Massachusetts homeowners received the fewest amount of foreclosures this year in July, in anticipation of new state requirements.

Mortgage servicers in the state started fewer than 1,200 foreclosures in July, down 17% from the month before and below the previous low this year of 1,333 in January, according to The Warren Group, a real estate publication that tracks filings in the state.

Banks faced new rules all summer not just from the $25 billion mortgage servicing settlement signed in March but even tighter requirements from a bill winding through the Massachusetts state legislature. Gov. Deval Patrick signed the bill into law in August.

Mortgage servicers will be required by law to prove who owns the loans before taking a foreclosure action. The new law also makes it a crime for a servicer to misrepresent a filing in a state or federal court. Certain fees and business referrals to third parties for foreclosure work is also prohibited.

Like the settlement standards, the new law requires servicers to consider a borrower for either a modification, short sale or deed-in-lieu before filing the foreclosure.

Warren Group CEO Timothy Warren Jr. said more homeowners are taking advantage of the opportunity.

"Foreclosure activity has been fluctuating for the past year or so - slowing after several banks delayed and examined their own proceedings, and then ramping back up," Warren said. "It appears we're seeing a clearer picture now - less starts and deeds which means homeowners are making payments and working out defaults through short sales and loan modifications."

jprior@housingwire.com