Judge Dismisses Class Action Racketeering Suit Against Ocwen

Ocwen Financial Corp. won a victory in a Los Angeles court when a federal judge dismissed a class action lawsuit against the servicer accusing them of illegally charging excessive fees for property inspections, according to media reports.

Judge Otis Wright in the U.S. District Court for the Central District of California threw out the suit on Thursday, ruling that a group of California homeowners' claims against Ocwen amounted to a breach of contract claim but nothing else.

The homeowners filed the suit against Ocwen in 2014, accusing the Atlanta-based non-bank mortgage servicer of violating various California state laws as well as federal laws, including the U.S. Racketeer Influenced and Corrupt Organizations Act, according to Reuters. The homeowners claim that Ocwen charged them for unnecessary repeat inspections properties where the borrower was either delinquent or in default, and by doing so they claim Ocwen was in violation of Fannie Mae's servicing guidelines that require individual cases to be assessed to determine if the properties are in need of subsequent inspections after the first.

In his ruling, Wright said the homeowners could not enforce Fannie Mae's servicing guidelines because they were not a party to them. Since the homeowners' entire claim depended on those guidelines, without them they had no claim, the judge said.

"We are pleased and agree with the decision of the court," Ocwen spokesman John Lovallo said in an email to DS News.

The homeowners also accused former Ocwen chairman Bill Erbey, as a major shareholder in Altisource Portfolio Solutions, the company with which Ocwen contracted to perform the property inspections. The plaintiffs in the suit did not name Erbey as a defendant. Erbey, who founded Ocwen in the mid-1980s, resigned his position with Ocwen in December as part of a $150 million settlement with the New York Department of Financial Services over alleged servicing violations.