Mortgage Tax Break: What If It Goes Away?

Realtors have gotten used to bad news over the last few years -- but the chatter about eliminating the mortgage tax deduction at last week's National Association of Realtors conference in New Orleans must have rattled them to their bones.

Thomas Hoenig of the Federal Reserve Bank of Kansas City made the suggestion during a speech that suggested interest rates need to rise before the housing market could fully recover. NAR economist Lawrence Yun later expressed concern that an elimination of the mortgage tax deduction, a cornerstone of American homeownership, would cause home prices to drop another 15 percent.

"Housing is critical to the economy," he said. "In my view, [losing the deduction] will surely put us in a broader economic recession."

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