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Ethics Complaints Filed Over Obama Mortgage Rate

POSTED: 05:57 PM ET, 07/ 9/2008 by Derek Kravitz

The conservative public-interest group Judicial Watch today filed ethics complaints alleging that Sen. Barack Obama (D-Ill.), the presumptive Democratic presidential nominee, broke the rules when he accepted a discounted deal on a 2005 mortgage loan, as first reported last week by The Post.

"Americans ought to be suspicious when a United States Senator such as Barack Obama, obtains a sweetheart mortgage deal," Judicial Watch President Tom Fitton said in a statement. "We have serious concerns that Senator Obama's mortgage may have violated the law and Senate ethics rules." The group filed separate complaints with the Federal Election Commission and the U.S. Senate Ethics Committee.

The Post's Joe Stephens reported that in 2005, Obama, then a freshman Democratic senator, bought a $1.65 million restored Georgian mansion in an upscale Chicago neighborhood. To finance the purchase, he secured the loan, for $1.32 million, which was locked in at 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." Compared to the average rate in Chicago at the time for a jumbo mortgage, Obama's deal could have saved him more than $300 per month, Stephens reported.

The article quoted an Obama campaign spokesman as saying Obama received a discount from the base rate at the bank, not because he was a senator, but because he had an offer from a competing bank and he brought other business to the institution.

"It appears that due to his position as a United States Senator, Barack Obama received improper special treatment from Northern Trust resulting in an illicit 'gift' which has a value of almost $125,000 in interest savings," Judicial Watch wrote in its U.S. Senate ethics complaint. In its FEC complaint, the group called for an investigation into whether the special mortgage is a "disguised and illegal corporate campaign contribution" to Obama.

In March, the Obama campaign posted documents related to the home loan on its Web site.

By Derek Kravitz |  July 9, 2008; 5:57 PM ET
Previous: Nigerian Press: Pfizer Drug Settlement Fails | Next: LA Times: Gifts to Nonprofits Often Don't Get There


Please email us to report offensive comments.

Obama is just another crooked politician and it is becoming very evident. Nothing special here. He's the premeditated candidate "selected" by a kangaroo court DNC.

Well we've seen the "change" already. It's Obama changing his already nebulous positions to suit his political ambitions.

Wake up superdelegates! Are you going to allow this hijacking of an election? This crack in the foundation of our democracy of not counting every vote?

The DNC instead of going after Bush the Emperor has borrowed the Republican playbook and is propping up one of their own.

"Just Say No Deal". No Obama. PUMA!

Posted by: sjtruth | July 9, 2008 7:56 PM

I hope it has legs. But, from what I've seen of his shady dealings, that's just the tip of the proverbial iceberg.

Posted by: ytba | July 9, 2008 8:03 PM

"Change we can believe in," if you can call $125,00 change. Seems he can change his views on any issue at any time also. He doesn't lie however, he is just "Very Flexible" in the words of Mara Liasson on Fox News 6/26/08.

Posted by: weirdone | July 9, 2008 8:06 PM

An 80% super jumbo at 5.625%? I don't think so. At that time loans over $1mm were maxed out at 75% loan to value, with super jumbo at par around 6.75%. The buy down was probably around 4% (points) of $1,350,000, so somone paid his $54,000.
Nothing out of the normal. A payoff for protection from a potential regulator or helper.

Posted by: Mortgage Broker | July 9, 2008 8:12 PM

About time someone said something about Obama's shady dealings.

He lies and lies to us and the media never really calls him on it.

For example, he claims that Wright was no longer the man he knew after Wright's racist rant... in his own book, he describes the first Wright sermon he ever heard (20 years ago!!!) which blamed white people for the world's ills.

Posted by: Lisa | July 9, 2008 8:56 PM

People obviously are oblivious to the fact that numerous loans are granted on such favorable terms. You don't have to be a senator. Just have bucks and be a good risk candidate (and yes, often sending business or being a "good" customer). Having a slew of royalties in the pipeline obviously doesn't hurt. I've known of celebrities who get such perks and I would gather many many CEOs. Has zero to do with political influence and I wouldn't be surprised if scores of other senators have similar great deals (indeed far better ones. 5.6 is hardly so amazing. I've heard of 2.9). Simply business and special low risk circumstances and indeed some negotiating in a competitive market for solid candidates. Get over it people. What a shameful tactic on the part of this organization. Must be some PAC.

Posted by: smithie | July 9, 2008 10:13 PM

Excuse me, try again. The rate back in 2005 was 5.75%. The difference is a big 13.5 BASIS POINTS or just over .1% which is nothing, just like these attempts to vilify the democrat candidate for president, republicans have no shame. Since when did it become a bad thing to avail oneself of a good deal? Now if we were talking 30 year fixed at 4.5% or 3.75%, that would be different (which could have been obtained with a hefty buy down). I wonder if "Judicial Watch" even knows how the mortgage lending industry works?

Posted by: Sonia Martinez | July 10, 2008 12:16 AM

Another way of putting it would be - as a crook, Obama is in good company. Or - there are lots of people who are's the American way.

Posted by: daiseymae | July 10, 2008 1:55 AM

The terms of this loan was public information three years ago and this conservative web judicial watch, making a big deal of this while Obama is now running for President. I got a "jumbo loan in July of 2005 at a rate of 5.7%. by getting competing bids from different lenders. My income was much less than Obama but if was getting the millions from royalties on books I was able to sell as well a his I am sure I could have done 5/100 of one percent better than me at the time. This is 100% political

Posted by: Glen P. | July 10, 2008 1:59 AM

Just a moment. Mr. Obama sat on a couple of boards that did investments with this bank. If they can tie this in with the "sweet deal" that is a question of ethics.

Mr. Obama's past is catching up with him. If you hold a seat where there is union money to invest, and you favor a bank to do that investing and then come off with a great mortgage, that is ethical? And, that bank has donated to your campaign fund? Think again.

Posted by: Kbentleyis | July 10, 2008 10:14 AM

I have been a mortgage broker for the past 5 years. These things happen ALL the time. It doesn't matter if you are a senator, athlete, or a regular Joe. His loan was a "safe" deal. His annual income more than 10 X's his mortgage. In 2005, 80% ltv jumbos were out there at extremely low rates.

Posted by: Spike | July 10, 2008 10:26 AM

Northern Trust is my top client in my profession... They deal with A-list borrower's 95% of the time... even better... they are not value pushers when I'm appraising these properties (one of the very few clients that say "it is what it is"). Congrats to Obama for getting a great deal. And Northern Trust... congrats on securing his loan. I highly doubt you'll be gracing the Implode-O-Meter list of the fallen.

Posted by: Terry | July 10, 2008 12:26 PM

The Post has done a very sloppy job of explaining just how ridiculously good a deal Obama got. The post continues to insist on saying the average rate was just under 6% at the time Obama received a 5.625%. That isn't entirely accurate. The average rate on a loan up to 850k was just under 6%. Obama's loan was 1.32 million. That means he received .375% lower on a loan that was more risky. The Post didn't compare his loan to other loans of his size because there weren't enough to make a market. That means such loans were especially risky. That means the rate was likely between 6.5%-7% at the time. Obama received a boondoggle and now the question is what was in it for Northern Trust. Here is how I summarized it...

Posted by: Mike Volpe | July 10, 2008 12:47 PM

let's all tell the truth- the media is finally seeing past the spell they were in- Great Reporting- finally people realize he is not the Lord.

Posted by: Baez | July 10, 2008 1:15 PM

I am glad that someone like JW is stepping up to the plate. I can assure from personal exerience that this is just the tip of the iceberg. Having been employed by the now conveinently dismantled Aegis Contract Services(Just a carpenter foreman folks) who partnered with Rezko on several projects, I can attest to deliberate collusion to defraud the taxpayers.

I have only given my blog name as here in Chicago there is a history(& not ancient either)of unfortunate circumstances coming to those that don't exercise caution. I still need to get permits and pass inspections and such, sorry folks but that is just the way it is.

Posted by: Archimedes, give me a place to stand... | July 10, 2008 2:04 PM

It's high time the media did a little digging into Mr Obama's baggage!! How on earth did this man get this far? He's inexperienced! He's crooked! He's arrogant! And, he has more ties with unscrupulous people of power, hate and divisiveness than anyone I can think of..... PLEASE America!!! We deserve better than this!!!

Posted by: DonnaD | July 10, 2008 2:04 PM

I am a mortgage banker in the industry for over (6) years currently working for a major bank. Judicial Watch and The Post's Joe Stephens don't know what the hell they are talking about. People go to LendingTree.COM all the time looking for competing offers from banks. Banks to compete and are willing to offer concessions to win business from another bank because they know potentially the client is a source of more business such as checking, savings, investment accounts, credit cards etc. Banks make money from these other accounts so they are willing to bit the bullet on the mortgages. This happens all the time so I can assure you that OBAMA is not the first or will he be the last to get a better offer from a bank. Good deals are not just given to politicians or high profile clients but also to every day consumers who just shop arround for the best deal.

Posted by: AK | July 10, 2008 2:39 PM

Maybe I did not shop around enough in 2005 when I purchased my home but my rate was slightly above what the Obama's paid for a much lower mortgage amount. Glad someone is checking although it may fan out to be nothing.

Crooked is what crooked is and the Senator sits in that seat.

Posted by: sunshine | July 10, 2008 3:54 PM

@Lisa | July 9, 2008 8:56 PM

" his own book, he describes the first Wright sermon he ever heard (20 years ago!!!) which blamed white people for the world's ills."

Well, you see Lisa, the Shocking truth is that just isn't the Obama he thought he knew.

Posted by: Anonymous | July 10, 2008 4:06 PM

Some pretty ridiculous comments. I have worked in the mortgage industry for 30 years and depending on when Senator Obama took out the loan and depending on what other banking services he opened with the bank, he could have indeed received a rate that low. The bank likely portfolio'ed the deal and he probably brought in his depository accounts, etc. with him.

The people who are saying he got a deal someone else could not have gotten are mistaken by just not knowing how to get a great rate works.

Posted by: TEHelms | July 10, 2008 4:17 PM

The Crowne Family are Obama contributors and control Northern Trust as well as the company that owned Maytag, which closed their Illinois plant and moved to Mexico. Obama likes to talk about those Maytag jobs that left but never asked the owner about saving the jobs, even with their connections. Obama and William Ayers did business with Northern trust on behalf of the Woods Foundation, where Ayers and Obama were on the Board for years.

Posted by: Jim Aaron | July 10, 2008 4:48 PM

I also received a refinanced loan for $425,000 in 2005 on my house in Seattle at a rate better than that: 5.45% for 30 years. I have a good credit rating but not near the income that the Obama's have. I don't think it smells funny. When someone had a good credit rating and good income, those were the going rates back then.

Posted by: BBro | July 10, 2008 5:08 PM

From what the documents supposedly show he was earning less then, he did not pay any origination or fees that would normally be paid to lower the interest rate. Since by the above comment "because he had an offer from a competing bank and he brought other business to the institution" he should be able to prove that. However, if he did not pay any fees to buy down the interest at that period of time when it was higher, it is still preferential treatment.

Posted by: Tiger | July 10, 2008 9:48 PM

Sorry folks, but the "where there is smoke there is fire" crowd is absolutely wrong that he couldn't have gotten this deal at that time. I originated several loans during the same time frame that had similiar rates, terms, and with 0 pts.

Posted by: J.Broughton | July 11, 2008 3:59 PM

Note the Washington Post's own ombudsman has also criticized the original story as negative in tone and found that the financial experts she consulted felt there was no story there. Her title for her piece was "More Story than a Loan Merited." She did not respond earlier as she was away.

For details see

Posted by: Fairfax Voter | July 12, 2008 10:55 PM

Yet another illustration of how the self-proclaimed "Ethics King" is anything but. The fact is it was Obama himself who laid down the terms of this race by his message of Change and calls for transparency -- progressives have been saying all along that Obama is not the form of the message he proclaims and will lose when the truth of this comes out. He is not the transparent candidate he claims to be and even tried to keep this story out of the media throughout his campaign when it came out in Chicago. When he refused to invite the original Chicago reporter who uncovered the Rezko house issue to his "open press conference," it was so obvious how he was not for transparency when it came to himself but rather another who would manipulate his message. I realized that this candidate is nothing but fluff.

Posted by: chklaver | July 15, 2008 12:22 PM

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