The latest controversy surrounding the HUD M&M Asset Manager (AM) 3.9 contract raises serious questions about compliance with the Federal Acquisition Regulations (FAR) and ethical standards in government contracting. Now referred over to HUD HQ SFAM, the packages ranging from $595 to $2,125, for “voluntary” training, are under scrutiny. A recent email from a HUD AM awardee’s Closing Department, viewed exclusively by Foreclosurepedia, promoted a “voluntary” paid training for HUD real estate agents — despite the fact that providing such training is already a contractual obligation under the HUD M&M AM contract and registration required with HUD itself. How else would a Realtor learn about the P260 or how to properly market the HUD asset? The inference is unmistakable. First, the Las Vegas junket is hosted and paid via the HUD M&M awardee’s company website. Second, while the $595 and $995 tickets only allowed for a “Roundtable with Area Managers”, if you are willing to shell out $2,125 you receive an “Exclusive Meeting with Area Managers”. Ergo sum, miss the extremely pricey Las Vegas junket, exclusively hosted by the HUD M&M AM awardee at your own expense — no pun intended. 😉
Fact of the matter is that Raine Companies, the HUD M&M AM 3.9 awardee hosting the junket, touts a near control over most of the HUD post conveyance asset sales. 3A: IL, 4A: IN, KY, 5A: NC, SC, 8A: FL, PR, VI, 1D: CO, NM, N. TX, UT, 4D: IA, NE, SD, WI, 5D: MN, MT, ND, WY, 1P: MI, 3P: CT, MA, ME, NH, NJ, NY, RI, VT, 4P: OH, 4S: ID, NV, and 6S: AK, OR, WA.
If a trade association or an Industry affiliated group wants to put on the “voluntary” paid training, fine. For the HUD M&M AM awardee to do it shatters all illusions of fair and competitive.
The Contractual Obligation to Train Agents
The FAR, which governs all federal contracting, is very specific when it comes to Pay-to-Play and there are a half dozen other federal laws covering the same. There is a separate and unique relationship between the HUD M&M awardee and the Realtor — the Realtor, for want of better words, is a subcontractor. The Anti-Kickback Act of 1986 is quite clear on the relationship. Additionally, there is no Doctrine of Privity between HUD and the Realtor. Fact of the matter is that the HUD M&M AM requires that HUD M&M AM awardees fulfill the duties specified in their contract without additional compensation from third parties. Under the contract, HUD M&M AM awardees are responsible for ensuring that HUD listing brokers are properly trained in HUD procedures. This is not an optional service, nor is it a revenue-generating opportunity — it is a contractually required duty that the federal government already pays for.
And while the M&M AM awardee points out that this conference is “voluntary”, the inference of direct access creates the opposite environment. Even the perception that charging Realtors for training, that should be provided at no cost, raises serious concerns:
- Double Dipping: The HUD M&M AM awardee is already compensated by HUD to provide training. Collecting additional fees from agents constitutes a clear financial conflict and may violate federal procurement rules.
- Pay-to-Play Perception: While the training is labeled as “voluntary,” the Industry reality suggests otherwise. Brokers fear that failing to attend could negatively impact their standing or future opportunities with the HUD M&M AM awardee. The implication is clear: pay or risk being left behind.
- HUD’s Oversight: It was unclear, prior to publication, whether HUD was aware of or had approved this “voluntary” fee-based training model. When we reached out to HUD, they stated that they were not and referred it to HUD HQ SFAM and “…other REO [Directors]“. As HUD was unaware, it suggests a failure in oversight as well as raises concerns about contract enforcement.
“Voluntary” or Veiled Coercion?
The situation is further complicated by the way this training is being marketed. The invitation was sent from the HUD M&M AM awardee’s Closing Department email address, creating the appearance of an officially sanctioned event rather than an independent, optional seminar. For brokers reliant on HUD listings, such an email is difficult to ignore, reinforcing concerns that attendance — while technically “voluntary” — is functionally required.
As one Realtor put it,
Even though she posts that it is not a mandatory meeting, we all know if you don’t attend, it will be held against you.
This raises a crucial ethical and legal question: If brokers believe that declining to pay for this training will negatively impact their business, is it truly voluntary?
The Financial Breakdown
The fees reportedly range from $595 to $2,125 per agent, depending on the level of access purchased — higher fees granting “personal time” with asset managers and the HUD M&M AM awardee, herself. Given that the HUD M&M AM awardee in question controls a substantial portion of the country, attendance could reach hundreds of agents, generating hundreds of thousands of dollars in additional revenue — all from a service that should already be provided under the contract. Moreover, though, the potential for Pay-to-Play, in such a low volume environment, should be thoroughly reviewed.
This scenario represents a disturbing conflict of interest, where the HUD M&M AM awardee is not only profiting from agents but potentially conditioning success in HUD listings on paying for access.
What Needs to Happen Next?
- HUD Oversight and Transparency – HUD should immediately investigate whether this “voluntary” fee-based training violates the terms of the HUD M&M AM contract and if it complies with the FAR.
- Accountability for HUD AM Awardees – HUD M&M AM awardees must not be allowed to monetize training that is already included in their government contract. If brokers must pay for training, HUD should clarify who is responsible and adjust the contract terms accordingly.
- Protecting Fair Competition – The Industry must ensure that brokers are not forced into a “pay-to-play” dynamic to maintain their ability to list HUD homes.
If HUD allows this practice to continue unchecked, it sets a dangerous precedent — one where HUD M&M AM awardees profit from their position of power, brokers are pressured into paying unnecessary fees, and taxpayers ultimately fund a system that benefits private contractors at the expense of public integrity.
Will HUD step in to enforce its own contract, or will it allow this potential pay-to-play scheme to continue? The industry is watching as the HUD M&M FSM awardees begin setting their sights on the same.
If you are a Realtor performing upon any HUD M&M AM contract we would love to speak with you. And as always, if Raine Companies would like to have an on-the-record discussion, feel free to drop us a line!
