More Story Than a Loan Merited

Holden Lewis, a reporter who covers mortgages for Bankrate.com, said, "I realize that the story annoyed some people, but this was a case of an enterprising reporter asking a question that had to be asked and who got it answered thoroughly. I wish I had written the story."

Would he have done anything differently with the story? "I would have stressed that the mortgage rate was normal for someone who has $3 million invested with the brokerage lending the money. The money they invested was more than the mortgage, so they are incredibly good credit risks.''

Guy Cecala, owner of Inside Mortgage Finance newsletters in Bethesda, said the rate was not typical for most lenders to offer good customers. "It certainly raises eyebrows and suggests that Obama got the deal because he was a U.S. senator," he said. "I don't think you will find that Northern Trust handed out any other 5.625 percent, 30-year fixed-rate loans that day or week." Cecala said he had negotiated hard with banks himself for several loans and the most he had ever gotten was an eighth of a percentage point discount.

O'Connell said information about the other loans given that week is not easily available. He said Cecala's statement does not reflect an understanding of Northern Trust's business. "Our core business is wealth management, and mortgages are one of many services we provide to our clients," he said.

Jill Hoogendyk, president and owner of HomePoint Mortgage Co. in Phoenix, said, "It's nothing for one borrower to get a quarter percentage point lower than another borrower on any given day. The industry is set up in such a way that owners have that kind of flexibility. If you have a high-net-worth customer, it makes perfect sense to develop a business relationship that would bring in more business to the bank" by giving a break on a rate. "There's nothing unethical or scary or anything else about it. It's good business. If you take away the fact that he's a U.S. senator, no one would have a problem with that."

I asked the advice of my longtime financial adviser and CPA, Stephen B. Smith of Williams-Keepers in Columbia, Mo., only because Smith is about the most Republican Republican I know when it comes to financial matters. And he's no Obama fan. After reading the article, he said: "No story. It's a very normal mortgage gotten by normal people, not even a sweetheart deal. The story quotes average rates. Averages have a range in this context. The rate charged is probably within the range of others in the sample who had no reason to get a favor. That is not a rate to shock the conscience."

Several other readers brought up the "average" rate. Sarah Zielinski of the District wrote: "When banks are making loans, they are giving people with better credit a better rate and those with worse credit a higher rate. Yes, some people are probably getting special consideration and others, definitely, were getting scammed. But with no other evidence than a slightly better rate for the senator -- who I would not be surprised to discover has a good credit rating -- the article's premise seems unfounded and useless."

The Post has teams of reporters on each candidate. Stephens, who came from the investigative unit, has been assigned to report on Obama; another reporter, Kimberley Kindy, is doing the same on McCain. There are some facts that Stephens did not have for the story, such as Obama's credit score; he said he is continuing to report on the issue.

To Stephens, "given the Countrywide controversy and the Senate's prohibition on accepting gifts of any size, it was a no-brainer to ask the presidential candidates whether they had home loans and whether their lenders had given them discounts. In Obama's case, the answers were yes, he had a million-dollar mortgage, and yes, he received a discount. That was worth getting on the public record."

Readers deserve to know everything pertinent The Post can find out about Barack Obama and John McCain's finances. In that context and in the context of the home mortgage crisis, the story had news value. McCain doesn't have any mortgages, due to his wife's wealth; that's not uncommon for rich people, I'm told.

Still, the story had a negative cast to it. It also lacked the important context that other wealthy and savvy borrowers could have done as well under similar circumstances.

A longer version of this column appears on washingtonpost.com. Deborah Howell can be reached at 202-334-7582 or atombudsman@washpost.com.