Wednesday, July 02, 2008

Obama's mortgage 
Sorry, WaPo and hyenas of the right.

There's nothing that says politicians shouldn't shop around for the best deal. Obama got a below average mortgage rate. But unlike the case with the Countrywide loans, there's no damning paper trail and no formal VIP loan.

Obama's credit seems solid, and I would imagine if he shopped around enough, someone would have offered him those terms at that time.

Sure, the house was probably overpriced in '05. But bankers are not very smart, and they probably knew that. The broker sure would not have been compensated to point that out. He brought in a healthy commission for a super jumbo loan, even without the points.

It's possible that there was some shenanegans going on. But the article does not dig into the underwriting. It does not dig into the relevant FICO scores. It does not dig into the down payment or LTV rates, if any. So this article was not ready for prime time. If there's a story there, the reporter has not gotten it yet.

This critique gets it right, in my view.

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.

There's lots of reasons to distrust and oppose Obama. More every day.

But based on what I know so far, this isn't one of them.

Splash, out


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