- Existing freeholders won’t object to the bailout as it will be seen as protecting the equity in their homes.

- Renters won’t object, not only because they tend not to be well organized politically, but also because at a visceral level they think someone else will pay for it.

If either group was really concerned about fiscal distortions related to home finance, why does the mortgage interest deduction still exist?

In the context of your post I do know what you mean. I’m sure you are aware of the following, but please indulge me:

No-one owns any property free and clear, period.

If you stop paying the fee to live in “your” house (aka property tax) you will no longer be allowed to stay there.

So who really owns the house?

P.S. Nice blog post.