1115.org

Even though reality may be different for many of us, there is a make-believe marketing world where, when you’re shopping for a mortgage, lenders compete and you-the-borrower win.

Some venerable Senators were recently found living in this make-believe world. Now it turns out that Barack Obama also benefited from unusual competition amongst lenders:

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.
[…]
In Obama’s case, he received a lower rate than the average offered at the time in Chicago for similarly structured jumbo loans.
[…]
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.

Northern Trust didn’t issue as clear and ringing a statement as the Obama campaign would have liked:

“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.”

So, spokesmen for the Obama campaign seem to have appointed themselves official spokesmen for Northern Trust too:

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.”

It is, of course, not clear that there was actually any wrongdoing on Obama’s part, or any unethical behavior.

And there will be large numbers of people arguing vehemently on both sides of this controversy.

But I’m sure the Obama campaign is none too thrilled about this story surfacing now, when some of his once ardent followers are still smarting from his unceremonious cave-in on the FISA bill.

They can’t be too thrilled either to see Obama’s name paired again in news stories with Tony Rezko’s:

Obama’s house purchase has been a source of 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.