The big news last week was the $25 billion-plus settlement between the states and the five largest banks. But, unfortunately, the national mortgage settlement will not help everyone in trouble.  For example, numbers indicate that 62% of California mortgages are held by Freddie Mac and Fannie Mae. The settlement does not apply to those.

Nearly $300 million of California's portion of the settlement will go toward restitution for 140,000 homeowners who lost their homes to foreclosure, which works out to about $2,000 per homeowner. But if a homeowner lost a home worth hundreds of thousands of dollars, $2,000 is relatively small. Contra Costa County will receive about $651 million. A good portion of that will go toward paying for counseling services.

So from the borrower’s point of view, anyone who had a Freddie or Fannie loan is not included. From the servicer’s point of view, there are also problems. The settlement does little to stop future lawsuits against these five banks (Bank of America, Citi, Chase, GMAC, and Wells Fargo). Nothing in the agreement grants any immunity from criminal offenses and will not affect criminal prosecutions.  The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers.  The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases. The settlement only covers servicer liability for robo-signing and improper mortgage servicing. Notably, it does not cover any wrongdoings associated with mortgage securitizations, MERS, or any criminal liability.

As Winston Churchill noted, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” Many in the mortgage banking business would be happy with that, especially lenders who have been obeying the strict letter of the law such as Landmark Mortgage.