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FiveThirtyEight

Politics

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.

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