It’s that time again! The Fall 2022 edition of the California Department of Real Estate (DRE) Bulletin looks back on the year’s accomplishments, identity theft, licensing statistics, and more.

Read on for firsttuesday’s digest of Q4 2022’s DRE updates for real estate professionals.

Commissioner’s Update

DRE Commissioner Doug McCauley starts 2022’s final bulletin with a reflection on the Department’s compliance accomplishments throughout the 2021-2022 fiscal year. This year, the DRE is celebrating some new features and compliance updates for licensees, including:

  • the launch of the Online Exam License Application (OELA);
  • new fair housing and implicit bias training requirements for continuing education (CE); and
  • reduced call wait times thanks to their new “call back” feature.

Most notable for California licensees is the new training mandated by Senate Bill (SB) 263. It requires two hours of implicit bias training to be incorporated into CE. Further, the mandated three-hour Fair Housing (or Survey) renewal course has been restructured, including an interactive participatory component.

Real estate professionals looking to get a head start on the DRE’s new CE requirements can learn more about the new Implicit Bias and expanded Fair Housing course here. Currently enrolled students and students who already completed their CE with firsttuesday during this renewal cycle receive this education for free.

Commissioner McCauley also touts the DRE’s education and research fund, which underwrote an adaptive reuse study conducted by UC Berkley’s Terner Center for Housing Innovation. New legislation allocates $400 million of Governor Gavin Newsom’s state budget for 2022-2023 to help these crucial commercial-to-residential conversion projects overcome financial hurdles.

Related article:

Unused commercial space continues to convert into much-needed apartments

In closing his update for 2022, the Commissioner reaffirms the DRE’s commitment to Californians — licensees and clients alike — with more projects like the adaptive reuse study with one already in motion at a Cal Poly, this time focusing on property technology (proptech) and its effect on real estate professionals and the housing market.

Enforcers put their foot down

The Enforcement division investigates written complaints filed against licensees, subdividers and unlicensed individuals where real estate transactions are at issue. Investigators weigh violations of the Real Estate Law or Subdivided Lands Law and refer them to the DRE’s Legal division where disciplinary action is determined.

By the numbers, the DRE’s Enforcement divisions boasts it:

  • received 5,202 complaints;
  • referred 1,208 complaints to investigators;
  • suspended 107 licenses;
  • revoked 256 licenses; and
  • closed 440 audits in the 2021-2022 fiscal year.

Of the 5,202 complaints received, 1,208 were referred for investigation, and 363 were either revoked or suspended. This figure represents a downward trend in comparison to Fall 2021’s DRE Bulletin.

Proactive compliance is key when it comes to avoiding a DRE investigation. Click through to the latest installment of firsttuesday’s DRE Hot Seat series, in which we analyze disciplinary actions handed down by the DRE.

Related article:

DRE Hot Seat: The buck stops with the designated broker — always

Protection against identity theft

Amidst the complaints received in the fiscal year, the most popular charge was identity theft. The DRE recommends licensees check their listed properties regularly, as industry con artists are mining these listings for their own scams.

Real estate scammers are reposting property listings found under “For Sale” and listing them “For Rent” on other websites. This fraud puts renters at risk as scammers are requesting electronically-transferred fees, security deposits, and even rent without ever visiting the property.

The DRE encourages Californians to report fraudulent rental listings as soon as they are found. Read the full DRE Consumer Alert on Identity Theft here.

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Licensing statistics

With the DRE’s launch of the OELA in the fall of 2021, prospective licensees gained the opportunity to submit their exam or license applications online. By June 30, 2022, the OELA was handling 75% of exams and license applications — a huge step up in efficiency.

After exam centers in Sacramento, Oakland, Fresno, La Palma, and San Diego were limited to 50% capacity due to health and safety concerns, the centers finally returned to full capacity in June 2022. As far as licensing during the 2021-2022 fiscal year, the DRE:

  • administered 63,069 salesperson exams;
  • administered 4,699 broker exams;
  • issued 30,670 salesperson licensees; and
  • issued 4,699 broker licensees.

Additionally, license renewals held strong with:

  • 80% of salespersons; and
  • 94% of brokers renewing.

However, the overall licensee population is down 5%, currently sitting at:

  • 307,378 salespersons; and
  • 127,789 brokers.

The Licensing division also concluded their five-year exam development study. The Occupational Analysis and Exam Development Study, which operated under the DRE’s Exam Administration and Development team, aims to update DRE exams to reflect real-world industry practices and conditions.

The DRE plans to continue its expansion of the eLicensing system into the next fiscal year and evaluate potential third-party delivery options for exams.

Editor’s note — Looking to earn or renew a California DRE license? firsttuesday is a DRE-approved course provider of both statutory licensing courses and 45-hour continuing education.

A walk down audit lane

The Audits division focuses on trust fund violations, which maintain a top spot as one of the most common triggers for a DRE examination.

Though compared with the Fall 2020 DRE Bulletin Digest at $3.6 million, trust fund shortages have shot up — totaling to more than $9.5 million for the 2021-2022 fiscal year. The majority of offending brokers were involved in property management.

Need a refresher on trust fund violations? Review by watching our course video on improper commingling and limited authorized situations to prevent and identify trust fund violations in your practice.

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A breakdown on Mortgage Loan Activities

The mortgage loan activities (MLA) unit falls under the DRE’s enforcement section. It is responsible for overseeing a variety of work associated with real estate brokers who engage in mortgage business, such as:

  • mortgage loan compliance and enforcement;
  • background investigations; and
  • reports compliance.

Additionally, the MLA unit surveils online submissions via the DRE’s website of Business Activity Reports, Escrow Activity Reports, and Mortgage Call Reports submitted via the National Mortgage Licensing System (NMLS). This work is divided into voluntary mortgage loan advertising reviews and industry and commerce resource.

In the 2021-2022 fiscal year, the MLA staff conducted 365 MLO background investigations for license endorsement applicants. The department also fielded about 2,500 calls and letters in its service as an industry and consumer resource.

Click through to our December 2022 Department of Financial Protection and Innovation (DFPI) Bulletin Digest for our final MLO news roundup of 2022, including new laws and license renewal deadlines.

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DFPI Bulletin Digest: December 2022

As always, visit the DRE website to access the full Fall 2022 DRE Bulletin. Remember to sign up for the Quilix newsletter to receive the next DRE Bulletin Digest in your inbox.

Happy Holidays!