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:

Additionally, we noted certain personnel practices in the Enforcement Division that did not comply with the State Personnel Board (SPB) rules and the Fair Labor Standards Act (act). Because the department did not meet all of the requirements for two-year, limited-term appointments, it may have denied some of its employees certain rights, privileges, and benefits that would have accrued to them if they were initially appointed as permanent employees. Also, the department does not maintain records of overtime to ensure that staff members are duly compensated, a violation of the act.

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.

Recommendations

To improve its current complaint processing and to more effectively and efficiently resolve complaints, the department should take the following actions:

To ensure that employees are compensated for their overtime in the future, we recommend that the department maintain accurate attendance records that document overtime hours and compensate its employees in accordance with the act.

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:

Agency Comments

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.