President Bush, in an apparently clean break from his own tax reform commission, has pronounced the proposal to do away with the deduction for mortgage interest dead. But the Mortgage Bankers Association isn't so sure the idea won't come back -- and with a vengeance.

At a recent political event in Tampa, the President was asked specifically about the plan to convert the mortgage interest write-off to a tax credit. According to the National Association of Realtors' government affairs staff, Mr. Bush assured the audience he would preserve the deduction.

"I don't think you have to worry about the mortgage deduction not being a part of the income-tax law," the nation's chief executive said.

But wait just a darn minute, says Kurt Pfotenhauer, the MBA's chief lobbyist, who is worried someone is going to see all the tax money that isn't collected because of the benefits afforded to housing and go after it when the time comes to pay the freight for the nation's growing budget deficit.

"It's going to come back," Pfotenhauer said of the plan to replace the until-now sacrosanct write off with a credit. "I don't know where else they're going to get the money (to pay for the deficit) and the industry has to figure out what it wants to do about it," he told a industry conference earlier this month.

The housing lobby -- the 1.2 million-member NAR, the MBA, which has 2,200-member firms, and the 225,000-member National Association of Home Builders -- has already unleashed its collective wrath concerning the mortgage interest deduction. But, if Pfotenhauer is on target, they may have pulled the trigger much too soon.

There is, indeed, cause for concern. According to the Joint Committee of Taxation, the deduction will "cost" the Treasury some $72.6 billion because individuals can write off interest on up to $1 million in mortgage indebtedness plus interest on $100,000 in home equity loans. Over the next five years, the panel estimates, the write-off "cost" a total of $434.2 billion.

I put cost in quotes because the benefit really doesn't cost the government anything. What it really represents is lost revenue that's never collected.

But either way, it is a big number. And it's hardly the only write-off available to home owners. We also get to deduct our property taxes and plus interest on loans we take out to purchase vacation properties.

Nevertheless, the politically powerful NAR says it will fight to the death on the issue. And the other housing groups are ready to go to the mat as well -- for a number of reasons.

For one thing, to ensure that the deduction remains the most effective tax incentive to expand home ownership, which is considered a "cornerstone" of the American way of life. It is "the basis for positive community involvement, and a family's first step on the ladder to wealth," NAR says.

Ownership not only builds individual wealth, it also provides tax revenues for local governments and stimulates economic growth in all housing-related industries.

And one more thing: Though the write-off can be for as much as $1.1 million, it is hardly the province of the rich and famous.

Indeed, low and middle-income people also are taking advantage of the mortgage interest deduction. According to IRS tax return data from 2002, a little more than 60 percent of the families who claim the mortgage interest deduction have household incomes between $60,000 and $200,000.

But in addition, about 152,000 of the 36 million returns that utilize the deduction show an adjusted gross income of less than $5,000, according to NAR, which says eliminating it would hurt the very people it was intended to help.

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