It took more than four months, but something finally beat out the Vicki Iseman story for its sheer chutzpah and utter irresponsibility.
The culprit is this piece from the Washington Post, which alleges that Barack Obama received a "discount" on his 30-year home mortgage when he purchased his house in Hyde Park in 2005. Obama's mortgage rate was 5.625 percent; the Washington Post cites databases stating that the average rate on comparable properties was 5.93 percent.
So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from myFICO.com, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount.
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.
And, yes, I apologize for being a little off-subject (and running three media-bashing pieces in a row), but one of the things that ties together my work over here and my work at Baseball Prospectus is that I want the media to be smarter and more accountable when they cite statistical information, be it mortgage rates or polling numbers or batting averages. This article was neither smart nor accountable. It's the equivalent of noting that Alex Rodriguez has a batting average 40 points better than the league average, and using that to infer that the umpires were biased in his favor.
Wednesday, July 2, 2008
Irresponsible Journalism Alert
-- Nate Silver at 8:17 AM
Labels: controversy, msm
125 comments
That really is a hatchet job of an article.
You're so right, Nate, the umps are totally biased in ARod's favor.
Good catch, Nate. I just finished reading the article in question and came away with an identical impression. In view of the fact that the Obama family represented an unusually good credit risk, it's hardly surprising that they should have received a "better than average" mortgage rate.
How does the reporter think an "average" comes about?
P.S. This example supports a comment I just added on another thread about the challenges of teaching statistical methods to journalism undergraduates.
This article severely damaged my respect for the WaPo. I don't understand their logic of publishing it. It shows deep ignorance about mortgages that every homeowner should understand.
The only justification for this article is to provide "balance" for the articles savaging the McCains for not paying property tax on one of their 9 homes. That's not corruption, just deeply irresponsible.
Ugh. I manage the website for a small conservative government watchdog group. I had just read the first two paragraphs of this when my boss came in and said, "There's an article in the WaPo about how Obama got a sweetheart deal for a loan for his house, can you post a link on our website?" It's a good thing I wasn't drinking anything at the time.
The dirty bastards of the MSM have NO shame, they completely ignore McCain failing to pay taxes on his beachfront property home and try to spin this as something negative?
The stain of Iraq will never leave them.
it reminds me of the British member of parliament who stood up and said "it is a disgrace that 50% of our children are below average"
This is an incredibly stupid article. But I hope McCain hammers Obama on it though. Maybe then someone will discuss the McCain's credit problems. Ugh.
Can we just have the election now and get this over with?
Apparently, 5.625% was closer to the average back in 2005. (Extending the baseball analogies, it's sort of like saying Chick Hafey was a great player because he hit .330 when he did it in a time when lots and lots of players hit .320.)
"And, yes, I apologize for being a little off-subject".
More "off-subject" analysis, please.
New Quinni poll http://www.quinnipiac.edu/x1296.xml?ReleaseID=1190
Obama is kicking McCain's ass in CT. So much for the 3 pt Rasmussen poll. Checkout the breakdown-every category has a huge Obama lead.
Love how McCain has it as a swing it is more Obama by recent polling than MA which was one point less at 20.
Ohh- I guess this reconfirms that people now really hate Liebermann and that McCains notion he helps him compete in CT are insanely wrong.
Next election Liebermann has no chance and he should be kicked out of the party caucus after they get a clear majority- especially since they won't get to 60 this time even with him.
jeez WaPo owes an apology
what a piece of crap that article was
i honestly have absolutely no faith in the "media" anymore
i got a 4.75% rate on one of my properties, are they gonna target me next?
Another example of the 3 kinds of lies according to Mark Twain, “Lies, damn lies and statistics!”
Obama’s mortgage rate was better than the AVERAGE. Which means half of Northern Trust’s customers also received better than average loan rates.
This story would only mean something if others with the same risk factors and income couldn’t receive that rate, which there is no indication of. In fact, Northern Trust says it was typical for people in Obama’s category.
Just another example of some idiot using statistics to misrepresent a situation.
This is clearly the type of article where the reporters were directed to find some dirt on Obama's mortgage, didn't really find any substance, and published it anyways. And so they filled up about 80% of the text space with discussion about Countrywide and other mortgage scandals, without saying at all how that might relate to Obama's situation. Not even worthy of being in a third-rate college newspaper. Sad.
The cross-tabs on that poll are encouraging (single-digit defection rates for Obama, 16% for McCain). And given that Lieberman's been polling lower and lower in CT, I'm wondering how anyone in the McCain camp ever thought that he'd help.
I got the exact same rate one month after Obama. I was a first-time homebuyer -- and a graduate student, to boot. Is Obama the reason I got such a sweet deal? I think the Post has a follow-up on its hands.
can we say, b.s.?
The story is moneybags Cindy McCain.
Unbelievable.
http://www.politico.com/news/stories/0708/11477.html
Obama also put down a good 18% down payment on the loan. And this delightful sentence smashes their own argument apart: "the Obamas' $1.32 million loan was so large that few comparables are available."
Few comparisons are available...but it is unreasonable that they should be below the average.
The ombudsman for the Post is Deborah Howell. HowellDC@washpost.com
Thanks for the pointer, Nate. I commented on it.
Off Topic: I am interested in helping the progressive Democrat, Rob Hubler, who is running against the really loathesome Steve King (R-IA 5). (King is the dimwit who observed that Al Qaeda would be dancing in the streets if Obama won, among his many embarassing utterances.)
Are you aware of any polling that breaks Iowa down by congressional district? I heard there was a DM Register poll in February that showed Obama leading McCain, but since then? Thanks, if you have something.