Guardian Asset Management — DGG RE Investments — raked in over thirty five million dollars in US Department of Housing and Urban Development (HUD) contracts in the last six months according to the US Government. I want that staggering number to sink in for just a moment. Guardian was recently profiled on Foreclosurepedia as being purchased by New Residential Investment Corp whose ultimate parents are partially under foreign control. New Residential is slated to finalize their purchase in the last quarter of this year. While details of pricing are not available, Foreclosurepedia is advised that Guardian will retain its current management structure in the near term. What is not so clear is why Guardian did not advise HUD as to its sale with respect to the $35 Million + in contracts issued in one of the largest non competitive awards in the history of the HUD Management and Marketing (M&M) Field Service Manager (FSM) program.
Foreclosurepedia reached out to discuss what is the general amount of those awards that is paid to the Prime Vendor. A Senior HUD source, speaking on condition of anonymity, had this to say,
FPDS captures obligations and base + all options or “ceiling” value of the contracts. However, it doesn’t show expenditures. Based on what I’ve seen historically with FSM, I’d say actual expenditures are typically 15% – 20% less than obligations, assuming no major fluctuations in inventory.
So, that would mean that Guardian stands to make roughly $28 Million on its latest round of non competitive awards. Remember, these awards are for a single year! That’s it! And most states have less than 100 homes in them to maintain. Insane! I mean Guardian is going to pay a couple hundred dollars to do the HPIR I, II, and III. Then they are going to pay maybe $40 twice a month to cut the grass seven months out of the year. That is it! And yet time and again firms like Guardian continue to cut the bottom out of the market bringing bids in house, refusing to work others on projects that they convert bids for their own W2 personnel, and operate a chargeback pool like a gambling joint circa the 1930’s!
We also reached out to HUD in order to try and understand how it was that Guardian was allowed to land all of these contracts and then simply sell them out to foreign nationals. Here was the reply Foreclosurepedia received,
I have raised it to the SF DAS, [Redacted], and I know the FHA Commissioner’s office is at least aware of the situation as well. […] Since it’s a transfer of 100% of the shares of DGG, it’s going to prompt a similar review/approval process, as it will be classified as a Novation Agreement. Do you know whether New Residential is actively involved in the pre-conveyance servicing? That was the big sticking point during the AMS/MCS merger last time. It doesn’t look like the deal is expected to close until 4th quarter of 2019, so it will give HUD a bit of time to react before it goes final.
I mean you noted the reference to the AMS/MCS merger there, right?! Nothing new under the sun. But how it is being spun by Guardian is that, “We are here for Labor.” I am not so convinced anymore. Foreclosurepedia did a substantial amount of recruiting for Guardian over the past year. And almost all of those we spoke with are barely breaking even. In the heartland, where Foreclosurepedia made a direct referral to Guardian, they have yet to see even the first work order.
Stay tuned as we put Northsight Management under the microscope later this weekend. With their recent acquisition of Bill Roach and their “sale that wasn’t a sale” of the company, it has many wondering whether or not they may become a National Field Network waiting to happen.
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