Obama Benefitted from Mortgage Discount

The Washington Post reports that the Obamas received a discounted rate on their personal mortgage from Northern Trust Bank. The loan was on the Obamas' Georgian-style mansion that has been the subject of some controversy for the campaign. Obama received a $1.32 million loan from Northern Trust at a discounted interest rate of 5.625%, approximately three tenths below the average rate for similar loans in the Chicago area at the time. The Post reports that the Obamas paid no extra fees or discount points for receiving the lower rate.

While there are no allegations that the Obamas did anything wrong or received any special treatment due to his status as a U.S. Senator, the revelation could be damaging to the Obama campaign. Last month it was revealed that two prominent Obama backers, Sen. Christopher Dodd (D-CT) and Sen. Kent Conrad (D-ND), and a member of Obama's Vice-Presidential selection committee, Jim Johnson, received special deals from Countrywide Financial on their personal mortgages. Obama has spoken out against Countrywide and labeled the mortgage services giant, "the folks who are responsible for infecting the economy and creating, helping create a home foreclosure crisis."

The Obama campaign issued a statement on the matter saying that the Obamas received the discount from Northern Trust in response to a competitive loan offer from another bank and in anticipation of securing their future financial business. It worked. "The Obamas have since had as much as $3 million invested through Northern Trust," the statement said. Northern Trust vice-president John O'Connell confirmed that interpretation. "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."

Obama's home has been a continuing source of controversy for the campaign. The home purchase and Obama's partnership with convicted Chicago political fixer and financier Tony Rezko first raised eyebrows during the Democratic primary. Obama bought the home for $300,000 less than the asking price while Rezko's wife purchased an adjacent lot for full price. Rezko then sold a portion of the lot to Obama so that he could enlarge his back yard. The complicated transaction raised questions of political dealings between the two. No wrongdoing has been proved. Still, Obama's house purchase refuses to fade into the background.