We bought this house in March. The front landscape is red mulch. We have a fungus I have never seen before growing in it. It's spreading every time it rains. I do know it thrives in the damp. Is there any way to get rid of this without getting rid of the mulch?
The structures that you see are the fruiting bodies of the fungus. The fungus also produces microscopic filaments - mycelia - which, most likely, are growing all over the mulch.
My suggestion is for you to wait since with dryer conditions the visible fruiting bodies will "go away".
Hope this helps.