July 2, 2008
Obama Got Discount On Home Loan
Washington Post: Campaign Defends Lower Rate For 2005 Mortgage As Lender Competition For Business
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Photo
Democratic presidential candidate, Sen. Barack Obama, D-Ill., removes his tie after a photo session with photographer Kwaku Alston, left, at his home in Chicago, Thursday, June 19, 2008. (AP)
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Photo Essay
Barack Obama
A look at the life and meteoric rise of the president-elect.
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Timeline
Credit Crunch
Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
From Our Partner:
Shortly after joining the U.S. Senate and while enjoying a surge in income, Barack Obama bought a $1.65 million restored Georgian mansion in an upscale Chicago neighborhood. To finance the purchase, he secured a $1.32 million loan from Northern Trust in Illinois.
The freshman Democratic senator received a discount. He locked in an interest rate of 5.625 percent on the 30-year fixed-rate mortgage, below the average for such loans at the time in Chicago. The loan was unusually large, known in banker lingo as a "super super jumbo." Obama paid no origination fee or discount points, as some consumers do to reduce their interest rates.
Compared with the average terms offered at the time in Chicago, Obama's rate could have saved him more than $300 per month.
Obama spokesman Ben LaBolt said the rate was adjusted to account for a competing offer from another lender and other factors. "The Obamas have since had as much as $3 million invested through Northern Trust," he said in a statement.
Modest adjustments in mortgage rates are common among financial institutions as they compete for business or develop relationships with wealthy families. But amid a national housing crisis, news of discounts offered to Sens. Christopher J. Dodd (D-Conn.), chairman of the banking committee, and Kent Conrad (D-N.D) by another lender, Countrywide Financial, has brought new scrutiny to the practice and has resulted in a preliminary Senate ethics committee inquiry into the Dodd and Conrad loans.
Within Obama's presidential campaign organization, former Fannie Mae chief executive James A. Johnson resigned abruptly as head of the vice presidential search committee after his favorable Countrywide loan became public.
Driving the recent debate is concern that public officials, knowingly or unknowingly, may receive special treatment from lenders and that the discounts could constitute gifts that are prohibited by law.
"The real question is: Were congressmen getting unique treatment that others weren't getting?" associate law professor Adam J. Levitin, a credit specialist at Georgetown University Law Center, said about the Countrywide loans. "Do they do business like that for people who are not congressmen? If they don't, that's a problem."
Under financial disclosure rules, members of Congress are not obliged to disclose debts owed to financial institutions for personal residences. Names of lenders and rates paid on mortgages sometimes can be determined by scrutinizing property transaction records. In March, in response to media questions, Obama posted on his campaign Web site records related to his house purchase.
Last week, during debate on a bill to help homeowners caught in the foreclosure crisis, some members of the Senate ethics committee proposed an amendment to require that lawmakers disclose their mortgage lenders and loan terms in annual financial forms starting next year.
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.
"It's certainly safe to say that this borrower did better than average," said Keith Gumbinger, an HSH vice president, noting that consumer rates vary widely. "It's a good deal."
The Obama campaign called the rate "consistent with Northern Trust policies, and it reflected the base rate set for that period discounted to address the competition for the account and other opportunities, such as personal financial services, that the relationship would bring to Northern Trust."
When the Obamas secured the loan, their income had risen dramatically. Obama assumed his Senate seat in January 2005, with an annual salary of $162,100. That same month, Random House agreed to reissue an Obama memoir, for which it originally paid $40,000, as part of a $2.27 million deal that included two future nonfiction books and a children's book.
Around the same time, the University of Chicago Hospitals promoted Michelle Obama to a vice president and more than doubled her pay, to $317,000.
The couple wanted to step up from their $415,000 condo. They chose a house with six bedrooms, four fireplaces, a four-car garage and 5 1/2 baths, including a double steam shower and a marble powder room. It had a wine cellar, a music room, a library, a solarium, beveled glass doors and a granite-floored kitchen.
The Obamas had no prior relationship with Northern Trust when they applied for the loan. They received an oral commitment on Feb. 4, 2005, and locked in the rate of 5.625 percent, the campaign said. On that date, HSH data show, the average rate in Chicago for a 30-year fixed-rate jumbo loan with no points was about 5.94 percent.
Jumbo loans are for amounts up to $650,000, but the Obamas' $1.32 million loan was so large that few comparables are available. Mortgage specialists say that many high-end buyers pay cash.
Obama's Republican opponent, Sen. John McCain, has no mortgages on properties he owns with his wife, Cindy, who is a multimillionaire.
Unlike Countrywide, where leaked internal e-mails documented a special discount program for friends of chief executive Angelo Mozilo, Northern Trust says it has no formal program to provide discounts to public officials. Loan officers may consider a borrower's occupation when establishing an interest rate, the bank said.
"A person's occupation and salary are two factors; I would expect those are two things we would take into consideration," said Northern Trust Vice President John O'Connell. "That would apply to anyone seeking to get a mortgage at Northern Trust." He added that the rates offered to Obama were "consistent with internal Northern Trust rates at that time."
"The bottom line is, this was a business proposition for us," he said. "Our business model is to service and pursue successful individuals, families and institutions."
O'Connell referred additional questions to the campaign.
Since 1990, Northern Trust employees have donated more than $739,000 to federal campaigns, including $71,000 to Obama, according to the Center for Responsive Politics.
Obama's house purchase has been a source o 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.
By Joe Stephens
© 2008 The Washington Post Company
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See all 378 CommentsI didn''t realize that is worthy of world news. It is something that savvy shoppers do every day.
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Goodness, it''s not like people don''t get discounts on home loans. But okay CBS, you found something else for the Obama haters to go on about. Good job?
Can you?
A BIG FAT DUH.
Ya mean, Sen. "OsamaObama" had $3 million "laundered" through Northern Trust??
Last week we discovered Sen. Dodd (D-CT) and Sen Conrad (D-ND)got millions in "Sweetheart" deals from Countrywide. Leaving us real Americans scratching our heads at the open arrogance these Democrats display.
It does make me sick the thought of how much of America G.W. Bush was forced to let these Democrats steal without conscience, just to keep the war to protect us regular Americans funded.
Just three examples showing these elitist Democrats could care less about America, just so long as they can stuff their pockets. These three on top of what we''ve already seen from Sen. Harry "Palms" Reid and his land scam. Sen. Di-Fi using her seat to get $1.5 BILLION in Defense department cash given to her husbands company.
And, the best these hyphenated-Americans have on the GOP is some former Senator doing a toe tap in a mens room?????
Wake up America!!!!
John and Cindy just don''t pay taxes on the property they own until it is about to go into default.
Posted by melchg at 09:42 AM
Actually the big three, not including FOX, seem willing to run with anything that might be negative about Obama. And the only thing that gets mentioned about the white guy, is always put into the form of a question.
End of story.
How much more of America was G.W. Bush forced to let these Democrats steal, just to get this scum to continue funding this war to protect us regular Americans funded.
Especially since these are just the most recent three examples being revealed. Others that come to mind not too far back....Sen. Harry "Palms" Reid (D-Ne) and his land scam, or Sen. Di-Fi (D-Ca.) using her seat to get $1.5 BILLION in Defense department cash directed to her husbands company.
And, the best these hyphenated-Americans have on the GOP is some former Senator doing a toe tap in a mens room?????
Wake up America!!!!
Blah, blah, blah, blah, blah. Keep it up GOPig losers - you''re going to have 8 whole years to pick on Sen. Obama, and there''s not a single thing you can do about it.
Post by Beasty
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CRIMINAL ACTIVITIES!!! What criminal activities.
ANYBODY securing a 1.3 Million dollar 30 year loan could get a bank to give them a below rate loan.
End of story.
A BIG FAT DUH.
Posted by JACK3213
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I''m not a Congressman and I have a loan like that from Countrywide. I got a discounted rate on my mortgage because I asked for it and said if I didn''t get it there I would go to another bank.
I thought Republicans were for free markets (or is that only for when it benefits themselves)?
Senator McCain talks about national security, but gladly accepts terrorist money.
Posted by rudy654 at 09:45 AM : Jul 02, 2008
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We can only hope Rush will.
Plus, many of us real Americans should realize, these same Democrat Senators who''s involvement in criminal activities such as this, are the same Senators working on legislation aimed to silence folks like Rush.
Oh that''s right, "it''s just home loans." Didn''t we hear something similar about another Democrat receiving a Lewinski back in the 90''s??
Wake up America.....These Democrats almost have your nation destroyed and you appear to be sleeping through it.
The saddest thing of all is they know they can get the low information voters fired up over it.
Senator McCain talks about national security, but gladly accepts terrorist money.
Posted by daninmadison at 10:05 AM : Jul 02, 2008
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Look the man isn''t proud, he has hired the Swift boat liars.
Posted by Beastof70
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I hope you are at least getting paid for posting your BS. It really would be kind of sad to thing you are willing to make yourself look like a moron for free.
Posted by Beastof70
Bat boy please tell me the crime obama violated.
There''s nothing illegal here idiot! What a shock that people of means borrowing large sums of money get preferential treatment. Even with the discounted rates Northern Trust stands to make more money off a loan this large as opposed to a more modest mortgage, so of course they would cut him a deal.
Now, if you could provide some evidence that they received some quid pro quo in return from him regarding some legislation that would be an issue.
That''s not the case, or at leat there''s no indication that it''s the case. Do you have any evidence to the contrary, Dipshit?
Blah, blah, blah, blah, blah. Keep it up GOPig losers - you''re going to have 8 whole years to pick on Sen. Obama, and there''''s not a single thing you can do about it.
Posted by NewTagAgain at 09:57 AM : Jul 02, 2008
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Clearly you was still busy launching little yellow mush bombs in your diapers back in ''93 when your older hyphenated-American kin shared your optimism up until Bill Clinton revealed defeceit spending as far as the eye could see, on top of his wife''s Marxist plans for America, all of which resulted in getting both houses of Congress and a whole bunch of state Governors tossed out of office by ''94.
We''ll just have to see how close to 8 years America is willing to allow these Leninist elitist criminal to run rough shod over us??
Posted by Beastof70
Wait...so you''re suggesting Obama is a criminal because he got a home loan?
Wow. Just wow.
Do you think we should build more prisons, given that there must be at least 50,000,000 mortgages in this country?
Hey, how did that Rush thing with his illegal drugs thing go?
I would argue, quite obviously and persuasively, that a drug addict breaking the law to support his habit (Rush, a Republican) is more an example someone "destroying America" than someone taking out a home load (Obama, a Democrat).
Clearly it is YOUR side who is at war with American values.
Posted by Beastof70
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What B.S. Beasty.
You Repugs having have s.c.r.e.w.i.n.g. this country over for 12 years.
This is out-and-out BULL. Here in California these types of loans are the norm. Hell, the median price for a home is well above $650,000 so if you really wanted to find comparable mortgages, just look at California and no, we don''t pay cash. This article is a load of sh*t.
Posted by zerato at 10:09 AM : Jul 02, 2008
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This argument washes about as clean as the one about it being "just ***" when the President of the United States was using his position to swap favors for favors with the White House interns young enough to be his daughter who worked for him.
ROTFLMGTBO!!!!!
Posted by Beastof70
Perhaps if you move out of the trailer park you live in and buy a house - you will see that there is nothing wrong here. You nutty neocons are desperate, now you are reaching for straws. No wonder Bushie thought he had a mandate to bankrupt the country!
Oh........and did I mention..........he''s BLACK?
Anti-Constitution people such as yourself are not Real Americans. And of course you don''t have a problem with Limbaugh''s drug abuse.
We are all in danger and were losing our homes and Jobs
our country is slowly be taken over and i am affraid the Military will soon be killing us just like there doing in Jerusalem to the people that really own that land which is the Palestinian.
Now it become clear why Hitler went after these people and the Americans think they were abused by them when in fact it was our own president that turned this into a night mare.
Just like the wars in the past all our soldiers died in vain they died for the Neo Con Jew so they could run your life into hell
Posted by TawpDawg11 at 10:22 AM
That alone says it all.
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Half of Obamas voting base lives in trailer parks. How hypocrital of you.
YOu lose an argument you either call me a name or you bring up lewinsky/ clinotn. I call it the republican dodge. I am still waitning to find out what law obama has vioalted
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This is a lead story on the AP newswire this morning. And this is the same Illinois political breeding ground that produced our friend Obama. It seems that anywhere there is a questionable story about questionable people or questionable actions or deals, we have Obama lurking in the shadows and having to defend himself. Too many iffies for me!
The hit pieces are coming out for Senator Obama. Take that smallest item and blow it up.
Today, Cindy McCain is in the news.
The media is reporting today that Americans do not know much about Cindy McCain.
There are two salient facts that are not being reported:
Cindy McCain was a drug addict who stole a massive amount of drugs from her medical charity. She was caught by the Drug Enforcement Administration (DEA), plead guilty and was placed into a diversion and rehabilitation program. That is a program for rich women break the law when they are married to a U. S. Senator who. Cindy was a thief and a drug addict.
If a hospital nurse or doctor stole drugs to feed a habit, they would still be in prison.
Second, Cindy had a steamy affair with John McCain while he was still married to his first wife and the three children who had waited loyally for McCain to return from Vietnam.
When Cindy agreed to marry McCain, he tossed out the old wife and kids and married Cindy McCain 3 months later.
This is not only McCain%u2019s biggest flip-flop, it is the greatest stain on his character.
If a man like John McCain will not keep his word and protect his honor with his family, then how can anyone trust him?
And what does this say about the woman?
Posted by JERSupporter
YOu should quit trying to quit polling in your neighorhood and try the other parts of the country.
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