Is anyone else terrified by the proposed decrease in the mortgage deduction?

First, let me say that I voted for President Obama and am proud to say that. There was little chance I was going to vote for McCain, and his choice of Sarah Palin for a running mate removed all doubt. That said, I'm not thrilled by the President's recent announcement that he plans on reducing the mortgage deduction for individuals making over $250,000 per year.

While I'm not yet in that tax bracket, it will impact me nonetheless. In an already depressed housing market, doing anything that could further weigh down housing prices is borderline insanity. The Bay Area is widely known to be the most expensive metro area in the US. Lots of people here make over $250K per year and still have trouble buying homes. Removing the mortgage deduction which also removes a big incentive to buy a house, will cripple the real estate market in this area - and likely take down a lot of regular folks with it. There are a lot of adjustable rate mortgages in our area, and if home prices are dropping there are going to be a lot of people unable to re-fi in a few years. That means lots of increased mortgage payments and subsequently lots of defaults on loans or complete demolition of savings accounts because they have to sell at lower values to repay the loan. I'm not going to lie. That scares the crap out of me. We're still 3.5 years away from having to re-fi, but the chance of losing 20% to 30% off my condo's value is terrifying. At this point, there's not much I can do besides hope that this economic tsunami is over by then. That's a pretty helpleses feeling. Hopefully the right decisions are made by the right people to avoid what could be a very ugly financial situation in the Bay Area.