Since the interest deduction has been around longer than highly leveraged mortgages have been popular (prior to WWII most mortgages were much less than 50% of property values), we have NOT been without the deduction of mortgage interest before.
The issue of repealing or reducing mortgage interest was brought forth by Bush’s panel on tax overhaul ideas. The idea was practically DOA because of the various lobbies (not just the NAR, but the 70% of people that “own” homes).
I could see the deduction further limited, e.g. capped at a lower maximum, say the same number as the Conforming Loan Limit. This would hurt places like East band West Coast, but might be easy for the rest of the country to buy into since it is only soaking the rich (and predominantly blue) states.
