because we have 92,000 licensees in Arizona and only about 43,000 are REALTORS®. So the association could control the REALTOR® base through ethics and professional standards and education, but then there are all of those other licensees out there.
What we hope to do is… tighten down the qualifying criteria for schools, instructors and curriculum. We’ll be putting in place fees wrapped around that, which we’ve never had before. We will be once again having a compliance department within our education division to make sure that the qualifying criteria is being met and that the laws are being met as far as instruction laws. Even if we have to look to volunteers to be able to man that because of budget costs, it’s been suggested from our volunteers that they would have no problem… helping the department out from volunteer perspective. So we’re reviewing, researching that angle.
We may be looking at creating some post-licensing requirements. When someone takes their pre-licensing hours, they’ll get their license, but it will be a provisional license until they’ve done their post-licensing requirement.
Then the next element would be looking at continuing education guidelines. Deciding whether any of those need to be modified and if not, what the required categories must have within the curriculum in order to be approved.
INVESTIGATIONS
AAR: Members were also concerned about the impact of a few bad apples on the public’s perception of real estate agents and brokers. What role will investigations and enforcement play in your administration?
Commissioner Lowe: That’ll be our second focus… We’ll be streamlining our complaint process, enhancing and speeding up our investigation process and becoming tougher on our enforcement and compliance process. So once we determine there is a violator or violation, that violation will see some enforcement. And it’ll be tougher.
BUDGET CHALLENGES
AAR: How is your department being impacted by the state budget troubles?
Commissioner Lowe: Our department is committed to living with whatever budget we’re given. As one of our staff said the other day, “We’ll just do more with less.” We’ve already made some staffing cuts. We don’t know that that’s over…
We will definitely be reviewing the four-year license to see whether it’s something that we should leave in place or not. The past administration put in place a 4-year licensing… When it comes to the budget, [it] was not a good thing… Is it really fair to take the fees up and down so dramatically just to accommodate a longer license period when the licensee still has to do their 24 hours of C/E every two years? It really is not a benefit to the licensee, and it definitely is not a good decision for the department.
SHORT SALES/REOS
AAR: The real estate landscape has changed drastically in such a short period of time, and so it’s no surprise that many questions concerned short sales and REOs.
Commissioner Lowe: One thing we’re seeing that is a hot issue right now—licensees maintaining that they know how to do those, that they’re the specialists in those categories, when 1) they’ve never had any training and 2) they’ve never really handled loan modifications, short sales or REOs. In essence, they’re working outside of their area of expertise. If their broker is allowing them to do that, then everybody really could be in violation.
AAR: What advice do you have for those who want to become an expert on these transactions, who want to get hands-on experience while protecting their customers?
Commissioner Lowe: Many of our schools have been approved for loan modification, short sale and REO education. My suggestion would be: Get enrolled and then begin to develop business after you’ve been educated, not before. And be sure and review all of Michelle Lind’s articles!
Go to www.azre.gov and under Education, you can look up approved schools and can contact a school to see what classes are being offered. We are in the process--hope to have it in place soon--to have the schedules of the schools posted on our website.
AAR: Many licensees feel that the rules are unclear. For example, should all offers be presented to the sellers?
Commissioner Lowe: It’s really a local association issue, but it could be a violation of a statute, which requires all offers to be presented to the seller. Of course, in a short sale, your seller is still the homeowner, but you do have to deal with the lender… The seller can look at the offer, and it never got to the lender. So the violation isn’t there because the seller saw it. The licensee actually adhered to the law.
AAR: Concern has been expressed by some licensees that title companies who have a contract with a bank to process their REOs are no longer neutral third parties. What is your position on this issue?
Commissioner Lowe: We don’t regulate escrow and title. The Department of Insurance regulates title insurance. And the Department of Financial Institutions regulates escrow. However, we are building partnerships with those two departments to begin to look at consumer advocacy, what’s good for the consumer, hoping to package some guidelines that can be adhered to and enforced.
AAR: Do you plan to require all lender-owned properties listed for sale through a real estate brokerage to provide all prospective buyers with a complete Seller's Property Disclosure Statement as well as applicable Affidavits of Disclosure?
Commissioner Lowe: Well, we can’t enforce it with the lender; however, we could make it a requirement of the broker file. And that then would cause the licensee to have to get it from the lender, and therefore the lender would have to supply it. However, we’ve found that unless it’s a national law, such as our lead-based paint disclosure, it’s very, very difficult to say to a lender in New York that we have to have something like the seller property disclosure form.
HOA/PROPERTY MANAGEMENT
AAR: Do you anticipate bringing HOA management companies under the purview of ADRE?
Commissioner Lowe: There are really two types of property management… The laws around property management fall under brokerage laws. The laws around HOAs are totally independent of the department.
We are going to begin to look at auditing property management brokerages more often and more extensively. It will probably be… an audit where the property management brokerage will, on a very regular and consistent basis, need to feed information electronically into our department to be reviewed by our auditors to red flag those who may have some violations. Then we’ll do a field audit, an extensive audit on site to confirm whether there are violations or not.
LOAN MODIFICATION
AAR: Some licensees are unclear as to whether a real estate license is required—or should be required—for loan modification. What are your thoughts?
Commissioner Lowe: We’re in the process right now of creating an internal workgroup, bringing together some stakeholders to address that. We definitely realize it’s a huge issue with lots of questions around it.
LOAN ORIGINATION
AAR: Can a real estate agent be a loan originator?
Commissioner Lowe: Yes, as long as there are disclosures to all parties involved in the transaction. And of course, very soon the loan officer part of it is going to require a license [from the Department of Financial Institutions]--a separate license that a real estate agent could get. Of course, with broker approval--some brokers allow it; some brokers don’t.
PRE-LICENSING
AAR: Some states permit online pre-licensing. Do you anticipate that Arizona will do so?
Commissioner Lowe: Probably not. We’ve found that classroom instruction is the best, and we feel our educators in Arizona are some of the best.
ELECTRONIC FILES
AAR: We’ve heard that only agents—not designated brokers—are able to print their licenses online.
Commissioner Lowe: That’s going to be taken care of. We were shooting for July 1, and it’s on our priority list.
AAR: Now that the information is online, do you anticipate that at some point brokers wouldn’t need to keep hard copy licenses?
Commissioner Lowe: Wouldn’t that be wonderful? If you saw our fileroom, you’d see how wonderful it really would be. Electronic document storage, we’re reviewing it right now--what we’re required to do within our state, what other states do around electronic document storage.
We’re looking at our broker auditing, at integrating it with TM Sureclose software. As a broker has all of their transactions numbered as the department requires and stored electronically, that broker could give our auditors access to go into their transaction database and review and do their audit without having to go out and into the field… We’re all moving to this transaction management interaction that will help everybody save energy, time, money, all those things. And create a more effective audit.
We’ve been asked by the broker community—and we’ve added it to our list—to move forward to allow them to electronically sign those transactions that are in SureClose. Then they may not have to keep the hard file. Right now they feel that they have to keep the hard file to prove their review and their signature on the file. So many brokers want us to look at that too and see if that will require legislative action.
CALLS TO DEPARTMENT
AAR: When a licensee calls the department with a question, how quickly should they expect a response?
Commissioner Lowe: That’s one of our streamline issues. In fact we just implemented this morning a system that we’re hoping will create a human being answering the phone at the time they call. And then [that person is] able to distribute that out to whatever division the caller is requesting.
I recommend they visit our website first, see if the answer is there under our FAQ. Then when they call, be prepared to tell our customer service representatives what your call is about and which division you would like, if you know it… The more concise the caller can be, the better the service will be for them.
FACILITATE COMMUNICATION
AAR: One member suggested introducing a biannual conference with delegates from all REALTOR® associations and MLSs in the state to encourage information exchange and facilitate communication between your office and the trade.
Commissioner Lowe: We don’t want to be in competition, let’s say, with what AAR does in its Mid-Winter Conference. But if through our partnership and collaboration we hear that we all would like to work together to create one mega-event, I think that would be fun and exciting and helpful to everyone. To bring all of the agencies and the associations, the home builders, the REALTORs®, the commercial, the finance, the insurance, the appraisal--to all learn and exchange from each other and build relationships. Right now there’s really nothing that does that.
COMMISSIONER’S GOALS
AAR: Is there anything that we didn’t ask that you wanted to mention? A goal you want membership to know?
Commissioner Lowe: We appreciate feedback. We want to improve the perception of the real estate department in the minds of the REALTORS®—and everybody for that matter. To service the needs of real estate agents through better customer service. To become more transparent, with a better knowledge in the industry of what goes on in [the department]… We’re all together in this, in a partnership to protect the consumer.
