the tax on time, regardless of things like the bill not being delivered, etc.

    Usually it is the responsibility of the taxpayer (5.00 / 0) (#120)
    by Molly Bloom on Wed Jul 02, 2008 at 03:24:55 PM EST
    to inform the property tax authorities of the correct address where to send the bill.

    Also as a general rule  trust is a contract- an inanimate object- involving a settlor, a trustee and a beneficiary.  Inanimate object don't pay tax bills. There is such a thing as a business trust in some states, which is a different animal, but even that requires a human to operate.

    If the Trustee failed to inform the taxing authorities that doesn't excuse the failure to pay.

    The McCain's must be real  regular folk, they have so much money and property they don't even know what bills they have and they can afford to pay someone to look after/neglect their interests and they feel they have no need to watch the watchers. Either they have money to burn or they are very careless. Not impressed.


    McCain should fire the family lawyer (none / 0) (#154)
    by Cream City on Wed Jul 02, 2008 at 04:23:25 PM EST
    and/or accountant, is how it looks to me.  At the level of Cindy McCain's money, that's who would handle this stuff, I suspect.  Or in this case, mishandle it.  And if you're a politician, you don't need lawyers messing up on such public matters.

    What paperwork? (5.00 / 6) (#16)
    by TChris on Wed Jul 02, 2008 at 01:42:08 PM EST
    What paperwork would Obama have that would explain how a lender sets an interest rate?

    He wouldn't have any papers (5.00 / 1) (#38)
    by scribe on Wed Jul 02, 2008 at 02:10:00 PM EST
    because they'd present to him the rates they computed and decided to offer him.

    See mine at #30 on this thread.


    iirc - the Crown family (Obama supporters) (5.00 / 1) (#40)
    by Josey on Wed Jul 02, 2008 at 02:11:24 PM EST
    owns a big chunk of Northern Trust (Obama supporter) that holds Obama's mortgage and gave him a super duper rate.

    that is interesting (5.00 / 1) (#44)
    by befuddledvoter on Wed Jul 02, 2008 at 02:18:22 PM EST
    Boy, the Crown family certainly has helped out Obama in so many ways.  

    Also, if Obama were so credit worthy, then why could he not get a mortgage for the full sale price asked for the home/lot and the adjoining lot??  Why did he need Mrs. Rezko to purchase the adjoining lot?


    Super Duper Rate? (5.00 / 1) (#49)
    by squeaky on Wed Jul 02, 2008 at 02:25:28 PM EST
    What are you out of your mind?  5.625% v the average  5.93%

    What is it that you do not understand about the word average, or super duper?

    Must be that Obama hate has taken hold of your brain cells, or something.


    .3 % over the lifetime of a loan (none / 0) (#71)
    by Edgar08 on Wed Jul 02, 2008 at 02:43:46 PM EST
    does anyone know what that comes out to?

    $300/month (none / 0) (#75)
    by jtaylorr on Wed Jul 02, 2008 at 02:49:47 PM EST
    300*12*30 = $108,000

    you're right - (none / 0) (#80)
    by Josey on Wed Jul 02, 2008 at 02:51:54 PM EST
    From the article -

    Compared with the average terms offered at the time in Chicago, Obama's rate could have saved him more than $300 per month.


    why would a Senator (5.00 / 0) (#88)
    by tben on Wed Jul 02, 2008 at 02:57:14 PM EST
    and best-selling author, married to a corporate exec, be expected to get the average rate?

    An AVERAGE rate is not a STANDARD rate. (5.00 / 2) (#92)
    by Pegasus on Wed Jul 02, 2008 at 02:58:28 PM EST
    So your point makes no sense.  Some rates come in above the average, some below; it's not as if every loan in the city of Chicago except Obama's was at 5.9% at the time.  

    He got a pretty good rate because he was creditworthy and because another lender made a competing bid.  Trying to paint it as otherwise robs you of any credibility.


    Could Have Saved Him (5.00 / 0) (#97)
    by squeaky on Wed Jul 02, 2008 at 03:03:19 PM EST
    Exactly $345./month. But then again he could have gotten an above average rate, and paid more than $1,000 extra per month.

    And he could have played roulette and won 10 million dollars, or lost a million.

    He also could have......


    "Average" That means some people. (none / 0) (#96)
    by MKS on Wed Jul 02, 2008 at 03:03:00 PM EST
    aside from the Obamas, got a better rate than the stated average rate.  Why could that be?  FICO scores, no debt, both spouses have secure incomes, there was a good down payment on the loan?

    Lots of conflict of interest there I see (5.00 / 1) (#65)
    by Edgar08 on Wed Jul 02, 2008 at 02:40:24 PM EST
    obama needs to explain that connection.

    If he had actually gotten a break (5.00 / 2) (#85)
    by Pegasus on Wed Jul 02, 2008 at 02:55:22 PM EST
    on his loan, sure.  But given that the rate was well within the average range at the time, it takes a truly special set of smearin' goggles to see a problem.

    Jim Johnson's loan, this ain't.


    On the (none / 0) (#100)
    by 0 politico on Wed Jul 02, 2008 at 03:05:30 PM EST
    board of Northern Trust:  Susan Crown, also a Yale University Trustee - FWIW.

    The thing is (5.00 / 3) (#24)
    by Steve M on Wed Jul 02, 2008 at 01:48:23 PM EST
    it's not like they have some mathematical formula that leads to the exact interest rate, as if you were filling out your tax forms.  The loan officer decides what rate to recommend, some supervisor initials it, that's probably the extent of the paperwork.

    I used to work on class actions involving discrimination in interest-rate setting for car loans, and one of the things you run into is that there's just so much discretion in the process.  I don't even consider this worthy of an investigation, but it's very unlikely that there's anything to turn up either way.


    Apparently, he has (none / 0) (#13)
    by dianem on Wed Jul 02, 2008 at 01:41:05 PM EST
    According to War Room at Salon, anyway, Obama has put up the purchase information on his web site.

    Throw stuff against the wall... (5.00 / 2) (#3)
    by tben on Wed Jul 02, 2008 at 01:32:25 PM EST
    and see what sticks. Thats what they'll do everyday till Nov 5.

    They would have (5.00 / 0) (#5)
    by TeresaInSnow2 on Wed Jul 02, 2008 at 01:35:21 PM EST
    also questioned McCain's mortgages, except that McCain has no mortgages.

    Dodd is under investigation for taking favorable interest rates.  It's a good question.  It needs an answer.

    Face it, there's something about the Rezko house deal that raises the radar, don't you agree?  Whatever it is, it will probably come out in September, October.

    Nothing wrong with vetting candidates.  Nothing.

    This isn't vetting, though. (5.00 / 3) (#7)
    by Pegasus on Wed Jul 02, 2008 at 01:39:15 PM EST
    This is taking a perfectly normal event -- a highly creditworthy couple getting an appropriate mortgage rate -- and straining to get a smear out of it.  It's ludicrous, and it's not journalism.

    if it's OK to investigate (5.00 / 1) (#55)
    by TimNCGuy on Wed Jul 02, 2008 at 02:34:54 PM EST
    Dodd for this same thing, then why not Obama?

    Because there is no favoritism (5.00 / 1) (#90)
    by MKS on Wed Jul 02, 2008 at 02:57:55 PM EST
    and no favor.

    Was there favoritism for Dodd? (5.00 / 1) (#146)
    by dianem on Wed Jul 02, 2008 at 04:12:47 PM EST
    And, if there was, then did they know that when they started investigating?

    we all know it is a sin against God (none / 0) (#184)
    by kenosharick on Wed Jul 02, 2008 at 09:00:06 PM EST
    to dare question or criticize Saint Barack. This vetting should have been done long ago, but the MSM failed to do their jobs AGAIN!!!!

    but but (2.00 / 0) (#12)
    by progrocks on Wed Jul 02, 2008 at 01:40:58 PM EST
    they were mean to Hillary!

    the only legs this has is for people to think even less of the washington post


    It's about context (none / 0) (#20)
    by dianem on Wed Jul 02, 2008 at 01:44:25 PM EST
    Some people got breaks in rates because they were buddies with important people. Obama was an important person who was at least associated with one of the people who might have gotten one of these loans. It's a fishing expedition, and unlikely to bear fruit (it's mixed metaphor wednesday!)but they have to do it to fill space on a slow news day.

    It is about context (none / 0) (#81)
    by mikeyleigh on Wed Jul 02, 2008 at 02:52:11 PM EST
    and the context is that at a time when many Americans are losing their homes in a mortgage crisis, some Americans like Dodd, Conrad, Johnson, and now Obama are getting much better than average deals on their homes.  It doesn't mean there's anything criminal, much less wrong, with such deals.  But the perception....!

    Much better than average??? (5.00 / 1) (#87)
    by MKS on Wed Jul 02, 2008 at 02:57:00 PM EST
    No, it was right where it should have been.....Did you not read about FICO scores being able to shave a quarter point off the interest rate?

    That happens all the time....


    My FICO is terrific (5.00 / 1) (#145)
    by dianem on Wed Jul 02, 2008 at 04:11:38 PM EST
    And I didn't get that good of a rate  - and it wasn't a jumbo loan, which I understand tend to have higher rates. My mother's FICO is astonishing, and her loan was completely secured by a house that was worth about 10 times the value of the loan, and she didn't get a rate cut below the typical rate at the time. And we did shop around and play the companies against each other to get the best rate. This is, at best, an example of a wealthy person getting a deal that isn't available to the common folk. I doubt very much that it's actually anything more, but it looks bad. It's one of those things that politicians who aspire to higher office need to be aware of - they can't play by the rules. They have to play by a stricter set of rules. $300 a month would have been a trivial price to pay to avoid accusations that Obama was being treated favorably. It's like saving a few dollars on taxes using a legitimate dodge. Most of us can do that without a problem. A presidential contender, not so much.

    less the shave and more the shake (5.00 / 1) (#176)
    by VicfromOregon on Wed Jul 02, 2008 at 06:33:04 PM EST
    The article may play up the pert Obama got, but the underlying issue is WHO was selling the mansion and adjoining lot (a connection from earlier land deals Obama and Rezko made)and WHO gave him the loan (a company Obama and Rezko, et al accessed for other "good deals"). That may possibly be the next segment.  Obama got a better than average rate, got thousands shaved off the initial cost, and was chosen over another prospective buyer who was offering even more money (which is a little wiggly with the real estate rules).  So, they are implying, rightly, in the article that his connections got him what he wanted.

    Why do you have a problem (none / 0) (#56)
    by TeresaInSnow2 on Wed Jul 02, 2008 at 02:35:00 PM EST
    with asking the question.  If he's clean, let it be known.

    I don't have a problem (5.00 / 0) (#67)
    by Pegasus on Wed Jul 02, 2008 at 02:42:22 PM EST
    with the question being asked.  Not a bit.  I have a problem with the WaPo publishing what they found as if it's a story deserving of public attention, when there's absolutely nothing there.

    They can (and should) ask all the questions they can think of, but they shouldn't be dressing up humdrum finders as controversial ones in their published stories.  It's terrible journalism, and good journalism matters in a democracy.


    So is the WP (5.00 / 1) (#107)
    by tree on Wed Jul 02, 2008 at 03:12:40 PM EST
    supposed to ignore the question and not investigate? Or investigate and not share ite info with the American public, just tell us "don't worry, everything's OK, trust us?" There's nothing wrong with this story. Its not much of a story but the investigation they did was not slanted. Now, if they harp on this for the next several months, then there's a problem. But one straight ahead investigative report that lays out all sides of the  question? No problem.  

    Oh, come on. (5.00 / 2) (#115)
    by Pegasus on Wed Jul 02, 2008 at 03:21:08 PM EST
    1,200 words on a mortgage that was a measly 30bp lower than average?  LOL.  Yeah, it's absolutely vital to our democracy that the WaPo breathlessly bring us that revelation in all its lurid detail.

    Hell, look at the title: "Obama Got Discount on Home Loan".  Saying he got a "discount" is silly there; to get a discount implies there is a market standard that the lender improved upon.  But that's just not the way mortgages work.  Lenders offer rates based on FICO scores, income, job security, competing offers, etc.  There's no standard from which they could offer a discount.

    If Obama had gotten an unreasonably low rate, like James Johnson did, there'd be something worth talking about.  But this is just yellow journalism, nothing more.


    So you determine a "hit piece" based on (none / 0) (#131)
    by tree on Wed Jul 02, 2008 at 03:44:49 PM EST
    word count, not on content? And yellow journalism now? If the story was not a big deal, and it apparently is not, as there were no negative conclusions drawn, why are you so upset about this? This seems like a big overreaction to me. I think its a bad precedent to set to declare that the media can't investigate and print stories like this. I'd rather have more information than less, especially if the info is balanced from all angles. I don't want the media to tell me it didn't think it needed to share the details of its investigation with me, even if those details don't indicate any wrongdoing.  

    What's the story? (5.00 / 1) (#133)
    by Alec82 on Wed Jul 02, 2008 at 03:50:42 PM EST
    There's no discount.  There's nothing unusual.  There's no story.

     This isn't "hey, that's weird, obama has an interest free loan from a campaign contributor for his house."  This is "Obama has a mortgage."

     With allusions to the "controversy" surrounding his house because of Rezko, some dressing for the otherwise tasteless salad.

     What's next for the "Vince Foster was murdered" set? "Obama bought a car: Campaign defends auto loan, gas mileage"?

     This is ridiculous.


    Hmm... that did get hyperbolic. (5.00 / 0) (#134)
    by Pegasus on Wed Jul 02, 2008 at 03:52:02 PM EST

    Still, crap story, and IMO indefensible as political journalism.  A couple getting the mortgage rate they deserve isn't a story, and pretending this was anything else is laughable.


    Headline writer is more at fault (none / 0) (#157)
    by Cream City on Wed Jul 02, 2008 at 04:28:19 PM EST
    here then the reporter, I think, as the headline is more slanted or simplistic or using poor wording.  And thus, the copy desk chief who let the headline go through is more the problem.

    Not that the story isn't a bit too slanted, so the editor could have had the reporter rewrite the lead to state that both candidates appear to be in the clear.  Unless the editor called for this slant, of course.  Either way, the story needs another day's work, from what I can see, to deal with some holes.

    So many ways and reasons a story can go wrong.  


    findings*, not finders (none / 0) (#68)
    by Pegasus on Wed Jul 02, 2008 at 02:43:14 PM EST
    don't know where i got that from, lol.

    Oh please. I have a credit rating of 820. I'm very (none / 0) (#183)
    by derridog on Wed Jul 02, 2008 at 08:42:08 PM EST
    well off, I've bought and sold many houses and I currently have a jumbo mortgage. Nobody EVER offered me a special deal on mortgage rates. You get the jumbo rate or you do some other deal like take out two mortgages -one at the maximum for a non-jumbo rate and then a second at a higher rate for the rest.

    To say that everyone who is credit worthy gets a rate deal like Obama's is ridiculous.  And this doesn't even go into the fact that his deal not only included the interest rate, but $300,000 off the asking price and special favors from Rezko's wife, who bought the side lot to his property for the full price of $665,000 on the same day, even though she was supposedly only making $37,000/year and her husband was already under investigation and claimed to have no money.  It also doesn't go into the fact that O bought a piece of that property back from her for $64,000 more than it was valued for a year later. Nor does it go into the fact that, shortly before the first purchase, Rezko got a huge amount of cash from Nadhmi Auchi, the London billionaire who was Saddam Husseins' moneyman and is an international criminal who would go to jail if he set foot in France or the U.S.

    But this is PERFECTLY NORMAL.  Move right along. Nothing to see. My friends and associates with no money would have done the same for me and I for them if I wanted a big house. We are all just one big happy family just like Obama and the Rezkos. And my mortgage loan officer is also a big pal and would do anything for me, I'm absolutely positive.  Next time, I'll be sure to ask.


    You Would Have Done Better (none / 0) (#186)
    by squeaky on Wed Jul 02, 2008 at 11:05:56 PM EST
    To have had two banks competing, or more competing for your business. But it sounds like you were fine with what you were offered.

    I did. (none / 0) (#193)
    by derridog on Thu Jul 03, 2008 at 08:01:33 PM EST
    And You Did Not Get A Better Rate? (none / 0) (#194)
    by squeaky on Thu Jul 03, 2008 at 08:04:44 PM EST
    I got mine knocked down a quarter of a point, for a jumbo.

    Jumbo loan is key. (5.00 / 3) (#6)
    by BeBe on Wed Jul 02, 2008 at 01:38:42 PM EST
    This may or may not be an issue. Jumbo loans have higher interest rates because they are a higher risk to the lender. They also usually require very high collateral. Purchasers of very high dollar homes often pay cash so they are not so very common. The jumbos also require substantial credit histories with high dollar credit. Banking regulations have rules for this and could check to see all were met. This could be a problem, but banks are usually very careful to meet regs.

    I thought so, too -- and (5.00 / 1) (#22)
    by Cream City on Wed Jul 02, 2008 at 01:47:26 PM EST
    it's not well explained here, nor is there any mention I see of collateral.  I can't see that they had property sufficient for sizeable collateral.

    That certainly is commonly required to receive, as they did, waivers on origination fee or discount points to so reduce their interest rates.

    It's a story that does not answer enough basic questions, so it's not good journalism, sure.  That doesn't mean it was a good loan practice.


    It's a mortgage loan. (5.00 / 3) (#25)
    by TChris on Wed Jul 02, 2008 at 01:49:22 PM EST
    The collateral is the house he was purchasing.

    It's a mortgage (5.00 / 1) (#26)
    by Steve M on Wed Jul 02, 2008 at 01:49:38 PM EST
    Isn't the house, and the insurance policy you're required to hold on the house, the collateral?  Do people typically post additional collateral in connection with a home loan?

    Yes, according to a realtor (none / 0) (#29)
    by Cream City on Wed Jul 02, 2008 at 01:55:31 PM EST
    I know who handles huge old houses, but that may be just in my city.  Some practices do seem to vary from locale to locale, just to make understanding the mortgage industry even murkier (per your comment above).

    Mortgage and real estate practices (5.00 / 2) (#32)
    by scribe on Wed Jul 02, 2008 at 02:04:24 PM EST
    vary wildly from state to state and sometimes even within states.

    For example:  A friend practices in New Jersey and related the varying practices there.  North of Trenton, all closings of residential realty are handled by lawyers on both sides of the transaction, once the realtor gets the signed contract.  South of Trenton, lawyers are only rarely involved on either side and the closings are done by title agents.  And that's a tiny state.

    So, to even do a proper article on Obama's house and mortgage, one would first need a primer on Chicago real estate practices, and lending practices, and then whether and to what extent (if any) there was any deviation from the broad range of acceptable practices.

    At least no one showed up with a shopping bag full of tens, twenties and fifties.


    And mansions are a far different market (5.00 / 1) (#53)
    by Cream City on Wed Jul 02, 2008 at 02:30:16 PM EST
    from the norm, at least in many cities.  Some banks don't like houses that may sit on the market, as this one did and many mansions do -- especially if the bank has to foreclose, as in a no-collateral loan.  

    Many mansions and McMansions in my metro area have  for-sale signs that have grown faded and have cobwebs, and that can happen even in a boom market.  Then again, with the way that banks behaved until this bust, many sensible norms were ignored.


    This home "sat" on the market? (none / 0) (#74)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 02:49:07 PM EST
    For how long?

    Long enough to reduce the price (none / 0) (#147)
    by Cream City on Wed Jul 02, 2008 at 04:12:51 PM EST
    by $300,000, as this story said.  Earlier stories had how long it sat on the market, which does not matter sufficiently to me, but you can search here or  google for it.

    Cream, you know that I am no Obama fan, but (none / 0) (#86)
    by FLVoter on Wed Jul 02, 2008 at 02:56:13 PM EST
    I can tell you from my experience that people that buy mansions are generally the private banking type, not the run of the mill borrower.  So some concerns that pertain to the typical borrower do not pertain to this crowd.  That is why I said previously that WaPo needs to do more digging to make this a story.

    That's what I said -- atypical housing (none / 0) (#149)
    by Cream City on Wed Jul 02, 2008 at 04:13:57 PM EST
    so atypical arrangements.  I have agreed elsewhere here that it's bad journalism, that the story ought to have been that both candidates look to be in the clear on this, so what is the problem with you people.

    No, it's not just your city (none / 0) (#72)
    by MKS on Wed Jul 02, 2008 at 02:43:51 PM EST
    This is absurd.  Collateral?  The house is the collateral....That's the way it works in every city.  

    The bank is a secured creditor....The only real differences from state to state are the foreclosure laws....

    And additional collateral beyond the house?.....I doubt it....That would be an exotic transaction....


    I'll tell my realtor friend (5.00 / 1) (#151)
    by Cream City on Wed Jul 02, 2008 at 04:15:48 PM EST
    that you said so, that he's wrong, and that somehow he has made a fortune from selling mansions without knowing this.  Thanks so very much.

    Can I have that realtor's name? (none / 0) (#155)
    by SpinDoctor on Wed Jul 02, 2008 at 04:25:28 PM EST
    Because I will be sure to never use him.  The property is the collateral for the mortgage.  It does not matter whether you are buying a trailer home or a mansion.

    If your realtor friend has been telling his or her clients that they need to put up collateral to purchase a home, he ought to have his license revoked.


    Good lord. You have a realtor friend. (none / 0) (#167)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 05:14:59 PM EST
    Don't tell us you have a bank employee friend too?!

    Yes, some states require lawyers to close (none / 0) (#83)
    by MKS on Wed Jul 02, 2008 at 02:53:48 PM EST
    but the substance of the transaction remains the same.   Mortgage v. trust deeds....Same difference....

    The house is always collateral....


    Do you mean down payment? (5.00 / 1) (#165)
    by Montague on Wed Jul 02, 2008 at 05:05:01 PM EST
    I see a bunch of people going on about collateral in the comments below.  Yes, sure, the house is collateral for the loan, but no bank wants to have to take over a house as collateral for a defaulted loan, because they are likely to lose money on it.  It will sell for a low amount and they'll need to dump it fast.  Unless the down payment is sizable, the bank risks losing money if there is a default.  This is why banks are cautious in making loans, especially jumbo loans.

    Ummmm .... (none / 0) (#174)
    by camellia on Wed Jul 02, 2008 at 06:14:51 PM EST
     "Banking regulations have rules for this and could check to see all were met. This could be a problem, but banks are usually very careful to meet regs."

      is this why we have a meltdown in the housing market?  I think that the banks haven't been careful at all in extending credit to people, nor in meeting regulations.  

    That said, however, this story seems to be a piece of simple checking on the part of the WaPo, and to be fair they didn't slant it as unfavourable to the Obamas.   And, since I don't like him, I would welcome anything unfavourable to him but I just don't think there's anything to this story.  So he got a miniscule discount on his (well-secured) loan?  Big deal.


    I can't find the story (5.00 / 0) (#21)
    by Steve M on Wed Jul 02, 2008 at 01:44:58 PM EST
    It's not like they gave him a zero-interest loan or something.  It's easy for me to imagine that they knocked off a tenth of a point or something because of who he is - it's an advantage for a lender to have celebrity borrowers they can boast about, among other things - but unless he had some way of specifically knowing he was getting a better rate because he was a public official (in which case he's probably supposed to turn it down) there's absolutely nothing to talk about here.

    It's similar to the stories about Sens. Dodd and Conrad which also seem to have no substance.  I mean, we're not talking about some kind of super-special loan rate that's never been seen before, it's more like getting a seat upgrade.  If the airline tells Sen. Dodd that he's eligible to sit in first class today, is he supposed to demand to see backup documentation to ensure that they're not giving him special treatment just because he's a US Senator?

    I originate mortgage loans for a living. (5.00 / 2) (#23)
    by independent voter on Wed Jul 02, 2008 at 01:47:44 PM EST
    Often times, a lender will offer a "special" if a loan meets certain criteria. It is extremely common to have a reduction in pricing (rate and fees) for good credit/ low LTV/good income purchase loans. An originator can take a pricing reduction on the loan if they really want the business. The average rate means next to NOTHING. Each loan is priced based on it's own characteristics. If his rate was 1% less than prevailing with no points or discount, that would be something. .375 to .5 is no big deal!

    Not to mention (5.00 / 0) (#37)
    by jtaylorr on Wed Jul 02, 2008 at 02:09:56 PM EST
    the company who gave him the mortgage also handled at trust of his and any money they lost by giving him a "below average" rate would be more than made up in fees for handling that trust.

    So which is it? (5.00 / 2) (#31)
    by LatinoVoter on Wed Jul 02, 2008 at 02:02:30 PM EST
    Where the Obama's a young couple who bypassed corporate America, raising two kids, were barely keeping afloat of their bills and student loans on Barack's meager state senator salary? Or where they wealthy enough to qualify for a huge risky loan on a million dollar home?

    Both narratives can't be true.

    he wrote (5.00 / 2) (#35)
    by tben on Wed Jul 02, 2008 at 02:07:32 PM EST
    a couple of best-selling books.
    You just forgot that, right?

    I hope you're not a loan officer (5.00 / 1) (#46)
    by Cream City on Wed Jul 02, 2008 at 02:19:19 PM EST
    as it was only a book contract at the time.

    The problem with Obama... (none / 0) (#48)
    by pmj6 on Wed Jul 02, 2008 at 02:24:25 PM EST
    ...is clearly that, after Rezko and other assorted shenanigans with privatizing Chicago public housing, and given that Obama is not above accepting sweetheart deals, there just might be something there.

    Obama also has (none / 0) (#50)
    by pie on Wed Jul 02, 2008 at 02:26:53 PM EST
    to pay for his residence in DC - rent or whatever.

    Hope he sold a lot of books.


    Oh, he did. But he had not done so (none / 0) (#54)
    by Cream City on Wed Jul 02, 2008 at 02:32:22 PM EST
    then, not a couple of books then.  Only a contract for reprinting the first one, which had sold well -- but with a first contract of only $40,000, it says.

    And royalties, I'm sure, but those checks take a looong time in coming from publishers.


    what are you driving at? (5.00 / 1) (#59)
    by tben on Wed Jul 02, 2008 at 02:37:21 PM EST
    He could afford the house. He got a mortgage he was entitled to. Nothing wrong here. You are just desparatly trying to find some way to find something wrong here. Why? What are you trying to accomplish?

    No, you misstated the "facts" (5.00 / 1) (#143)
    by Cream City on Wed Jul 02, 2008 at 04:10:57 PM EST
    and you so harrass about facts, yet you stated an untruth -- that Obama would have had income at the time from best-sellers.  I simply corrected your untruth, Ben.  If you can't get the facts straight, best stfu.

    As for whether they could afford (5.00 / 1) (#153)
    by Cream City on Wed Jul 02, 2008 at 04:16:56 PM EST
    the house, Ben, then Michelle Obama ought not complain that they couldn't afford piano lessons.

    Thank you for helping me (5.00 / 1) (#62)
    by LatinoVoter on Wed Jul 02, 2008 at 02:38:18 PM EST
    make my point that they weren't collecting scrap metal to get by like the campaign wants people to believe.

    But to answer your question I didn't forget about the book deal just like I haven't forgotten the connection the bank has to the Crown family and the earmarks that Barack requested for the Crown family's projects in IL.


    I will not pass judgment on this story. To make (5.00 / 2) (#42)
    by FLVoter on Wed Jul 02, 2008 at 02:14:00 PM EST
    any determination whether or not the Obamas received favorable treatment you would need to know the particulars of their loan including their credit scores, appraised value, debt ratio, etc... which no one here knows.  Believe it or not you cannot tell just by looking at someone whether or not they have bad credit, nor can you tell if they have ever defaulted on a debt.  Of course if the Obama's did not qualify under their lender's standard jumbo requirements, there are always portfolio loans.  There is nothing wrong with a portfolio loan.  So the Washington Post will need to do more digging if they want to make this a story.

    Even that's not enough (none / 0) (#121)
    by Lou Grinzo on Wed Jul 02, 2008 at 03:24:58 PM EST
    You'd have to look at other, similar loans made by the same lending institution around the same time, and see how they fared.  

    If the rate they got was only 0.3% below the average, then it could well turn out that they got a crappy deal and not a sweetheart deal, at least relative to how other borrowers were treated.

    In my opinion, there's no evidence at all of anything amiss.


    Not so fast. (5.00 / 2) (#51)
    by mrmobi on Wed Jul 02, 2008 at 02:27:52 PM EST
    Or where they wealthy enough to qualify for a huge risky loan on a million dollar home?

    Both narratives can't be true.

    Obama has written two best-selling books, and won a grammy for his readings of one into an audio book. His wife makes a lot of money, as does he. The loan was not risky, since the property was the collateral, and his prospects are, well.... Presidential.

    Anyone with good credit and prospects can get a good mortgage rate, especially for properties like this one. Of course, Obama hasn't been forthcoming about this, he's hidden... oh, wait, it's all up on his website. Never mind.

    The Washington Post was having a slow news day, and also noticed that the knuckle-draggers needed a distraction from defending St. McCain from non-attacks by a couple of war heroes (Clark and Webb) who were stupid enough to choose to be Democrats. Can a Democrat be a hero? Just asking.

    I would concede one point from an earlier comment. Everything in Chicago is done the "Chicago Way." Every process, every contract bid, virtually every transaction is completely and utterly corrupt. We are all Al Capone. Happy? You better be, because we're dangerous. Did I mention we're corrupt?

    Being a Chicagoan, I actually own, and sometimes wear, a T-shirt which says, "Chicago, where the weak are killed and eaten!"

    Barack won the grammy (none / 0) (#82)
    by LatinoVoter on Wed Jul 02, 2008 at 02:52:57 PM EST
    back in February. He didn't have the Grammy when he got the loan so I don't know what that has to do with anything.

    Lemme guess you're the kind of Chicagoan that wears that t-shirt while living in Schaumburg? ;0)


    And it was a book contract then (none / 0) (#159)
    by Cream City on Wed Jul 02, 2008 at 04:38:30 PM EST
    much as I hate to set off tben again, as he said the same thing -- but book contracts are not book income.  I actually happen to have to vote on promotions of people based on production of books.  I have seen book contracts that don't result in books.

    And I also have seen a lot of remainder tables.  If publishers -- and banks and loan officers -- could correctly predict best sellers, or not, we would waste far fewer trees.


    Btw, appreciate that you agree (none / 0) (#162)
    by Cream City on Wed Jul 02, 2008 at 04:46:14 PM EST
    that there is a Chicago Way, which also gets argued against here.  I happen to love your town and have spent a lot of time there with relatives there -- including an uncle who was a journalist there.  He taught me about the Chicago Way a long time ago.

    It is what is it is.  Every town has its way of getting things done.  It looks corrupt to me, but it works for you in Chicago, where machine politics are so embedded that it's hard to imagine any other way that would get things done in such a massive city.  

    And it sure beats the way things got done in Chicago, by absentee landlord Easterners, before the machine put an end to that.  The Obamas are part of the machine politics, sure, and she's from a machine family -- but there's no other way to be in politics in Chicago, from what I was told.

    The problem would be if only the politicians benefit from the machine.  But that takes care of itself, as the machine meets a speedy demise.


    .305% lower than the "average" (5.00 / 3) (#95)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 03:01:49 PM EST
    is an issue? rotflmfao

    It's a pretty sizable (none / 0) (#161)
    by Montague on Wed Jul 02, 2008 at 04:43:16 PM EST
    discount.  Not unheard of, by any means, but just goes to show that Obama is nothing like the ordinary American, and I can't imagine why his wife keeps saying, "Give me something here."  Seems they've been given plenty.

    Sigh. Discount? Really? (5.00 / 1) (#169)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 05:26:06 PM EST
    Can you please tell us what the higher interest rate was that the bank was trying to get vs. the lower, discounted, rate it ended up getting with Obama?

    I believe someone who is experienced (none / 0) (#188)
    by Montague on Wed Jul 02, 2008 at 11:45:20 PM EST
    in banking has commented on this elsewhere in the thread.

    I hope you are aware that the rich people own the country.  And that rich people come in many flavors, not just white, straight, and male.


    Also (none / 0) (#189)
    by Montague on Wed Jul 02, 2008 at 11:47:34 PM EST
    You are aware, I presume, that people sometimes go through the hassle of refinancing to get a rate that's 0.3% lower.  So it's a very nice discount.

    I doubt there's anything there... (5.00 / 1) (#170)
    by OrangeFur on Wed Jul 02, 2008 at 05:32:19 PM EST
    Still, this story is yet another reminder of how the well-connected get all the breaks. CEOs get golden parachutes, Congresscritters get cushy jobs on K Street, etc. I mean, who needed a favorable loan less than Jim Johnson, the erstwhile VP vetter? But friends of Countrywide's boss got special rates while the rest of us pay full price.

    The nut of the story... (4.50 / 2) (#15)
    by Dawn Davenport on Wed Jul 02, 2008 at 01:41:20 PM EST
    ...is that members of Congress are not compelled to list their debts or disclose their mortgage interest rates under current ethics laws.

    This really needs to change, and should be part of routine financial disclosures for members of Congress.

    no doubt (2.25 / 4) (#1)
    by tek on Wed Jul 02, 2008 at 01:28:05 PM EST
    there is something nefarious about how Obama purchased his Chicago house and it will come out eventually.  I don't think this is it.

    No doubt? (5.00 / 1) (#9)
    by SpinDoctor on Wed Jul 02, 2008 at 01:40:31 PM EST
    Your opinion is based upon what exactly?

    It's one of those faith-based opinions (5.00 / 1) (#34)
    by scribe on Wed Jul 02, 2008 at 02:07:20 PM EST
    He's faithfully hoping against hope there's something - anything - out there for McCain to hang on Obama.

    I have a lot of doubts about (5.00 / 2) (#27)
    by Cream City on Wed Jul 02, 2008 at 01:51:54 PM EST
    the part I know something about, the process of getting historical preservation status and tax credits.  And it seems there was a skirting of the process, and that angers me, as I am a proponent of historical preservation and don't like to see anyone imperiling the law.

    But then, it's the Chicago Way.  Corruption in its historical preservation committee appointments and practices would not surprise me in the least.

    And I fully acknowledge that the number of voters and journalists who know and care about this is nil.  That's too bad; it is federal funding in question.  


    Agreed. This isn't it. (none / 0) (#4)
    by angie on Wed Jul 02, 2008 at 01:33:05 PM EST
    This story isn't even "all smoke no fire" -- there isn't even any smoke that I can see.

    There is no story here. (none / 0) (#11)
    by sarcastic unnamed one on Wed Jul 02, 2008 at 01:40:50 PM EST
    Some think there is some other story about the home purchase, but I don't think so.

    I get lower than average rates (none / 0) (#28)
    by Carolyn in Baltimore on Wed Jul 02, 2008 at 01:54:07 PM EST
    - or I used to - by shopping around, and being aware. I also went with shorter term loans when I could so my $$ doesn't all go to interest.
    And then there are the points etc and what cost get rolled into the loan and how much you put down and......

    Any savvy person can beat the 'average'.

    And two lawyers would be (none / 0) (#36)
    by Cream City on Wed Jul 02, 2008 at 02:08:12 PM EST
    doubly savvy, it would seem safe to assume.

    I feel... (none / 0) (#33)
    by Alec82 on Wed Jul 02, 2008 at 02:05:12 PM EST
    ...slightly bad for the author of this hit piece.  Kos erupted over this story.

     And it is so idiotic and transparent I have no idea how it got past an editor.  But it is the Washington Post...

    I would wish that the editor (5.00 / 2) (#39)
    by Cream City on Wed Jul 02, 2008 at 02:10:57 PM EST
    had said to turn the story around to say that it looks like both candidates are in the clear on this.

    I have no problem with the questions being asked.  After all, people are losing their homes, loan execs are being charged, and Congress is elected to be watchdogs.  But then, this Congress has not done well on that in many ways.


    I wonder if it is a front page story in the print (none / 0) (#63)
    by samtaylor2 on Wed Jul 02, 2008 at 02:38:28 PM EST
    Edition?  A lot of stupid stuff appears on both the NY times and posts websites that isn't in the paper.  Not that it makes it better

    Wasn't Front Page... (none / 0) (#101)
    by indy in sc on Wed Jul 02, 2008 at 03:05:30 PM EST
    was A3.  Perhaps after the NYT took a hit on the non-story they did about McCain and his supposed affair with the lobbyist that ran on its front page, WaPo decided it was better to bury this a little.

    This is (5.00 / 1) (#142)
    by Steve M on Wed Jul 02, 2008 at 04:10:51 PM EST
    little different from the dreck John Solomon used to peddle, before he took a job at the Washington Times.  I seem to recall a similarly substance-free story about John Edwards' home purchase.

    I'm not surprised at all that this story made it past an editor.  Seems like standard fare, unfortunately.


    Have you actually read the WP (none / 0) (#98)
    by tree on Wed Jul 02, 2008 at 03:04:43 PM EST
    story? I wouldn't call it a "hit piece" by any stretch of the imagination. Obama did get a discount on his home loan as the headline states, and the story is very clear that the discount could be accounted for by several means other than as gift for a public official, which is prohibited by law. Considering that both Dodd and Conrad are both under preliminary Senate ethics inquiries on their loans, I think it is entirely consistent to ask the questions the WP did about both Obama and McCain. I don't see any slant in the story. It clearly offers info from many sides.

    It's a hit piece (5.00 / 1) (#128)
    by Alec82 on Wed Jul 02, 2008 at 03:35:45 PM EST
    There was no story there.  They cooked one up.

     Look, the article doesn't make any sense as  a news story if it isn't a hit piece.


    Campaign Defends Lower Rate as Lender Competition for Business

    And in closing:

    Obama's house purchase has been a source of controversy. In 2006, the Chicago Tribune reported that on the day of the closing, the wife of Obama's longtime friend and fundraiser Antoin "Tony" Rezko closed on an adjoining lot that had been the estate's side yard.

    The Obamas bought the house for $300,000 less than the asking price of $1.95 million, while Rezko's wife, Rita, bought the neighboring lot for the full asking price of $625,000. Rita Rezko later sold a portion of the undeveloped lot to the Obamas, enlarging the senator's yard.

    Tony Rezko already had been linked to a grand jury investigation involving public corruption. Last month, he was convicted of 16 counts in an influence-peddling scheme that reached the highest levels of Illinois state government.

     The insinuation is pretty clear.  "An air of corruption and unseemliness hovers over House Obama."  Hit piece.  There are no "sides" to this story, because there's no controversy.  No issue.  Nada.

     Are you just upset because there's no there there?


    Exactly. (5.00 / 1) (#129)
    by Pegasus on Wed Jul 02, 2008 at 03:41:27 PM EST
    Look, the article doesn't make any sense as  a news story if it isn't a hit piece.

    No newspaper is about to publish a story on Barack and Michelle Obama's mortgage, because that's boring.  The only way to make it interesting is to imply some wrongdoing.  So they went ahead and did just that.


    The story doesn't upset me at all (5.00 / 0) (#136)
    by tree on Wed Jul 02, 2008 at 03:52:25 PM EST
    I learned information from it, which is what I think a newspaper article should provide.   You seem to think that a newspaper article's only purpose is to find wrongdoing and if it didn't do that then there is no reason to print it. There would be very few articles printed if that were the case, and we would all be less informed.

    What I want to know is why did you go off the deep end on this? Why do you confuse this with "yellow journalism"? Why the outrage?


    Um... (5.00 / 0) (#139)
    by Alec82 on Wed Jul 02, 2008 at 03:59:51 PM EST
    ...how many stories do you see written about mortgages taken out by political candidates?

     And why would such a story include references to Rezko, and his criminal case?  Keeping in mind that it is completely unrelated.

     You do not see such stories because they are indicative of one, uninteresting fact: the candidate has a mortgage.

     But if you want something to get attention and readers you spice it up with "questions" about "possible wrong doing."  Speculative, unfounded questions.

     Voila.  Fox News or another sensationalist beltway outlet should give me a job.  I'd at least be subtle.


    There are two (5.00 / 0) (#148)
    by tree on Wed Jul 02, 2008 at 04:13:06 PM EST
    Senators who are presently under preliminary Senate ethics investigations because of mortgage loans. Are you really trying to tell me that Obama gets some kind of special dispensation from media investigation of his mortgage loan when this topic is a current one?

     This investigative report didn't claim, or imply, any illegal activity on Obama's part, and it provided several possible scenarios for the lower than average rate that were entirely benign. Political candidates get investigated on their financial dealings all the time. You know that. If you are going to go off the deep edge every time it happens then you will be like the boy crying wolf when the real hit pieces come out. Hold off your ammunition if you want it to be effective.


    Looks like the story, if there is one, (none / 0) (#41)
    by pie on Wed Jul 02, 2008 at 02:13:44 PM EST
    might center on his ties to Rezko.

    Whether more comes out or not, repubs will keep flogging that beast.

    During Whitewater... (none / 0) (#43)
    by pmj6 on Wed Jul 02, 2008 at 02:17:25 PM EST
    ...there was even less evidence of wrongdoing, in fact the Clintons lost money in process, yet this was enough.

    This is one of the perils of having an unvetted presidential nominee. It won't take much to paint Obama as a corrupt, hypocritical pol from corrupt Chicago. Good deal on mortgage=smoke, and smoke=fire.

    You know, there's NO chance (none / 0) (#45)
    by ParkSlopeVoter on Wed Jul 02, 2008 at 02:18:45 PM EST
    that I'll be voting for Obama in November (don't like him, especially some of his recent flip-flops) but this really is a non-issue.  For a 15-year mortgage of $500,000, the payments (annual) would be:
                @ 5.65% Interest:  $50,311
                @ 5.93% Interest:   51,246

    This is a difference of $935 annually, or approximately 2%.  I'd say: Case closed!


    Good point (none / 0) (#60)
    by befuddledvoter on Wed Jul 02, 2008 at 02:37:39 PM EST
    There was also a competing (none / 0) (#61)
    by BlueMainer on Wed Jul 02, 2008 at 02:37:40 PM EST
    offer from another lender. Obama accepted the better offer.

    I agree... (none / 0) (#77)
    by pmj6 on Wed Jul 02, 2008 at 02:50:20 PM EST
    ...in this case I don't think the Obamas did anything improper. If you have that kind of money to throw around (and it looks like they put down a down payment of $300K--that's no chump change) people will fight for your business and you'll get some good deals.

    The real interest for me in this story is that the WP editorship evidently thought this (i.e, aspersions on Obama's honesty) is something their readership would like to read.

    really?? you know what's in our souls? (none / 0) (#84)
    by Josey on Wed Jul 02, 2008 at 02:55:20 PM EST
    Your comment is very Bushie.
    iow - those who dare to question or criticize Obama's actions - hate him.

    The only point of interest might be...NO points on (none / 0) (#89)
    by jawbone on Wed Jul 02, 2008 at 02:57:31 PM EST
    the loan. I have no idea if the interest rate meant that with points they could have received an even lower interest rate (that's how it worked on my itsy bitsy mortgage years ago: higher interest, fewer points; lower interest; higher points).

    IIRC, points equal one percent of the mortgage amount, so each point for the Obamas would have been $13,200. Depending on whether he was given a deal on the points is where the benefit might have come into play.

    In Obama's case, he received a lower rate than the average offered at the time in Chicago for similarly structured jumbo loans. He secured his final mortgage commitment on June 8, 2005, and during that week, rates on similar loans for which information is available averaged 5.93 percent, according to HSH Associates, which surveys lenders. Another survey firm, Bankrate.com, placed the average at 6 percent.

    The article doesn't seem to pay much attention to the points factor, other than saying it appeared they are usually paid to lower the going rate. Nor does it give much detail about origination fees.

    Guess the WaPo just has to do real estate hit pieces about Dems (they did one on Edwards, not sure about Hillary; Dodd, of course, got one recently).

    Points vary from locale to locale (none / 0) (#158)
    by Cream City on Wed Jul 02, 2008 at 04:33:52 PM EST
    so I've read.  Points are common in my city, but no points are so in other cities.  However, I read that the tradeoff can be higher rates.  In this case, though, the difference in the rate received is not much.  Bottom line again is that a reporter from D.C. maybe needed to find out more about the Chicago real estate market, and for this sort of house, to provide better context for the reader to be able to make any sort of reasoned judgment here.

    crown (none / 0) (#94)
    by jedimom on Wed Jul 02, 2008 at 03:00:45 PM EST
    I find the story in the Crown board members and their links to Obamas entire career.

    um, sure TChris. (none / 0) (#141)
    by cpinva on Wed Jul 02, 2008 at 04:05:13 PM EST
    do you believe in the easter bunny as well? sorry, call me the skeptic cpa, who's audited many a bank, but i'd like to base my conclusion on verifiable, unrelated, third-party documentation, if that's ok with you atty. types.

    i read the article when it first came out. i thought it odd that a "super jumbo" loan should receive such wonderful terms. however, in fairness, i've also not seen all the loan documents. it wouldn't at all surprise me to learn that the wp left out some pertinent facts.

    the problem is, added to the below-market price he paid, mrs. rezko's market price paid for the lot next door, purchased, simultaneously, from the same people, and the subsequent sale of the 10' strip, it begins to look like a great circumstantial case for inurment, on the part of sen. obama.

    lay it to rest, for all reasonable people, by releasing all the documents associated with this entire series of transactions.

    if sen. obama's campaign fails to do this, they've laid the groundwork for another republican 527 ad campaign.

    Hm (5.00 / 2) (#150)
    by Steve M on Wed Jul 02, 2008 at 04:15:44 PM EST
    The banks you audit really "show their work" regarding the computation of each and every loan rate, down to the percentage points?  There's absolutely no discretion in the process?  I'd be surprised to hear that.

    First you claimed it was (none / 0) (#156)
    by tree on Wed Jul 02, 2008 at 04:26:45 PM EST
    a hit piece and yellow journalism, but now you are saying that what's upsetting you is not the article itself but what others' reactions to the story are. There are people that are going to overreact to this just as there are people that are going to overreact to the article on McCain's unpaid property tax. (Look around.) That doesn't make either one of the articles necessarily hit pieces or yellow journalism.  

    The richer you are, the less you need (none / 0) (#160)
    by Montague on Wed Jul 02, 2008 at 04:42:02 PM EST
    the discount, and the more likely you are to get it.  What I want to know is why his wife's salary shot up so spectacularly after Obama joined the Illinois state senate.

    You're serious {{cue cynical expression}| (none / 0) (#171)
    by goldberry on Wed Jul 02, 2008 at 05:45:04 PM EST
    That's like asking what was wrong with buying some real estate in Arkansas for a resort community and then losing money on it.  

    Man Pets Dog (none / 0) (#178)
    by WakeLtd on Wed Jul 02, 2008 at 06:43:37 PM EST
    Not dog bites man. I'll be first in line to critcize Barack Obama when I think he is evading political commitments that he has uttered in his many fine speeches, whiling he was coming up, only to sound like like a "competent" George Bush now that he is the presumptive nominee. See Obama run. See Obama run to the center. See Obama run right pass the center

    But,this story - hey, I'm no credit analyst, but it seems to me Senator Obama could possibly have an excellent credit score and history & his employment prospects certainly seem strong. This is not a story likely to resonate except among the crowd for the desperate "gotcha" crowd.

    This "Story" is Ridiculous (none / 0) (#179)
    by Belswyn on Wed Jul 02, 2008 at 07:17:18 PM EST
    To assess the uniqueness of the Obama's deal, we have to know more than than his rate is below average. We need to know what the variance, or standard deviation of the mortgage rate variations are. This article doesn't provide that except to say that "mortgage rates vary widely". Widely by how much? The amount of the discount the Obama's got could be day-to-day fluctuations for all the information that's contained in the WaPo article.

    Once we knew what the variance was, then we would need to know things like credit-worthiness, cash on hand, future earning prospects, etc., to assess if he got "special" consideration beyond that.

    We're average people (none / 0) (#180)
    by dianem on Wed Jul 02, 2008 at 07:30:36 PM EST
    Tell you what - I'll resist calling you an idiot if you resist the urge to throw around foolish accusations of "ODS". I'm not attacking Obama, I'm telling you how the average person will interpret this. I'm about as average as you can get, and I don't particularly like the idea of rich people getting money cheaper than I can. The justification of "but he has a better credit score" doesn't apply. There is no corruption here, but it is still a story that can damage Obama. I never, ever made an accusation of favoritism. I think this is simply a routine thing that banks do for rich and powerful people - not just politicians. But it still doesn't look right, and he should have spent a bit more time thinking about how this would look to the voting public and less thinking about saving $300/month.

    Agreed (none / 0) (#190)
    by Montague on Wed Jul 02, 2008 at 11:50:25 PM EST
    While he was at it, he should have bought a cheaper house.  John Edwards, on the same topic, should never have started building that massive house when he knew he would run for president again.  Sure, $400 haircuts are an absurd topic when the economy is tanking and an idiot is in the WH, but surely Edwards should have known how it would look to people?  

    He can live where he likes (none / 0) (#191)
    by dianem on Thu Jul 03, 2008 at 01:54:13 AM EST
    Most people have no problems with rich people living in big houses. We could buy a big house, if we had the money. It's the little things that matter. The haircuts do matter. That's a lot of money. Enough to pay for a weeks rent for a family. Maybe a hundred dollar haircut would have been nearly as good. A new home isn't a problem - but it had better not have gold toilet fixtures. Having money is not really a problem, as long as people don't perceive that you'er throwing it around to get things they can't have. Of course, you are.  But they can't perceive that.

    Actually I have a big problem (none / 0) (#192)
    by Montague on Thu Jul 03, 2008 at 01:18:00 PM EST
    with rich people living in big houses.  Not because I care that there are some differences in how much wealth people have, but because a big house has a more deleterious impact on the environment.

    You are right about perception.  That's the part that counts.  And since one never knows when the media or the other party will latch onto something and turn it into some huge scandal, any politician is best off to practice moderation.


    interest rates (none / 0) (#185)
    by notinKansas on Wed Jul 02, 2008 at 10:35:42 PM EST
    Sometimes you find a deal.  He got 5.6%.  We managed to find 5.0%.  No story there.