The US Department of Housing and Urban Development (HUD) has been moving at a blinding pace, lately, with respect to rolling out its Marketing and Management (M&M) Contracts. The HUD M&M Field Service Manager (FSM) 3.10 issued its first award to Purdy Enterprise several weeks ago and many of the remaining awards are expected out over the next week. At nearly breakneck speed, HUD has begun soliciting the HUD M&M Asset Manager (AM) award covering 30+ states and all four Home Ownership Centers (HOC). We are witnessing the historic facelift of the HUD M&M Contract as we know it.
Sources both within and without of HUD are all unanimous on the opinion that the original ideas of How Low Can You Go did not fly in the Beltway. We are being told that regardless of the Awardees whom have won, Washington wanted each of the Contracts gone over with a fine tooth comb to alleviate any liberty interest Protests.
The HUD M&M AM 3.9 is moving ahead at full steam. In fact, the normal Industry Day is not in the cards for this go around. Another item, which is fraught with the peril, is the fact that HUD is going to roll this bad boy out under Lowest Price Technical Value (LPTV). LPTV is the motherload of everything which can go wrong. Simply ask April Cooper, CEO of Alpine. Foreclosurepedia took a read through the legal case she and her JV Partner, First Preston just went through, and the tally I came up with was nearly a third of a million dollar protest defending the 3A Award. Now, remember that was under the HUD M&M AM 3.5 Contract. It brings up the question of why, precisely, HUD likes to run LPTV or, moreover, why even have a bidding process for the AM?
Let me get off in the weeds, just a little bit here. Under LPTV bidding, you are never going to get new blood into the HUD M&M Contracts. And while I understand that federal law requires open and free bidding, the reality is that even after you invest the tens of thousands of dollars into the bidding process, there are substantial risks in defending any potential award based simply upon hurt feelings.
I have been discussing, over the past several weeks, how many of those former Awardees such as Sage Acquisitions, are privately being thrown out on their collective asses based, in no small part, upon their incompetence. More importantly, though, many of the protested Awards from the AM 3.5 offering are finally entering the pipeline. So, what you are seeing on the FBO website is not, necessarily, that which is available and up for bid. Even more important than that is the simple and salient fact that the volumes you have been witnessing, to date, are not the volumes you are going to experience post award.
As I have discussed over the past several weeks, the Federal Reserve is getting ready to offload a good portion of its nearly $4.5 trillion dollar balance sheet. With a trade war already underway with our neighbors to the North in Canada; with geopolitical instability in areas like the South China Sea, the reality is that Q3 of this year will kick off a spiraling down of the gains we have witnessed, to date.
Things are tightening up for everyone. In fact, the Federal Open Market Committee (FOMC), a Committee within the Federal Reserve charged with overseeing the Nation’s open markets, has been discussing plans to offload its $4.5 Trillion on its balance sheets. The Fed amassed most of the bonds it owns during three rounds of “quantitative easing,” a monthly bond-buying program aimed at juicing the economy following the financial crisis. The securities are mostly Treasurys and mortgage-backed securities. It has been reinvesting the proceeds from those bonds and rolling them over rather than shrink the balance sheet. Lately, though, the Fed has been hiking the interest rate and with talks of several more hikes and the offloading of both the balance sheet and ceasing its reinvestment strategy beginning by Q3 of this year, many, including myself, believe that it does not bode well.
Foreclosurepedia has been working with several large brokers to closely examine the HUD M&M AM 3.9 and its draft PWS recently released. One of the discussions which came up is the fact that we needed to roll up the sleeves and host a Summit inviting both large and small Realtors in order to get a fundamental understanding of whom is out there and what they were capable of. As such, we are putting together a meeting in Fort Lauderdale later this year.
On tomorrow’s Foreclosurepedia Podcast, we discuss the HUD M&M AM, in depth, with several firms whom have had intimate access to both HUD and the process itself.