Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

There's a myth legend in certain circles called the Sports Illustrated Cover Jinx.  It goes like this:

• You're a story worth covering
• Sports Illustrated makes you its cover story
• The jinx begins and you fall from grace

If you're under the age of 30, you probably know this jinx better as the Madden Curse. 

Players featured on the popular video game's cover often suffer through injury- and/or performance-plagued seasons after appearing on the game's packaging.

Regular readers here may be wondering if The Mortgage Reports has its own sort of jinx going. The author is certainly starting to think so.

Let's look back at the last six weeks -- you can decide for yourself.

 

The first known case of The Jinx started February 22, 2008.

At the time, I was advising clients on the relative benefits of a 5-year, adjustable-rate mortgage versus a 30-year, fixed-rate mortgage. 

The graph I used spoke volumes, clearly illustrating how homeowners could save $250 monthly on the 1 percent spread between the two products.

Within 15 days of posting, though, conforming mortgage rates for the 5-year ARM rose by 1.250% and surpassed the holding-steady rates offered for 30-year fixed products.

The first time something jinx-like happens, you dismiss it to chance.

The next known case of the jinx started February 27, 2008.  That day, we talked about lender-paid mortgage insurance and how it was the clear alternative to traditional PMI for 100% home loans.

Within 15 days of posting, though, 100% home loans were abandoned by every mortgage insurance company in America and, subsequently, 100% home loans are no longer available to American homeowners.  It's not that the banks won't do it, it's that the insurers won't insure it.

The second time something jinx-like happens, you take notice.  But then came the third instance. 

On March 5, 2008, I wrote about the 5 Things That Don't Control Mortgage Rates, noting that the only controller of mortgage rates is the price of mortgage bonds.

I must have angered the Mortgage Gods with those comments because the very next day, Fannie Mae levied brand-new, price adjustments on all conforming loans, proving that mortgage rates come from two places:

1. The price of mortgage bonds
2. The fancy of Fannie Mae

This jinx thing -- it's starting to sound convincing, isn't it?  Well, it continues!

Next, on March 10, 2008, I talked about the 1-year ARM and how it could be an effective mortgage planning tool for soon-to-be homesellers. 

The product is not without risks, of course, but with rates in the 3.500% range, the 1-year ARM was a terrific fit for a huge group of homeowners in this country.

Shortly after we featured it, the secondary market for  1-year ARMs vanished in an instant.  One mortgage lender popped rates on the 1-year ARM from 3.500% to 10.500% overnight. 

That's seven percent in 12 hours. 

Now, to be fair, not every topic we've covered in the last six weeks has faced the black magic.  There are two obvious examples that show that The Jinx doesn't impact all parts of the economy equally.

1. The U.S. dollar (March 3, 2008): The dollar has continued it's record slide, delighting foreign national real estate investors whose U.S.-based homes continue to get cheaper.

2. Crude Oil (March 11, 2008): Crude briefly touched $110 per barrel before settling down a bit, but inflation numbers are thus far unimpacted.  Inflation readings are showing signs of softness.

Exceptions to a jinx don't diminish the jinx's power, however.  It just means that exceptions exist and we have to respect them. 

This is consistent with the Real World; Tiger Woods and Michael Jordan have appeared on 72 Sports Illustrated covers between them.

But whether The Mortgage Reports Jinx is truly a jinx or just a function of fast-changing mortgage markets, it teaches us an important lesson: When a door opens for you today, you must to be ready to step through it. 

Tomorrow, the door may be closed.

---

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.