The CFPB has filed a proposed court order with authorities in 49states and the District of Columbia that requires Ocwen FinancialCorp., the country's largest nonbank mortgage loan servicer, to payback $125 million and to provide $2 billion in principal reductionfor underwater borrowers.

Atlanta-based Ocwen specializes in subprime or delinquent loansand focuses on resolving delinquency through loss mitigation orforeclosure.

“The consent order addresses Ocwen's systemic misconduct atevery stage of the mortgage servicing process. Ocwen must alsorefund $125 million to the nearly 185,000 borrowers who havealready been foreclosed upon and it must adhere to significant newhomeowner protections,” the CFPB said Thursday in a release.

Ocwen collects payments from mortgage borrowers and sends themto the owner of the loan, customer service, loan modifications,collections and foreclosures.

The CFPB claims Ocwen engaged in illegal foreclosure practices,took advantage of borrowers by imposing unauthorized fees, failedto apply payments on time and did not maintain accurate accountstatements. CFPB also said Ocwen “deceived consumers aboutforeclosure alternatives and improperly denied loanmodifications.”

Ocwen recently acquired some of its competitors such as HomewardResidential Holdings LLC and Litton Loan Servicing LP as well asthe mortgage servicing rights from portfolios held by some of thelargest banks in the U.S.

“Deceptions and shortcuts in mortgage servicing will not betolerated,” said CFPB Director Richard Cordray in a statement. “Ocwen took advantage of borrowers atevery stage of the process. Today's action sends a clear messagethat we will be vigilant about making sure that consumers aretreated with the respect, dignity, and fairness they deserve.”