On Thursday the Obama administration and state officials announced a $26 billion settlement with five of the nation's biggest banks over a range of foreclosure fraud abuses. Forty-nine states, all but Oklahoma, signed onto the largest government-industry settlement in more than a decade. The Washington Post [28]reports:

The deal aims to help troubled borrowers by reducing the amount they owe on their mortgages, lowering their interest rates and paying restitution to homeowners who suffered mortgage-related abuses. It will force lenders to revamp how they interact with troubled homeowners and bar them from trying to foreclose on borrowers while simultaneously negotiating mortgage modifications.

In addition, firms will have to make sure borrowers have a single point of contact with a lender, rather than being shuttled to different employees with each interaction.

... Under the terms of the deal, banks would have three years to complete principal writedowns, refinancings and other relief. But officials said they structured the deal so that it provides incentives for actions taken within the first 12 months, in an effort to get aid to homeowners sooner rather than later.

About $17 billion from the settlement will go toward foreclosure-prevention actions, such as mortgage modifications and reducing the loan balances for underwater borrowers. About $5 billion will be in direct cash penalties, which provide $1,800 to $2,000 for homeowners who qualify for the direct payments.

In remarks on the settlement, President Obama criticized various bank abuses that pushed borrowers into foreclosure. "In many cases, they didn't even verify that these foreclosures were actually legitimate," he said. "Some of the people they hired to process foreclosures used fake signatures on fake documents to speed up the foreclosure process. Some of them didn't read what they were signing at all."

But many housing advocates [29] have criticized the settlement as a mere slap on the wrist, given the damage that lenders caused to millions of families -- especially African Americans and Latinos, who were twice as susceptible [30] (pdf) to foreclosure as whites -- not to mention the hit to the broader economy. The president admitted to the shortcomings.

"No compensation, no amount of money, no measure of justice, is enough to make it right for a family who's had their piece of the American dream wrongly taken from them.  And no action, no matter how meaningful, is going to, by itself, entirely heal the housing market," he said. "But this settlement is a start. And we're going to make sure that the banks live up to their end of the bargain. If they don't, we've set up an independent inspector, a monitor, that has the power to make sure they pay exactly what they agreed to pay, plus a penalty if they fail to act in accordance with this agreement."

He continued that the government could build on the settlement if Congress would pass his recently unveiled mortgage plan, making it easier to refinance for borrowers who are current on their loans.

"There's no excuse for doing nothing to help more families avoid foreclosure," he said. "We are Americans, and we look out for one another; we get each other's backs. That's not a Democratic issue, that's not a Republican issue. That's who we are as Americans."

The president did not mention progress on the new unit of federal prosecutors [31], announced in his State of the Union address, to further investigate abusive lending practices -- or whether their investigations might lead to criminal prosecutions around this issue. While the settlement will help stop the fraudulent industry practices that it identifies and keep more struggling borrowers in their homes, without criminal liability, the response feels conspicuously incomplete.

Cynthia Gordy is The Root's Washington reporter.