This and That

Department of Real Estate (DRE):
Yes, you read that right, DRE. The current California Bureau of Real Estate (CalBRE) will be converting back to the DRE as of July 1, 2018. Licensees should see no changes other than the name change. I have confirmed with the CalBRE that the use of DRE, BRE, CalBRE or CalDRE will be acceptable during and after the change, but the letters DRE should be used on any new signs, cards, advertising, etc., that are printed after July 1, 2018. For advertising disclosures on websites, brochures and print advertising, the current verbiage should be: Real Estate Broker – California Bureau of Real Estate – License #00000000. After July 1, 2018, it should read: Real Estate Broker – California Department of Real Estate – License #00000000.

License Numbers on First Point of Contact:
Starting January, 2018, all first point of contact material (including advertising signs, promotional handouts like pens, etc.) must include the CalBRE identification number. The font size of the license number must be no smaller than the smallest font used in the advertising copy (no mice type!).

Broker-Associates:
Beginning on January 1, 2018, all Broker-Associates working for another Real Estate Broker need to be “attached” to the broker/corporation (the same as Salespersons are currently). This does not preclude the Broker-Associate from working for him/herself independently or working for multiple brokers/corporations, but just requires the notification to the CalBRE that he/she is working as a Broker-Associate. This cannot be done online via e-licensing but must be accomplished by mailing the RE-215 change form to the CalBRE in Sacramento, completed and signed by both the Broker-Associate and the employing broker. Once filed, the Broker-Associate(s) will be listed on the CalBRE printout for the broker/corporation. And, make sure those Broker-Associates also have a Broker-Licensee contract.

Self-Dealing:
If a broker uses private investor funds for loans in which he/she is the borrower (even if the borrower is a corporation or an LLC in which the broker has ownership), he/she must notify the Mortgage Loan Activities division of the CalBRE, in writing, no less than 24 hours prior to the funding of the transaction. In addition to the notification, the broker must include an unexecuted copy of the LPDS for the transaction. Additionally, the loan CANNOT be a multi-lender loan, but can only be from a single beneficiary/lender. Just a word to the wise.

Business Activity Report (BAR RE-881):
Recently I have had inquiries from brokers who are negotiating and originating only business-purpose loans (no consumer loans), they do not meet threshold, and they wondered if they still needed to file the annual Business Activity Report. The answer is a resounding YES! Any 1-4 residential loans originated, regardless of usage of the funds, need to be reported on the RE-881 by the end of March each year (unless the originator is only acting as a Broker-Associate, in which case the employing broker must report).

Office Surveys for Restricted Licensees:
The CalBRE Special Investigators are currently visiting offices to conduct office surveys of brokers who are employing licensees with restricted broker or salesperson licenses. These usually take about an hour and the emphasis is on the supervision policies and procedures used by the employing broker to supervise the activities of the restricted licensee. Expect a call if you employ a restricted licensee.

Multi-Lender Transaction Notification:
The CalBRE form RE-860 must be filed with the CalBRE within 30 days of a broker conducting multi-lender/fractionalized transactions. This must be filed if the broker/corporation originates a multi-lender loan OR services multi-lender loans. Additional requirements of multi-lender servicers include quarterly reviews of the multi-lender loans by an independent CPA. Confusion regarding the need to file has occurred when the broker/corporation only services and does no originations. If you are servicing multi-lender loans, make sure you are meeting the filing requirements.

Pam Strickland is a compliance consultant who strives to make sure that brokers are prepared to survive a CalBRE audit. She can be reached at pam@pamstrickland.com.