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Connecticut Senator Chris Dodd is addressing criticism that he knowingly accepted favorable terms on his two home mortgages. None of the talking heads revealed the terms, but the NY Times published the following:

Mr. Dodd said that he was a longtime customer of Countrywide and refinanced the mortgages on his homes in 2003 after shopping for the best deal. Ultimately, he obtained a five-year adjustable rate loan at 4.25 percent for his house in Washington and a 10-year adjustable rate loan at 4.5 percent for his house in East Haddam, Conn.

Rates were pretty low in 2003. I used to have the software to look up Countrywide’s rate sheet archive, but I no longer do. Here is what I know. Adjustable loans have lower introductory rates than 30 year fixed. We refinanced our home in December 2003 with a 3 year adjustable at 4.25%. A 5 year adjustable would have been higher, and a 10 year higher still. There is a slew of commentary about this, but few facts on the actual details of the mortgages. 

 Mortgage News Daily has some details.

The three men were alleged to be participants in a special program for “friends” of Mozilo that awarded discounts and waived fees for those friends. Portfolio, citing internal Countrywide documents, said that the company made two loans to Dodd in 2003, shaving three-eights of a point off of a $506,000 loan to refinance a townhouse in Washington. The discount saved Dodd about $2,000 in interest payment. A second loan to refinance a house in Connecticut was written at a quarter point off the going rate, saving the Senator about $700 a year.

Since anyone can pay down their rate about a quarter of a percentage point by paying a point up front, Dodd was not charged about $7500 for the Washington Townhouse, and perhaps paid $2-3000 less for his Connecticut home. That is roughly $10,000 which would have been rolled into the closing costs. He saved roughly $200 per month on his combined payments.

Is this a horrible scandal? No. Niether Dodd nor Countrywide grafted millions from the public in this deal, nor are there millions in unmarked bills in the senator’s basement freezer. Countrywide probably just wholesaled the loans, which, in industry terms, means that Mr. Dodd got the “par” rate at no profit or loss to the company.  

How aware the Senator was of the deal he was getting is debatable. Despite the popular myth that democrats are more like us working stiffs, Dodd is the son of a US senator and has been in Washington since 1975. He probably lives in lala land about the mundane details of life. That said, Washington is  tough town and he has won the war of attrition through eight elections and over 30 years in office. A guy on the senate banking committee ought to know how to cover his tush. This isn’t a free bottle of wine at a restaurant on his anniversary.

So, for about $10,000 which could have been rolled into the loans for a total of about $40 per month, Senator Chris Dodd is very embarrassed. 

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