After years of disorganization and tension in the housing and mortgage markets, California lawmakers have passed legislation that will provide homeowners with some of the nation's strongest protections from foreclosure. The new legislation will also protect homeowners from unnecessarily aggressive bank practices.

The legislation makes California the first state to prohibit "dual tracking" the practice of negotiating with clients to modify a mortgage so that payments become more affordable, while simultaneously pursuing foreclosure. With dual tracking, homeowners can wind up being evicted even though they had been working with the bank to pay their loans.

The legislation also outlaws faulty processing of foreclosure documents- and would allow state agencies and private citizens to sue financial institutions for civil damages of up to $50,000 if lenders intentionally violate the law. According to the bills, no lawsuit could go forward if the bank or servicer first fixes the problem with documentation or procedures.

The banking and real estate industries opposed the new legislation bills, calling them well-meaning but overly complicated and legally ambiguous enough to prompt frivolous lawsuits. Dustin Hobbs, a spokesman for the California Mortgage Bankers Association stressed that under the new legislation the banks should not "give borrowers and enterprising attorneys an opportunity to delay foreclosures at will."

The legislation is critical, as its intention is to ease the current housing crisis in California. Although mortgage delinquencies and home repossessions have eased, more than 362,000 California homes were in foreclosure or seriously delinquent as of March 31, Mortgage Bankers Assn. data show. About 30% of all California homes with mortgages would not be able to command a sales price high enough to pay off the mortgage, according to research firm CoreLogic.

The proposed rules that state lawmakers approved Monday, some of which are already finding their way to borrowers, seek to simplify the loan process between lenders and banks, and protect homeowners from unnecessary evictions.