DGG RE INVESTMENTS LLC d/b/a Guardian Asset Management, whose parent company is NEW RESIDENTIAL INVESTMENT CORP. a real estate investment firm based in Langhorne, Pennsylvania, is facing potential layoffs amid a low foreclosure rate and rising interest rates. Joining the ranks of A2Z Field Services, Altisource, Assero, Cyprexx, MCS and ServiceLink, the tightening of the belt is impacting the entire Industry. This, even as tens of millions of dollars in add on profits have been culled weekly from the price increases given by both Fannie Mae and Freddie Mac.
According to data from the U.S. Department of Housing and Urban Development (HUD), Guardian has received over $244,684,481 in federal awards since 2017. These awards have been used to acquire and rehabilitate foreclosed properties under the HUD M&M FSM contract which has been extended, for years, through a series of bridge contracts and other justifications which has ensured no other competition. It is historic, from the point-of-view that no other M&M contract we have found has ever, in the history of the program, been addressed this way. In fact, while firms such as JGM Property Group and 24 Asset Management received the HUD M&M FSM 3.12 Awards, some years ago, both firms are teetering on financial insolvency — JGM’s issues are self evident and 24 Asset Management’s hinge on the collapse of Assero and their financial association with 24 Asset Management.
With the foreclosure rate declining in recent years, and interest rates rising it is an ironic double edged sword when factoring the record high level of equity homeowners have in their homes. This could make it more difficult for Guardian to acquire and rehabilitate HUD post conveyance properties, which could lead to layoffs. Ever more so, is the simple and salient fact that Guardian has essentially been unable — or unwilling — to strike real world conversions with HUD as is apparent from their outlays versus awards which is self evident in their numbers reported on USASpending.gov the official awards website of the US Government providing real time transactional data.
In addition, the Federal Reserve’s recent meeting in Jackson Hole, Wyoming, has raised concerns about a potential recession. If the economy does enter a recession, it could lead to even lower foreclosure rates and higher interest rates, which would further increase the risk of layoffs at Guardian. And while Guardian has not yet announced any layoffs and appears to be “monitoring the market closely” and is “considering all options” to ensure its long-term success, the reality is that running offices in all HUD HOC’s, fully staffed and with virtually zero inventory, is a risky business.
If Guardian does lay off employees, it would be the latest in a series of layoffs in the real estate industry. In recent months, several major real estate companies, including Compass and Redfin, have announced layoffs. The layoffs in the real estate industry are a sign of the changing economic landscape. As interest rates rise and the economy slows, it is becoming more difficult for real estate companies to make money. This is leading to layoffs and other cost-cutting measures. It is unclear how many employees Guardian could lay off, if any, but it would be a good bet that the first to go would be associated with the HUD M&M Contract sources speaking on condition of anonymity advised Foreclosurepedia.
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