HUD's $982M Ginnie Mae MBS Program Contract Awarded to Carrington Mortgage Services LLC

Contract Overview

Contract Amount: $981,984,466 ($982.0M)

Contractor: Carrington Mortgage Services LLC

Awarding Agency: Department of Housing and Urban Development

Start Date: 2023-08-10

End Date: 2026-08-09

Contract Duration: 1,095 days

Daily Burn Rate: $896.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: SINGLE FAMILY MASTER SUBSERVICER SERVICES IN SUPPORT OF GINNIE MAE'S MORTGAGE-BACKED SECURITIES (MBS) PROGRAMS.

Place of Performance

Location: ANAHEIM, ORANGE County, CALIFORNIA, 92806

State: California Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $982.0 million to CARRINGTON MORTGAGE SERVICES LLC for work described as: SINGLE FAMILY MASTER SUBSERVICER SERVICES IN SUPPORT OF GINNIE MAE'S MORTGAGE-BACKED SECURITIES (MBS) PROGRAMS. Key points: 1. Significant contract value of $982 million for essential mortgage-backed securities services. 2. Carrington Mortgage Services LLC is the sole awardee, raising questions about competition. 3. Potential risk associated with a single provider for a critical financial program. 4. Spending falls within the Investment Banking and Securities Intermediation sector.

Value Assessment

Rating: fair

The contract value of $982 million is substantial. Without comparable contract data for similar master subservicer roles, a precise pricing assessment is difficult. However, the duration and scope suggest a significant investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating no prior competition. This limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The lack of competition for this large contract may result in a less favorable price for taxpayers than if multiple bids were solicited.

Public Impact

Ensures the stability and functioning of Ginnie Mae's Mortgage-Backed Securities programs. Impacts homeowners and investors relying on the MBS market. Supports the broader housing finance ecosystem.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Potential for cost overruns in a time-and-materials contract.
Dependence on a single provider for critical financial infrastructure.

Positive Signals

Supports a vital government program (Ginnie Mae).
Long-term contract provides stability for services.
Awardee has experience in mortgage servicing.

Sector Analysis

The Investment Banking and Securities Intermediation sector involves complex financial services. This contract, supporting Ginnie Mae's MBS programs, is a significant expenditure within this domain, highlighting the government's role in financial markets.

Small Business Impact

There is no indication that small businesses were involved in this sole-source contract award. Future solicitations could explore opportunities for small business participation.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and effective service delivery. Regular performance reviews and cost audits are crucial for accountability.

Related Government Programs

Investment Banking and Securities Intermediation
Department of Housing and Urban Development Contracting
Department of Housing and Urban Development Programs

Risk Flags

Sole-source award
Time and materials contract type
Lack of competition
Significant contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $982.0 million to CARRINGTON MORTGAGE SERVICES LLC. SINGLE FAMILY MASTER SUBSERVICER SERVICES IN SUPPORT OF GINNIE MAE'S MORTGAGE-BACKED SECURITIES (MBS) PROGRAMS.

Who is the contractor on this award?

The obligated recipient is CARRINGTON MORTGAGE SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).

What is the total obligated amount?

The obligated amount is $982.0 million.

What is the period of performance?

Start: 2023-08-10. End: 2026-08-09.

What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure value for money?

The justification for a sole-source award typically involves unique capabilities or circumstances. For this contract, the specific rationale needs to be documented by HUD. To ensure value, oversight should focus on performance metrics, adherence to time-and-materials limitations, and benchmarking against industry standards where possible, despite the lack of direct competition.

What are the risks associated with relying on a single master subserivcer for Ginnie Mae's MBS programs, particularly in terms of service continuity and disaster recovery?

The primary risk is service disruption if the sole provider experiences operational failures, cyberattacks, or financial distress. This could impact the entire MBS market. Robust contingency plans, regular system audits, and clear contractual obligations for business continuity and disaster recovery are essential to mitigate these risks.

How does the time-and-materials pricing structure impact cost control and taxpayer exposure for this extensive contract?

Time-and-materials contracts can lead to cost uncertainty as they are based on actual labor hours and material costs. Without fixed price components or strong oversight, there's a risk of inflated hours or unnecessary material usage. Effective cost control requires diligent monitoring of labor rates, efficient task completion, and clear definition of billable hours.

Industry Classification

NAICS: Finance and Insurance › Securities and Commodity Contracts Intermediation and Brokerage › Investment Banking and Securities Intermediation

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 1600 S DOUGLASS RD, ANAHEIM, CA, 92806

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,039,959,523

Exercised Options: $1,039,959,523

Current Obligation: $981,984,466

Actual Outlays: $355,128,994

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline