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Tess Vigeland: Homeowners here in California have some new protections against losing their homes. The state legislature passed a law yesterday that sponsors are calling a "Homeowners Bill of Rights." Supporters say the changes will prevent unnecessary foreclosures.

But the industry is warning that similar legislation being considered in other states could just create new bottlenecks to a housing recovery. Here's our senior business correspondent Bob Moon.

Bob Moon: One of the targets of the California legislation is a practice known as "dual tracking." Even struggling homeowners who've applied for a restructured loan and more affordable payments can still face foreclosure.

Kamala Harris: Unfortunately, the very common story is that the homeowner who is in the process of playing by the rules and paying the modified loan payment is foreclosed upon.

Kamala Harris is California's attorney general. She says the new measure will halt the foreclosure process until there's a decision on the modified loan application. Too often, she says, the bank's left hand doesn't know what the right hand is doing -- so banks will be required to provide the homeowner with a single point of contact. The legislation also takes aim at a practice known as "robosigning." Banks using bogus paperwork can find themselves in court.

Harris: The homeowner can stop the foreclosure process, and of course, if the robosigning has occurred and they've been foreclosed upon, then we have teeth in our bill, which would allow the homeowner to seek recourse and accountability if the rules have been broken.

The banking industry is cautioning lawmakers not to make matters worse by creating a new wave of lawsuits that will cause a new glut of delinquent mortgages. Beth Mills speaks for the California Bankers Association.

Beth Mills: When litigation is involved, that typically prolongs the process, which takes more than 300 days already in California. If we get foreclosures tied up in the courts, that'll just inhibit the housing recovery.

The Golden State isn't alone in re-thinking foreclosure laws. The National Conference of State Legislatures reports changes are being considered in at least 25 states.

In Los Angeles, I'm Bob Moon for Marketplace.

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