The market for U.S. housing continues to be smothered by theweight of troubled real estate loans and choked on low consumerexpectations of being able to get a home loan, according to arecent survey from Fannie Mae.

The now government-owned mortgage giant reported that itsquarterly survey of consumer sentiment, the National HousingSurvey, found that 26% of survey respondents reported beingunderwater on their current mortgage loans – owing more on the loanthan the property is worth – an increase of 3% from thefirst-quarter survey.

Further the survey found that homeowners who reported beingunderwater on their mortgages, even if they were current on theloans, experienced greater degrees of stress about their financesand their debts.

Perhaps the biggest challenge for credit union mortgagemarketers, fully 53% of the consumers surveyed said that it wouldbe very difficult for them to get a mortgage today and thatpercentage climbed to 71% among renters.

“Consumers are more cautious due to concerns over employment andhousehold finances,” said Doug Duncan, vice president and chiefeconomist of Fannie Mae. “As a result, consumer spending, whichaccounts for about 70% of the economy, ground to a halt in thesecond quarter. Consumers are more hesitant to take on additionalfinancial commitments, and a setback to confidence means a setbackto the recovery of the housing market.”