Mortgage securities literally finance the provision of mortgages. Without them, mortgage rates for normal borrowers would be much more expensive and credit requirements would be much more stringent. So house prices would very likely go down (significally) but houses might not be (on net) more affordable for normal people in this scenario because the finance would be much much more costly. You could argue those changes would be healthy overall, but it's not as cut and dried as you might hope.
It's a very complex ecosystem. It's very tempting to fall for superficial hot takes, quick fixes etc but actually making significant structural changes would be very challenging without unintentional adverse consequences.
It would absolutely be healthy for USA society if housing prices were deflated by 2-10x.
I don't care if my mortgage rate is 10% instead of 7% if the overall loan is a fraction of the size (i.e. $200k instead of $700k). Maybe I don't even need a mortgage.
It would be horrible for Wall St, which runs Washington from K Street. Many people would not be able to afford their yachts and Aspen resort homes. This is why we working Americans increasingly can't have nice things.
It's a very complex ecosystem. It's very tempting to fall for superficial hot takes, quick fixes etc but actually making significant structural changes would be very challenging without unintentional adverse consequences.