Ocwen Financial Corp. agreed to pay $3.7 million to end a Massachusetts lawsuit claiming it didn't give homeowners required notices and illegally foreclosed on properties, the state's attorney general said.

Under the deal, homeowners will get $3 million of the settlement, with the balance going to the state, Attorney General Martha Coakley said in a statement today.

The Massachusetts settlement follows last year's accord with regulators in which Ocwen, the fourth-biggest mortgage servicer in the U.S., agreed to provide $2.1 billion in relief to homeowners to settle claims over abuses in its handling of borrowers' loans. Massachusetts claimed Ocwen broke state laws by failing to send notices to homeowners whose loans were in default and to execute and file public notices when mortgages were assigned to other parties.

Litton Home Servicing LP, a company acquired by Ocwen, also violated state laws by starting home-foreclosure proceedings without holding the underlying mortgages, the Massachusetts attorney general said.

Ocwen, which is a loan servicer and not a bank, is also being investigated by New York Department of Financial Services Superintendent Benjamin Lawsky.

John V. Britti, chief financial officer for Atlanta-based Ocwen, didn't immediately reply to a phone call seeking comment on Coakley’s announcement. Ocwen's media relations team also didn’t immediately reply to an e-mailed request for comment.

"Massachusetts homeowners faced unnecessary challenges due to these companies’ failure to provide proper notices and by initiating illegal foreclosures," Coakley said. "This agreement provides for direct relief for affected borrowers and requires that Ocwen undertake efforts to repair problem titles in the commonwealth."

Lawsky, in February, asked Ocwen for information about potential conflicts of interest between the company and affiliates that supplied it with mortgage-management services and were controlled by Ocwen's Chairman William Erbey.

The superintendent in April expanded that probe to include a review of possible conflicts of interest with a related auction service.

Hubzu, an online auction site used to sell homes facing foreclosure, seemed to be charging Ocwen’s customers three times as much as others, according to an April letter from Lawsky. Hubzu is a subsidiary of Altisource Portfolio Solutions SA, an affiliate of Ocwen.

"The relationship between Ocwen, Altisource Portfolio, and Hubzu raises significant concerns regarding self-dealing," Lawsky said in the letter to Ocwen.

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