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What delinquent borrowers are thinking

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Once a borrower becomes delinquent on his or her mortgage, that person develops a negative attitude not only about paying the mortgage and his or her general finances, but also about the whole idea of homeownership -- significantly more negative than homeowners who are underwater on their mortgages, but are still current in their payments.

That's according to a Fannie Mae study released this week.

"Though both underwater borrowers and those experiencing home-value declines have lost equity in their homes, delinquent borrowers are more likely to say it is OK to stop paying their mortgage if a person's house is now worth less than what they owe on it," wrote Doug Duncan, chief economist of Fannie Mae, in a commentary accompanying the results.

Twenty-three percent of delinquent borrowers said it's OK to stop paying a mortgage if the home is worth less than what they owe, compared with 7% of those who are underwater on their mortgages and 11% who said their home values had decreased. The survey was conducted in the first quarter, and polled nearly 3,500 Americans, 403 of which were delinquent on their mortgages.

Delinquent borrowers are also less likely to feel they have sufficient savings, and are more likely to say that they will rent their next home, according to the survey results.

This information can help policy makers and the lending industry fine-tune their approaches toward addressing the challenges of these borrowers, Duncan said.

Read more in this week's Real Estate pages, including the findings from Harvard University's annual State of the Nation's Housing report as well as a Realty Q&A about foreclosure reviews.

Fannie Mae research has consistently found that people typically buy a home for other than financial reasons, including their desire to live in the best environment for their children and their personal security.

But even those benefits seem to lose their luster for delinquent borrowers, as they inch toward the possible loss of their home, Duncan said.

--, Real Estate writer

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