Thoughts for future home financing

Freddie Mac's chief executive officer Ed Haldeman has everyone tweeting furiously this morning after he blogged "six key principles for the future of the housing market."

Haldeman takes pains to point out that it isn't Freddie Mac's job to "advocate any particular position in the discussions about our future," but to provide perspective.

What he suggests appears not to be groundbreaking, but it does provide some ideas in a list worth noting.

Private capital, rather than government, should represent a far greater portion of the market than it does today. Government has been trying to ease off since coming to the market's rescue three years back, but investors remain wary.

"We need a residential mortgage market – including a rental market – that is liquid." The easier it is to convert real estate to cash, the more money that can used for new mortgages.

"We need a residential mortage market that is stable." Enough said. You need to keep the housing industry on an even keel, even when the rest of the economy is tanking.

"We must maintain the widespread availability of a core set of sound, sustainable mortgage products – currently including long-term fixed rate mortgages – even as markets evolve and products change." The so-called "exotic" mortgages and lending more than borrowers' ability to pay have produced record foreclosures.

"Lenders of all types and sizes should have equal access to the secondary market." That would likely create competition and reduce prices.

"Once policy decisions have been made, the transition to a new structure must be gradual and carefully monitored."

Haldeman believes these are sound housing market principles "that can command broad consensus over time."