Remember last week when I explained the types of things that move mortgage rates? We all know I didn’t mention “government takeovers.” Because it never happens. I mean, it hardly ever happens. Okay, it happened last weekend.

Kidding aside, the federal takeover of Fannie Mae and Freddie Mac over the weekend sent mortgage rates plummeting south as the US markets opened on Monday. Rates dropped the most I’ve ever seen in one day in my career. The whole thing is remarkably historic.

If I’m getting a little ahead of myself (too nerdy?), let’s try to backtrack and explain what happened – you know, for the normal non stock-following, chart-graphing, CNN-in-the-background-all-day types out there.

Prior to this weekend, Fannie Mae and Freddie Mac were two publicly owned companies. Both entities work behind-the-scenes in the mortgage industry – buying, packaging and selling groups of home loans to investors on Wall Street.

But you cannot get a mortgage directly from either of them – they only buy from mortgage-originating banks and lenders. The idea is that by buying the loans, they free up money for lenders to write more mortgages and get more Americans into homes. It’s kind of like the circle of life – or the circle of loans.

Like many Americans having trouble selling their homes, ol’ Fannie and Freddie have been having trouble selling their packages of loans. The investors who typically buy from them have become much pickier about what they’ll buy – with good reason – they were worried about increased risk as mortgage defaults rose and home prices fell.

Since the two companies own or insure about $5 trillion in mortgages (nearly half of the nation’s total), the world has been watching them very carefully. Especially the American government. In the opinion of the government leaders, Fannie & Freddie were headed toward failure. Since they’re so big, their failure would have dramatic (likely worldwide) consequences. So Uncle Sam worked the weekend and officially stepped in.

So why are mortgage rates falling now? Think of it like this: Fannie and Freddie are kind of like big insurance companies. Before this announcement, investors worried that Fannie or Freddie might not be around to pay if mortgages they bought went sour. Worried investors = high mortgage rates for consumers. Now that Uncle Sam has stepped in, mortgage bond holders feel much safer. Happy investors = lower mortgage rates for consumers.

But, as they say – you must strike while the iron is hot. The mortgage and housing industry is in uncharted territory. While everyone might feel good one day,  there is no telling what side of the bed we’ll get up on tomorrow. The future is very fuzzy. We only know what is right in front us right this second – mortgage rates are historically low.

Home buyers – you are in a win-win situation. Low home prices, low rates. And to any current homeowner with a rate above 6% – don’t say I didn’t tell you. Now is the time for a mortgage check-up, at the very least. As always, your fine friends here at Quicken Loans have your back – just drop us a line.