President Obama has grabbed what the real estate industry considers the sacred cow of tax reform: mortgage-interest deductions.

Among the many tax increases on the affluent laid out in his budget proposal Thursday was a plan to reduce the itemized deduction rate for families with incomes over $250,000 to 28 percent, down from 33 or 35 percent. That would amount to as much as to $70 less for every $1,000 in mortgage-interest deductions.

The National Association of Realtors quickly responded with a strongly worded letter to the president, arguing the change could trigger yet another crisis in home values, by reducing spending, increasing foreclosures and expanding job losses. Mary Trupo, the Realtor group’s public issues director, said the impact would be particularly widespread in expensive housing markets like the Bay Area, where a large portion of home buyers are well-to-do.

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