BUREAU OF REAL ESTATE

FORUMSacramento Convention

CenterSacramento, CA

April 24, 2015

TODAY’S AGENDAOpening Remarks – Commissioner Wayne Bell

Operations Report – Jeff Mason, Chief Deputy Commissioner

Enforcement Update- Rick Fong, Assistant Commissioner, Enforcement Audit Report and Update – Dan Sandri, Assistant Commissioner, Audits Consumer Recovery Account– Tad Egawa, Assistant Commissioner, Legal Affairs Licensing Resources- Tom Pool, Assistant Commissioner Licensing & Administration Q & A- Wayne Bell and Panel

BUREAU OF REAL ESTATE

OPERATIONS REPORT

Jeffrey MasonChief Deputy Commissioner

FINANCIAL STATISTICSFY 2014-2015

FIVE OFFICES/EXAM CENTERS

SACRAMENTO OAKLAND FRESNOLOS

ANGELESSAN

DIEGO

$49.2 MILLION BUDGET

7/1/2013 – 3/31/2014 7/1/2014 – 3/31/2015

Revenues $36,302,000 $37,813,000

Expenditures $30,803,000 $34,165,000

0

200,000

400,000

600,000

FY04/05

FY05/06

FY06/07

FY07/08

FY08/09

FY09/10

FY10/11

FY11/12

FY12/13

FY13/14

449,107

504,144537,038 542,267519,941483,250

447,642423,080 410,701

402,937

LICENSE POPULATION

License Population Peak 11/2007: 549, 250

License Population as of 4/23/2015: 401,509

LICENSING WORKLOAD7/1/13 – 3/31/14

7/1/14 – 3/31/15 % Change

Exams Scheduled

RES 29,675 32,246 9%

REB 5,943 5,312 -11%

New Licenses

RES 11,956 15,317 28%

REB 3,954 3,463 -12%

Renewals

RES 39,759 37,524 -6%

REB 22,466 21,605 -4%

Renewal Rate

RES 74% 75% 1%

REB 85% 86% 1%

Total Licensees 403,842 401,845 -.49%

MORTGAGE LENDING ACTIVITY

Need MLO Endorsement to Originate Residential Loans

MLO Stats

Jan. 2014 Jan. 2015

Approved Individuals 15,743 15,668

Approved Companies 4,179 4,595Approved Branches 794 854Total MLOs 20,716 21,11

7

SUBDIVISIONS WORKLOAD

Applications for Public Report

7/1/13 - 3/31/14 7/1/14 - 3/31/15

Final 2,020 1,801

Renewal 309 279

Amendment 126 179

Total Applications Received

2,455 2,259

ENFORCEMENT WORKLOAD

7/1/13 -3/31/14

7/1/14 – 3/31/15

% Change

License Denials 116 220 89%

Disciplinary Actions(Revocations, Surrenders, Suspensions, Public Reprovals)

603 751 25%

Desist & Refrain Orders

77 85 10%

Citations 159

Consumer Recovery Account

FY 11/12 FY 12/13 FY 13/14 FY 14/15 YTD

(10 Months)

Claims Filed 243 180 152 140

Claims Paid 94 77 104 102

Amount Paid $3,165,6

69$2,625,6

15$4,286,5

36$4,106,0

02

Total Active Claims

391

ENFORCEMENTUPDATE

Rick Fong

Assistant CommissionerEnforcement

BUREAU OF REAL ESTATE AUDITS

Dan SandriChief Auditor

Types of Audits Closed Statewide 7/1/14 - 3/31/15

Investigative54%

Routine46%

432 Audits Com-pleted FYTD

Audits Closed by Activities Statewide – 7/1/14 - 3/31/15

Property Management

72%

Mortgage Loans11%

Broker Escrow6%

Other11%

432 Audits Com-pleted FYTD

Findings of Audits Closed, 7/1/14 – 3/31/15

Major Violations

31%

Corrective Action Letter16%

Minor Violations

22%

No Violations

19%

Cite & Fine13%

Trust Fund Shortages 7/1/14 - 3/31/15

$4,933,780.15 in total trust fund shortages Breakdown by real estate activity:

$3,153,424.23 – Property Management

$144,146.00 – Mortgage Loans $1,653,418.81 – Broker Escrow $791.11 – Sales

PAYMENT HANDLING, ACCOUNTING: THE WAY IT

WAS

• Payments by check or cash, usually received in person or by mail

• Very few wire transfers• Accounting entries

recorded by hand• Two entries required to

record a transaction in control record and ledger cards

Payment Handling, Accounting: The Way It Often Is Now

• Payments often received via ACH or credit card, through a payment processor

• Wire transfers are common• Accounting records are almost

always on computer• One entry covers journal and ledger

recording of transaction.

Broker Escrow Reporting - §10141.6

• Reporting required if broker engaged in 5 or more broker escrow transactions per the exemption or if activities total $1 million or more in calendar year.

• Report due from broker within 60 days of calendar year end.

• For 2013, 205 brokers reported total activities of $8.66 billion.

• Broker escrow operations facing increased audit focus.

Bureau of Real EstateAudit Section

Contact:Dan Sandri – Assistant Commissioner,

AuditsDan.Sandri@dre.ca.gov916 263-8704

CONSUMER RECOVERY ACCOUNT

Tad EgawaAssistant Commissioner

Legal Affairs

CALIFORNIA BUREAU OF REAL ESTATE’S

CONSUMER RECOVERY ACCOUNT

CALIFORNIA BUREAU OF REAL ESTATE’S

CONSUMER RECOVERY ACCOUNT

PURPOSE

Last resort victim’s fund to compensate innocent members of the public who are victimized by dishonest real estate licensees

HISTORICAL BACKGROUND

•Operative on January 1, 1964

•12% of License Fees(B&P Code §10450.6)

•$3,500,000/year

CONSUMER RECOVERY ACCOUNT

Claims History

Since 1964, BRE has paid approximately $51 million to victims

Approximately 54% of all applications paid

CLAIMREQUIREMENTS

CLAIMREQUIREMENTS

WHO MAY FILE

“Aggrieved Person”

CONSUMER

INNOCENT MEMBER OF THE PUBLIC

WHO MAY FILE

“Aggrieved Person”

CONSUMER

INNOCENT MEMBER OF THE PUBLIC

BASIS FOR APPLICATIONBASIS FOR APPLICATION

1) Final Judgment

2) Licensed Activity

3) Actual and Direct Loss

1) Final Judgment

2) Licensed Activity

3) Actual and Direct Loss

COVERAGE LIMITS(B&P Code § 10474.5)

as of 2008

•$50,000/per transaction

•$250,000/per licensee

COVERAGE LIMITS(B&P Code § 10474.5)

as of 2008

•$50,000/per transaction

•$250,000/per licensee

CASE STUDY

EMERALD BAY FINANCIAL INC. AND THREE INDIVIDUAL REAL ESTATE LICENSEES

30 VICTIMS TRUST DEED INVESTMENTS CalBRE AWARDED $1,000,000 TO

VICTIMS

CONSUMER RECOVERY ACCOUNT

QUESTIONS

(916) 263-8925

BUREAU OF REAL ESTATE

Tom PoolAssistant Commissioner

Licensing & Administration

What are the main Complaints?

Processing Times

Phone Wait Times

By the Numbers

Average Number of Calls per Month21,1308 Staff Dedicated to PhonesMany Calls Involve Status of Applications

What Can Be Done?

Help MeHelp You

- Jerry Maguire

eLicensing is the Answer

Salesperson terminations Update contact information (email and

phone numbers) Salesperson changes of employing

broker Broker main office address changes Mailing address changes Print license certificate Broker renewals Salesperson renewals

License Renewals 54, 537 Sales Renewals in FY 13/14

7,504 Sales Renewals by Mail 86% of renewals on-line

30,539 Broker Renewals in FY 13/149,722 Broker Renewals by Mail

68% of renewals on-line

Snail Mail DelaysAre Costly

17,226 Renewals by MailCurrently 4 Week Backlog eLicensing instantaneous

25,839 Actual Hours to ProcesseLicensing Saves 13 Yrs./13 PYs

Other Timesaving Licensing Resources

Combo Applications 38,781 REB Exam Applications

5,297 Did Not Use Combo Application 91,596 RES Exam Applications

26,764 Did Not Use Combo Application

Website Resources New Videos on RES/REB exam/app

process Posting of Current Processing Times Posting of FAQs

Website Resources

Website Resources

eLicensingWinWin

Spread the eWord!

Q&ATHANK YOU

This power point presentation will be made available in its entirety on the

CalBRE website.

www.bre.ca.govSan Jose, CA – October 2015