Wow, we just finished, and it worked perfectly. We even had a housing bubble!! We each played a couple people to simulate more players. At the beginning, property was extremely expensive, as people spent their starting money (savings), and racked up big loans, especially to get and keep people from getting monopolies. But then, as the first player defaulted and there were auctions for his property, housing prices hit the dirt, because everyone else was too much in debt to pay.
Yeah, eventually everyone defaulted and the banker used the tidy sum of cash he collected from everyone's interest to clean up.
The one modification I would make is that the banker should not be a player, with a token. There should be a person, who plays the banker, but all he does is decide what loans to give out, keep track of people's payments, and conduct the auctions. Having a banker as a player adds too much variance - the banker could just have bad luck a couple times and ruin the illustration.
Also, the banker should be able to set interest rates for each loan (based on risk), and decide how much credit he will extend to what players on which property.