IRVINE, Calif. - First Alliance Corp. said that its subsidiary, First Alliance Mortgage Co., has been authorized to sell a portfolio of servicing rights on $700 million of subprime mortgages to Ocwen Federal Bank, a unit of Ocwen Financial Corp.

The sale was approved July 14 by U.S. Bankruptcy Court for the Central District of California, in Santa Ana.

First Alliance said the Ocwen unit agreed to pay 1.11% of the outstanding balance of the loans, or $7.8 million. The deal is expected to close July 31.

First Alliance said the deal lets its quit the business of servicing loans for others.

The company was the target of a host of lawsuits accusing it of deceptive sales practices and the subject of investigative news stories in The New York Times and broadcast on ABC News in mid-March. It filed for Chapter 11 bankruptcy protection on March 23.

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