Did Hussein Get A Sweetheart Mortgage?
by Frank James
The Washington Post has a large headline that has drawn some attention today, certainly from the Republican National Committee: “Obama Got Discount on Home Loan.”
The story goes on to say that in 2005 when Sen. Barack Obama and wife Michelle applied for a $1.32 million loan from Northern Trust, they got a terrific 5.625 percent rate on a 30-year mortgage for what is known in the industry as a “super, super jumbo” loan because of its size.
That rate was below the Chicago-area average offered on such loans at the time, the story reports and it notes that Obama paid no origination fees of closing points on the loan. So he definitely got a great deal.
The question is did Northern Trust give Obama preferential treatment because he was a newly minted celebrity senator? After reading the story the answer seems to be: Who knows?
The campaign told the WaPo that wasn’t the case, that Obama got a competitive offer from another lender and that allowed him to negotiate the better deal with Northern Trust.
The bank for its part says the loan comported with its business practices. Of course, if part of its policy is to cut good mortgage deals to the connected and wealthy, than a sweetheart deal wouldn’t be out of the question, would it?
For a bank that offers substantial private-banking business to rich clients, doing whatever it could to attract future business from the millionaire Obamas, including giving them a great price on a mortgage is arguably just plain good business sense.
It’s possible, given that reality, that someone similarly situated to the Obamas, with large incomes that were quickly becoming larger, thanks in part to the senator’s lucrative book deal, would’ve quoted the same price for a similar Northern Trust mortgage.
Still, coming as it does after all the disclosures of the erstwhile Friends of Angelo program at Countrywide Financial which apparently benefited some members of Congress and at least one former member of the Obama campaign team, James Johnson, who headed up Obama’s vice presidential selection process until stepping down because of the scandalette, this story about Obama’s mortgage is certainly worth knowing about.
Obama’s political opponents will certainly try to make something out of this story. But contrary to the famous adage, not all smoke means there’s a fire.
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“…not all smoke means there’s a fire.”
I suppose that depends on the type of ‘institution’ Northern Trust is because sweetheart deals like this were a large part of the S&L/Trust/Thrift debacle of the 80’s.
July 2nd, 2008 at 10:56 amA lower than average rate on a loan twice the size of a ‘normal’ jumbo loan with no points, fees, etc., sounds like fire to me but hey… that’s me.
Nice digs though… far cry better than the $400K “poor house” they were living in while starving to pay off student loans according to Mrs. Obamination.
CRUCIFY HIM!
July 2nd, 2008 at 12:20 pmdid’nt a certain Mr Rezko help out aswell?
July 2nd, 2008 at 1:19 pmsully, is that what you would call a mansion ?
July 2nd, 2008 at 2:38 pmfranchie,now that they own it the term would be la maison de fosse septique
July 2nd, 2008 at 4:16 pmukatheist
you mean “la cabane au fond du jardin” ?
then check my post on the pooh places
uh, mansion isn’t it manoir ?
July 2nd, 2008 at 4:22 pmWe got a 5.375% fixed 30 year mortgage for about 1/6th the amount of the Obama’s in early early 2005. Much depends on your credit rating at the time of the loan. If we could have finished the house six or seven months earlier we could possibly have gotten a 4.875% rate. A far cry from the Jimmeh Cahtah years. I’m sure y’all know how I feel about Nobama but it doesn’t seem to me there’s any thing to the story here unless we got a sweet heart deal too!! (we didn’t! LOL )
July 3rd, 2008 at 7:43 amfranchie,une petit manoir avec grand cons.
July 3rd, 2008 at 9:57 am“… it doesn’t seem to me there’s any thing to the story here unless we got a sweet heart deal too!!”
The point is that his loan is what is called a super jumbo loan. Those loans are typically made at above average interest rates, even to buyers with excellent credit. In order to get the rate down to BELOW the average, in this instance 5.94%, Obama should have been required to pay DISCOUNT points, probably 2 to 3 discount points (20K - 30K), maybe more since the down payment was apparently only 20%.
July 3rd, 2008 at 11:01 amAlso, if the institution is chartered by OTS (Office of Thrift Supervision), it is likely an illegal loan for them to be making.
Your loan at 1/6 the 1.35 million does not even come close to a JUMBO loan and is nowhere near an equivalent analogy.
ukatheist
I bet there are lots of such petits manoirs avec grands cons
July 4th, 2008 at 1:23 am… mais seulement en France
July 5th, 2008 at 6:06 am