President Obama and Republican presidential nominee Mitt Romney have put their support behind the deduction. The real estate industry was able to apply enough pressure on the GOP to make it a last-minute entry into their platform right before the convention in Tampa, Fla., last month.
Mark Zandi, chief economist of Moody's Analytics, conceded he was wading into dangerous waters by suggesting that the deduction be removed for second homes and more expensive residences and then eventually phased out, and that the additional revenue could help fix the nation's fiscal situation.
"It doesn't help as much as the industry probably thinks it does and it jacks up house prices in some markets by 5 to 10 percent," Zandi said.
Just cutting the $100 billion per year cost by half could bolster the nation's finances, he said, which in turn would help the industry by keeping interest rates low.
But Howard countered that the market has suffered enough and needs the ability to attract buyers, and that removing the deduction would make the thought of a purchase unpalatable.
"We want consumers to get back in the market housing sector," he said. "The housing market must fully recover for economy to fully recover."
Zandi said he wasn't calling for a change within the next few years but for the next 10 to 15 years.
"You can ask almost any economist whether [a mortgage interest deduction] is beneficial and you won't find many who say yes," he said.
If he were to counsel the industry, Zandi said, he'd suggest that they lead the way in giving up something that is obviously important to them and that other groups will follow.
In that case, "good things will happen and we need someone to lead."