Report 97112 Summary - March 1998
Office of Real Estate Appraisers:
Improvements Are Needed in Compliant Processing, Personnel Practices, and in Some Licensing Procedures
Results in Brief
Some management practices of the Office of Real Estate Appraisers (department) have adversely affected its ability to protect consumers and to fulfill its responsibilities to employees. Currently, it has a large backlog of complaints and is experiencing extraordinary delays in resolving them. These circumstances were partly caused by not establishing an Enforcement Division sooner. Management decisions to staff its Enforcement Division initially with primarily limited-term appointments and to allow positions to remain vacant for long periods also contributed to these circumstances. In addition, personnel decisions, such as making two-year, limited-term appointments without meeting the necessary requirements and failing to maintain adequate records of overtime, may have exposed the State to potential liability.
Further, although the department generally processes license applications in accordance with established guidelines, its policies for reviewing renewals can be improved to ensure that the work of all licensed appraisers meets professional standards. Finally, the department did not promptly address deficiencies upon inspecting some of its licensee testing sites.
The department has two primary functions. One is to ensure the availability of State certified and licensed appraisers to perform real estate appraisals contracted for, or regulated by, the Resolution Trust Corporation or any federal financial institution regulatory agency by licensing qualified appraisers. The department's other function is to investigate complaints of incompetence, fraud, or unethical behavior against licensed and, in some instances, unlicensed appraisers.
Our review disclosed that the department currently has 641 open complaints. It receives approximately 330 complaints annually and takes an average of 1.5 years to close them. We found that in at least 17 cases, the department's delays had caused it to lose jurisdiction over the complaint and, as a result, it failed to protect the public.
We also noted the following specific conditions that contribute to the department's delays:
- Turnover, vacancies, and the department's own delays in filling these vacancies have left the Enforcement Division short-staffed.
- Although the department has established procedures to review and prioritize complaints to determine jurisdiction and severity, it does not adhere to them. Specifically, 18 of the 95 cases that we reviewed were not within the department's jurisdiction, and the department closed only
2 promptly. Further, of the 686 complaints the department received between January 1, 1995, and October 31, 1997, it has not prioritized 228, or 33 percent, and has no plans to do so. If the department does not prioritize cases promptly, it may not be aware of potential risks to the public.
- The department does not always maintain documentation in its complaint files to support investigation procedures. For example, 10 of the 23 cases for which the department stated that it had conducted appraisal reviews lacked evidence to support its statements. In one instance, because it was unable to locate the reviews, it performed them again.
- Because information in the Enforcement Division database is not always accurate or complete, it is not an effective tool for managing complaints.
In examining the department's licensing program, we discovered that the department generally processes applications in accordance with established guidelines; however, it has no assurance that the work of 31 to 63 percent of its current licensees meets professional standards. Additionally, for two of the three licensee testing sites the department inspected, it did not promptly report deficiencies to the exam provider nor follow up to make sure the provider promptly corrected these deficiencies.
To improve its current complaint processing and to more effectively and efficiently resolve complaints, the department should take the following actions:
- Develop a method to determine the number of
appraisers/investigators needed to meet its current workload and eliminate the backlog. Then, fully staff the Enforcement Division to meet current workload and consider appointing temporary staff or contracting out to eliminate the backlog.
- Review and prioritize all complaints promptly.
- Identify those complaints outside its jurisdiction and recommend other possible courses of action complainants may take. If necessary, promptly forward the complaints to another authority.
- Develop and implement a retraining program to ensure staff maintain documentation, such as checklists, reports, and summaries of investigation activity in the complaint files.
- Continue to identify and correct errors identified in its Enforcement Division database.
We recommend that the SPB review the department's use of limited-term appointments, and determine the extent to which it may have denied its former and current employees rights, benefits, or privileges that would have accrued to them if they were initially appointed as permanent employees.
We recommend that the Department of Personnel Administration-Classification and Compensation Division review the department's overtime practices, and determine the extent to which its former and current employees are entitled to receive compensation for any overtime worked.
To improve its licensing process, the department should:
- Subject the work of all licensed and certified appraisers to periodic review.
- Report the results of licensee testing site inspections to the exam provider within 30 days and follow up with the exam provider 30 days thereafter to determine that corrective action has been taken.
The Office of Real Estate Appraisers (department) agrees with our recommendations and states its intention to eliminate the complaint backlog by the end of the year. In addition, the department provides some supplemental information about its operations and its view of the conditions that the department has operated under since its inception.