It's a controversy that has been brewing in several states: Some state leaders are using funds from the $25 billion mortgage servicing settlement to fill gaps in their budgets, Bloomberg reported. 

In fact, some of the hardest hit foreclosure states are using the funds to support other state budget expenses while helping underwater homeowners seems to be an afterthought.

The movement of settlement funds to other matters has real estate analysts wondering if the intent of the settlement is being killed by governments with pre-existing budget issues.

Some housing analysts suggest a failure to use the funds to assist troubled real estate markets will only delay local recoveries, according to Bloomberg.

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