SAN DIEGO - Real estate executives said during a Tuesday conference that investors need to position themselves to survive a tumultuous economy - which they said already has entered a recession - in part by calling on politicians to rethink their responses to the housing crisis.

The conference's keynote speaker, John Robbins of Wachovia Securities, said proposed legislation that allows bankruptcy judges to alter mortgage terms would add $3,000 to $4,000 in costs to the borrower for every mortgage.

"It says when the United States feels like it, it can negate any contract," said Robbins, managing director for Wachovia. "You'll kill the U.S. mortgage-backed securities market if you do that."

Mortgage-backed securities shift the loan's risk to investors. Without that, the risk of home loans would be added into the cost of borrowing, Robbins said.

Robbins, the immediate past president of the Mortgage Bankers Association, spoke to a group of about 540 businessmen and women involved in commercial real estate at the downtown Marriott Hotel and Marina in a conference hosted by the University of San Diego.

Other speakers at the conference offered advice under the assumption that the economy has already entered a recession, telling the audience that investors needed to get back to the fundamentals of financing and avoid the creative restructuring that has caused billions of dollars in write-downs by many major banks.

One example of bubble-era creative restructuring that speakers blamed a credit meltdown on was collateralized debt obligations - securities that are sometimes backed by subprime loans with the highest credit ratings because of a complicated mathematical model, which was used, turned out to be inaccurate.

"Some guy put some numbers into a computer model and reverse-engineered it so it fit what the boss wanted to hear," said Burland East, managing principal for Silver Portal Capital. "It was a collaboration of stupidity."

East said the fallout from the subprime mortgages gone bad and the housing crisis will take a stark toll on real estate; he expects 75 percent of homebuilders to enter Chapter 11 bankruptcy and land will sell for 10 to 20 cents on the dollar.

Speakers at the conference said mortgages currently are more difficult to get, take longer to process and the collateralized debt obligation market has evaporated.

"One anecdote I've heard is, 'We're doing the deals that are low-hanging fruit and anything that's not, is put at the back of the line. And if we don't get to them, we don't care,'" said Janice Sears, managing director for Bank of America.

East said he thinks the housing market will hit its lowest point in the third quarter of this year and then start to recover. As a cause for the housing depression, East pointed to younger financial workers who failed to identify and avoid the bubble.

"Every single cycle is the same. It's like a dog that gets into the trash can. You scold it and it doesn't go into the trash can for 15 minutes," East said. "But then it forgets and goes right back into the trash can. That's the market."

- Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.