Just because you owe more on your mortgage than your home is worth doesn't necessarily mean that you are no longer able to afford your mortgage. For many Americans who bought their homes during the housing boom, little has changed for them financially other than what the appraiser has determined on paper.

What has changed are attitudes, and attitudes can be dangerous.

22.5 percent of U.S. borrowers were in a negative equity position on their homes at the end of Q3, according to a new report from CoreLogic

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That is actually an improvement from Q2, but only because many severely underwater homes went into foreclosure in the quarter, thereby taking them out of the pool.

The authors of the study warn that deteriorating home prices now will likely push the percentage back up in Q4.

The definition of home ownership, at least according to the Census, includes homeowners in a negative equity position. "However, homeowners in negative equity are not likely to behave similarly to homeowners with equity, because their financial interest (the equity) has disappeared and has only a small prospect of returning soon, given price trends," note CoreLogic authors. Underwater borrowers are more likely to behave like renters, which means they're not going to invest much in home improvement. They are also more likely to walk away from their commitment, although not in the waves some had predicted.

So what happens if you take those underwater borrowers out of the homeownership equation? It pushes the homeownership rate down to 56.6 percent, down 10 percentage points from the current reported rate, according to CoreLogic. That rate was over 69 percent during the housing boom.

The Obama Administration has been pushing lenders, Fannie Mae and Freddie Mac to write down principal on underwater mortgages in order to put borrowers back into a positive equity position. Interestingly, the latest push is for borrowers who are current on their mortgages. They lenders argue, why should they give money voluntarily if the loans are still performing? They don't even do that very often when the loans are in trouble!

The answer is: attitudes.

The Administration is clearly concerned that more borrowers will either walk away from their commitments or stop spending money on their homes, which are usually their single largest investment.

Think about how much money you have put into your home over the years.

That lack of consumer spending has already hit the economy hard, and the more borrowers who become effectively renters, the less spending we'll see.

But is the Administration's answer—to give borrowers back a few percentage points of equity on paper—really going to fix that and change owner attitudes? No, especially since so many Americans got used to taking money OUT of their homes to pay for all those lovely upgrades.

The change has to come in real home price appreciation.

That is the only thing that is going to give homeowners that much-needed faith in the market, that confidence to stay where they are and spend, not some measly equity handout that won't amount to much and may just prompt the borrowers to put their house on the already glutted market.

And how do you get home price appreciation?

Get rid of that glut of inventory—especially the foreclosures. I'm back on my investor high horse again. Stop offering handouts to underwater borrowers who don't need them to pay their mortgages and start focusing that same money on eating up empty houses and restoring real home price appreciation through a competitive marketplace. If you help well-vetted, responsible investors buy up the properties and rent them to all the families that lost their homes, you will do a lot more good.

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