I agree with you on this. The government has distorted the markets for quite some time by using the tax code to buy votes from people with their own money. A good first step would be to eliminate the deduction for second mortgages. Of course, this is something that the pols really enjoy having so it won't be so easy to get rid of it.
If they are going to eliminate this deduction though, it should be revenue neutral, as noted by one of the earlier posters. Any time actual taxpayers get to keep more of their own hard-earned money out of the clutches of the criminals in Washington, it's a good thing IMO. This proposal is only being floated because the criminal class in DC want more of our money. If they were to increase the personal exemption amount by a few grand along with the elimination of the mortgage deduction, I'd be for it 100% as it would remove the market distorting effects, and yet still allow Americans to keep more of their money as well.
Taxes are what distorts a market, not the other way around.