Monday, June 16, 2008

The Dodd Special

Answering charges that he had received special treatment from Countrywide, a mortage lender, U.S. Sen. Chris Dodd noted in the Hartford Courant that he had shopped around and gotten the same rates available to millions of other Americans.

According to Portfolio, a Conte Nast publication, that is not strictly true. Dodd, chairman of the Banking Committee, “… received better deals than those available to ordinary borrowers. Home-loan customers can reduce their interest rates by paying “points”—one point equals 1 percent of the loan’s value. For V.I.P.'s, Countrywide often waived at least half a point and eliminated fees amounting to hundreds of dollars for underwriting, processing and document preparation. If interest rates fell while a V.I.P. loan was pending, Countrywide provided a free “float-down” to the lower rate, eschewing its usual charge of half a point. Some V.I.P.'s who bought or refinanced investment properties were often given the lower interest rate associated with primary residences.”
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