Realtors, mortgage lenders and homebuilders slammed the Obama administration’s proposal to roll back the itemized deduction rate for wealthy taxpayers. This includes deductions that can be claimed by homeowners on their mortgage interest payments as well as other homeownership-associated expenses. The administration said capping by 28% the itemized deductions for wealthy families and individuals would raise $318 billion in 10 years time. This can result to lower health care costs and expanded health insurance coverage.

The proposed changes, which will only take effect in 2011, will apply only to families with earnings over $250,000 and individuals with earnings of over $200,000. This number is in fact less than 4% of taxpayers in 2006.

The National Association of Realtors however said any changes in the deduction would not only devalue homes but will also hurt middle class families. This can trigger another home value crisis. NAR said it can become a major impediment to the recovery of the country’s real estate market and can fuel a second credit crisis even when the country has not even recovered from the first one.