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Wednesday, July 02, 2008

The corollary of the IOKIYAR Rule
Posted by Jill | 10:00 AM
If everything is OK if you're a Republican, then the corollary is "Everything is shady if you're a Democrat."

In 2004, mortgage rates were dropping. We were two years into a 15-year fixed rate loan at 5.75%. I was seeing rates of below 5% on a number of sites, and had received a quote of 4.75% from Quicken Loans. I called our lender and said, "I have an offer of a 4.75% refinance from Quicken Loans. I'd like to stay with your company. What can you do for me?" The answer was that they could meet that quote AND offer me a no-closing-costs refinance. A $350 application fee, a big package of paper to complete and have notarized, and we could drop our rate by a point. Sold.

I knew people who were still in higher-rate loans, so I guess you could say we got a "discount" as compared to some of my neighbors who hadn't refinanced.

Because I am a registered Democrat, I guess that by Washington Post reporter Joe Stephens, I did something shady. And if I were running for office, it would warrant some opposition research. Because in the Land of the Hit Piece, there's something shady about negotiating a lower mortgage rate based on smart shopping and a pre-existing relationship with a lender.

There are hit pieces, and then there's crap like this:

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.


"Uppity Negroes", anyone? How DARE they aspire to a bigger house. A $415,000 condo isn't good enough for them? What a sense of entitlement they have? And horrors -- they received a mortgage rate 3/10 of a point lower than the AVERAGE (not the lowest, but the AVERAGE) rate for similar loans.

Stephens even uses this piece to mention Tony Rezko, even though Rezko has ZERO connection to the transaction.

So a high-profile couple, one of whom has a six-figure job (how DARE a black woman get that job!), and the other of whom is a United States Senator with a nice windfall from a book deal, walk into a bank to get a mortgage. Do you think that any bank is going to let a good risk like that walk away, if they have been offered a competitive rate someplace else? Mr. Brilliant and I are hardly in this league, and our lender was willing to pay closing costs to keep us in the fold.

So just what is the story here? Chris Dodd gets a loan discount and that's Barack Obama's fault?

This isn't the first time WaPo has been sniffing around the file drawers of Democratic presidential candidates. In January 2007, in another WaPo hit piece directed at a Democratic presidential candidate, John Solomon decided there was something shady about the Edwards' selling THEIR house.

Funny how Stephens hasn't written a similar article about how the McCains are tax deadbeats. If you search the WaPo site under "mccain property taxes san diego", all you get is an AP piece on how Cindy McCain has finally settled her tax debt -- AFTER the fact that she hadn't paid taxes on her San Diego property since 2004. It's not a piece by Joe Stephens.

Funny how if you're a high-profile Republican, nonpayment of taxes doesn't result in foreclosure. But of course, just like everything else, it's OK to be a tax deadbeat if you're a Republican. But if you're a black Senator who has the AUDACITY to want to live in a "white man's" Georgian mansion, you have to be smacked around by a low-level hack at the Washington Post.

UPDATE: Jason Linkins at HuffPo has more.

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4 Comments:
Anonymous Anonymous said...
Good racist projection - there's not 1 word in the article referring to race in any way. Whenever you want to see a racist look in the mirror.
7/2/08, 11:27 AM  
Blogger Jill said...
The author doesn't have to refer to race. His judgmentalism is very clear in the way he talks about the Obamas wanting to trade up from their condo -- as if they should have been satisfied with what they have. It's dog-whistling all over the place.
7/2/08, 4:22 PM  
Blogger D. said...
I can remember when financial/political scandals had serious money at their root. Hence "Follow the money" as basic excavation technique. But this story seems picayune even by the standards of nit picking. This isn't a loan obtained last year.

And didn't Countrywide used to be Household Finance?
7/2/08, 4:28 PM  
Anonymous Anonymous said...
As a yellow dog Democrat and a despiser of MSM hacks who write articles like the one described, I'd like to agree; but really, "uppity Negro?" Where the heck did that come from? The article was trying to paint him as an elitist; they would have written the same thing about Edwards' fancy house, or Kerry's, or Gore's or Clinton's. The attack was because Obama is a Democrat, not because he's black. To me, the "racism" rant, where - really -there was no evidence of racism, just sucked all the air out of what was up to then a pretty good point.
7/2/08, 8:28 PM  
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