In Obama we Trust

[autigeremt 6,661]

Home Loans

Barack Obama secured a loan on his $1.65 million Chicago mansion at a discounted rate that could have saved him more than $300 per month, The Washington Post reported Wednesday.

The newspaper reported that the presumptive Democratic presidential nominee locked down a $1.32 million loan from Northern Trust at an interest rate of 5.625 percent in June 2005, shortly after he entered the U.S. Senate.

The Post said the rate on the 30-year fixed-rate mortgage was “below the average for such loans at the time in Chicago,” and that similar loans would have been available at rates as high as 6 percent.

But Obama spokesman Ben LaBolt told FOX News there was nothing unusual about the mortgage and that “anyone with the Obamas’ financial profile could have gotten the same rate on that mortgage.”

LaBolt said Barack and Michelle Obama were flush with cash at the time they went loan shopping and that Northern Trust sought their business by offering a lower mortgage rate — in part to respond to a competitive mortgage rate offered by another lender. LaBolt would not identify the other lender.

The Obamas’ income was rising when they secured the loan. Barack Obama had cash from a $2.2 million book deal with Random House signed in January 2005. Michelle Obama doubled her income to $317,000 when she received a promotion at the University of Chicago Hospital system.

Northern Trust released a statement saying “the process for determining the Obamas’ mortgage loan was consistent with how we structure Northern Trust rates, and the rates themselves were consistent with Northern Trust rates at that time.”

Information about the Obamas’ home purchase can be found at the campaign Web site.

LaBolt said any accusation that Obama received favorable treatment is false.

Such accusations are a sensitive matter, after it was reported that Jim Johnson — the former Fannie Mae CEO who was previously vetting Obama’s running mate prospects — received favorable loan terms from Countrywide Financial. Johnson left his post on the campaign after the report was published.

Countrywide reportedly has a “VIP” program, under which well-connected or high-profile borrowers can receive special rates.

Northern Trust said it does not have such a program.

[RunInRed 16,454]

So, the Washington Post this morning published a breathless piece on the fact that the Obamas got a good deal on their home loan -- a 5.625% rate when the average rate was 5.93%.

Definitive smackdown:

So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from myFICO.com, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount.

Unless the Washington Post has access to Obama's FICO score -- and unless it has rented an apartment to him, it probably doesn't -- it is missing a pretty important piece of information on what Obama's mortgage rate ought to have been. What was Obama's FICO score? I don't know, but considering that...

* Obama had just gotten a $2.27 million book deal from Random House -- about $1 million more than the value of the mortgage.

* The Obamas each had exceptionally secure jobs that paid them a combined annual salary of about $500,000 per year.

* The Obamas had just sold their condo, on which they had realized a $137,500 profit.

* The Obamas were prominent public figures whose political futures depended in part on maintaining a reputation for responsibility and trustworthiness.

* The Obamas are known to be relatively thrifty and have no credit card debt but substantial savings.

...I would think that the Obamas were exceptionally creditworthy. So indeed, Obama received a "discount" -- the same discount that any borrower in his position would have received.

And, as Media Matters points out, "average" actually means something pertinent in this context (provided for the arithmetically challenged):

Indeed, the very concept of an "average" rate means that a substantial number of loans would have been at interest rates below the average level, as well as a substantial number above that level, and does not suggest that rates below average -- if in fact the Obamas received a below-average rate -- resulted from preferential treatment.

Link

[HuntsvilleTiger 0]

So, the Washington Post this morning published a breathless piece on the fact that the Obamas got a good deal on their home loan -- a 5.625% rate when the average rate was 5.93%.

Definitive smackdown:

So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from myFICO.com, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount.

Unless the Washington Post has access to Obama's FICO score -- and unless it has rented an apartment to him, it probably doesn't -- it is missing a pretty important piece of information on what Obama's mortgage rate ought to have been. What was Obama's FICO score? I don't know, but considering that...

* Obama had just gotten a $2.27 million book deal from Random House -- about $1 million more than the value of the mortgage.

* The Obamas each had exceptionally secure jobs that paid them a combined annual salary of about $500,000 per year.

* The Obamas had just sold their condo, on which they had realized a $137,500 profit.

* The Obamas were prominent public figures whose political futures depended in part on maintaining a reputation for responsibility and trustworthiness.

* The Obamas are known to be relatively thrifty and have no credit card debt but substantial savings.

...I would think that the Obamas were exceptionally creditworthy. So indeed, Obama received a "discount" -- the same discount that any borrower in his position would have received.

And, as Media Matters points out, "average" actually means something pertinent in this context (provided for the arithmetically challenged):

Indeed, the very concept of an "average" rate means that a substantial number of loans would have been at interest rates below the average level, as well as a substantial number above that level, and does not suggest that rates below average -- if in fact the Obamas received a below-average rate -- resulted from preferential treatment.

Link

I agree ruinred63...this is a nonstory. He got a better rate than average. Guess what? I've gotten better rates than average too based on my credit score. And seriously a $300 a month savings? Wooo! For someone making the change that he and the mrs. are making I'm sure $3600 a year is just the savings they needed in order to afford the home. The MSM is useless and this nonstory is part of the reason why. If his loan had been half the normal interest rate or something ridiculous then maybe you have a story but 0.3%? Nah.

[TitanTiger 20,509]

Hidden cameras found in runinred's home:

[RunInRed 16,454]

Just doing my part

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Just doing my part

I didn't realize RIR was a woman!