I think you're basically back to full reserve banking. Mortgages serve a really good purpose. You pay more in the future for something now.

The kicker is that banks used to have to select people eligible for a mortgage very carefully. If banks had to fully back every loan, we're good. The problem was people would default and the bank would go bust. But also in that case the CEO and all shareholders would be financially responsible. The legal entity known as the corporation also distorts this natural flow.