By definition of being underwater they own no equity of value. When a company goes bankrupt, i.e. when a company's equity value hits zero, i.e. when a company's assets are worth less than its liabilities, shareholders are wiped out. At that point they have no residual claim to the assets.
It doesn't have to be this way; for example in the event of a liquidation all parties with an equity interest could have money distributed to them in proportion to the interest the hold.
I'd rather see a court where the banks are ripped apart for their crimes, but for some reason this never happened.
From the mortgaged home-occupant point of view, the banks have all the power here. Government power is the only thing they fear, but government power is a fairly blunt stick - governments generally don't intervene in individual cases and have to attempt a systematic solution, and so far it has been very ineffective.
In this case the mere threat of government intervention that will actually help consumers may be enough to change bank policies (if not in Richmond, perhaps elsewhere). I see that as a positive thing, and one that will help correct a distortion in the market.
(Often on the basis of race - which is one of the things that makes all the people who blame the Community Reinvestment Act for the mortgage crisis really misguided. All the CRA did was ban redlining, a practice where banks excluded everyone in predominantly-black areas from prime mortgages even if they'd otherwise be eligible, leaving expensive subprime mortgages as their only option.)
Isn't the purpose of government to protect its citizens when a more powerful entity acts against them?
Also why bother obtaining property and wealth when the Government positions itself as the taker of all things whenever it suits them best?
I agree. That's clearly not what is happening here, though.
For one thing, the people who have taken the mortgage out own at least some of the property, and secondly the banks that hold the mortgages are profiting form fraud (ie, the deliberate strategy of selling sub-prime mortgages to people who couldn't afford them). Finally, this isn't what suits [the government] best. It would suit the local government if the problem could be ignored, which is what other jurisdictions (including at the Federal level) are doing.