A national mortgage settlement between states and five large lenders that goes into effect Wednesday is already having an impact, according to California's settlement monitor.

Complaints began to drop in September about a notorious practice called "dual tracking," monitor Katherine Porter said Tuesday. The settlement was announced in March.

Dual tracking has been a source of frequent complaints from homeowners who say that banks have foreclosed on them while actively working with them on loan modifications.

The practice is restricted under the mortgage settlement and a law banning dual tracking goes into effect Jan. 1.

"Banks are going to have to retool their operations," said Porter, a UC Irvine law professor who is the California monitor for the national settlement.

Porter said her office had received at least 224 complaints about the practice since March. She said that number almost certainly undercounts the Californians who have been dual tracked since the settlement was announced.

"I think it's been a painful period waiting for these changes," Porter said. "A lot of families have continued to be caught. It's a race that sometimes families lose. It's a loss for the family, the economy and California communities when some of those foreclosures could have been prevented."

The number of complaints rose to 59 in August, dropping to 29 in September as the Oct. 3 deadline neared.

Porter said restricting dual tracking is one of 304 loan servicing reforms in the settlement, but it is the bellwether she is using to track implementation of the reforms by the lenders who signed the settlement.

The monitor's office has received 1,482 complaints and inquiries from California homeowners in the past six months. Banks were given six months to clean up their act and meet the terms of the settlement.

At least 130,000 California families were in the foreclosure process when the settlement was announced. The program has closed 373 cases so far after giving homeowners assistance or getting a satisfactory response from the bank, the monitor's office said.

The settlement was agreed to by Bank of America, Wells Fargo, JPMorgan Chase, Citibank and Ally/GMAC bank.

Foreclosures have been dropping steadily this year, as banks started to modify mortgages rather than seizing homes and selling them at courthouse auctions.

Short sales -- the sale of a home for less than the amount of the mortgage -- are taking the place of some foreclosures.

Contact Pete Carey at 408-920-5419