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

The now government-owned mortgage giant reported that its quarterly survey of consumer sentiment, the National Housing Survey, found that 26% of survey respondents reported being underwater on their current mortgage loans – owing more on the loan than the property is worth – an increase of 3% from the first-quarter survey.

Further the survey found that homeowners who reported being underwater on their mortgages, even if they were current on the loans, experienced greater degrees of stress about their finances and their debts.

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

“Consumers are more cautious due to concerns over employment and household finances,” said Doug Duncan, vice president and chief economist of Fannie Mae. “As a result, consumer spending, which accounts for about 70% of the economy, ground to a halt in the second quarter. Consumers are more hesitant to take on additional financial commitments, and a setback to confidence means a setback to the recovery of the housing market.”