While the recent $25 billion agreement between many states including California
and the five banks that engaged in flawed real estate foreclosure practices,
sounds great, it unfortunately may never go to Californians.

Apparently, Fannie Mae and Freddie Mac who guarantee the mortgages are not
participants to the settlements.   The two organizations hold more than 3 million
of the nation’s 11 million underwater mortgages.  Since they are banking the loans,
 they are the ones who will take a loss of the mortgage if

It isn’t paid back in full.  Thus, lowering the amount of money owned on a loan
would result in at least short-term loss for Fannie and Freddie as well as to any
other investors in mortgages that are reduced.

The reluctance by these tow and others to take on principal reduction is partly
why the Obama Administration’s mortgage modification programs have been
ineffective. Apparently, some of the monies will go to states while some will go
to an estimated 750,000 homeowners who were foreclosed upon.   However, if you
lost your home, you may receive up to $2,000.  Some consolation given that it
will be taxable.