NEW YORK ( TheStreet) - Three major mortgage loan servicers have entered into a settlement with the New York State Department of Financial Services, agreeing to end "robo-signing" of mortgage foreclosure documents and make other servicing improvements, according to a Wall Street Journal report.

The agreement -- between Goldman Sachs ( GS - Get Report), its subsidiary Litton Mortgage Services and Ocwen Financial ( OCN - Get Report) -- is expected to be announced Thursday, according to the Journal, which cited unnamed sources.

Under the agreement, the loan servicers will cut mortgage payments for some New York borrowers, with Goldman agreeing to $13 million in principal reductions for Goldman's $52 million in New York mortgage loans. The servicers will also check loan files for mishandling of paperwork, according to the report.

Ocwen in June agreed to purchase Litton from Goldman for $264 million in cash, and the mortgage servicing settlement was a condition for New York Superindendent of Financial Services Benjamin Lawsky's approval of the Litton purchase.

With New York State overseeing a large portion of the mortgage loan servicing industry, the state's settlement with the mortgage servicers could shed light on the nature of an eventual settlement between largest U.S. servicers, including Bank of America ( BAC - Get Report), JPMorgan Chase ( JPM - Get Report), Citigroup ( C - Get Report) and Walls Fargo ( WFC - Get Report), and Ally Financial, the 50 state attorneys general and federal regulators, of various claims over the mishandling of mortgage foreclosures and other loan servicing problems.

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.