The Commissioner of the California Department of Real Estate, Doug McCauley, was very generous with his time and allowed me to interview him on his two year anniversary. I asked him the questions that I thought licensees would ask if they had this opportunity. His candid and open answers should help us better understand the operations of the Department. As a bonus, Jeff Oboyski, Assistant Commissioner, Licensing was present and provided additional information. Thank you very much Commissioner and Mr. Oboyski.
Yes, it has been two years already. Governor Newsom appointed the Commissioner on April 2, 2020, and he assumed the office on May 6, 2020. It is my sincere hope that we have another interview in an even better real estate market in 2024.
DUANE GOMER: You are the 25th Commissioner of the DRE, succeeding Wayne Bell. But, you have the distinction of being the only Commissioner who served during a Covid Pandemic. Obviously, the lockdown(s) caused problems for everyone. What was your biggest problem?
COMMISSIONER MCCAULEY: Our exam centers were shut down. Administering the exams for Salespersons and Brokers is one of our most important responsibilities. Over 7,000 exams were cancelled with no apparent way to respond. However, our staff was amazing and worked diligently to schedule more exams. Exams were offered in the evening, on weekends, and we established an auxiliary exam center in Sacramento. Today, applicants can sign up for exams on our website at dre.ca.gov, and the long wait periods after approval have been eliminated.
JEFF OBOYSKI: Between July 2021, through May 2022, the number of salespersons and broker exams administered increased 76% and 30% respectfully, when compared to the same period a year prior. With the changes the Commissioner noted, we now consistently administer more exams each month than we did before the pandemic started.
DUANE GOMER: One project that was completed in your first two years was the return of the Form 149, “Comparative Production Statistics”. This form presents monthly information on licensing numbers, renewal rates, number of new licenses, exam pass rates, exams scheduled and administered, investigations, audits, hearings, subdivisions and much more. The March 2022 Release of that Form can be viewed on the DRE Website, and it reflects that the test passing rates have decreased in the past year. In 2021 the passing percentages were 51% for Brokers and 60% for Salespersons, and in 2022 the rates are 47% for Brokers and 52% for Salespersons. Does the Department attempt to keep the passing rates within any certain parameters?
COMMISSIONER MCCAULEY: No. Our main concern is the validity of the exam. We monitor each question to make sure that it is working to test the student’s capability. We know that the passage rates will vary due to better preparation by applicants and Real Estate Schools or differences in the test groups. We want to make sure that the applicants have enough knowledge so they can work at an entry level in the industry.
DUANE GOMER: NMLS which controls MLO Education is allowing remote tests. Do you have any plans to implement testing “at home or at business sites”?
JEFF OBOYSKI: Not at this time, although we are open to the concept. We are deeply concerned about exam security and want to protect the integrity of our exams. Our exams are 3 hours (salesperson) and 4 hours (broker) long and monitoring a student by camera would present a number of challenges. We would have to make a number of changes to test administrations, and should test questions become compromised, the expense would be considerable.
DUANE GOMER: What is the status of your staff today as to where they are working?
COMMISSIONER MCCAULEY: About 90% of the staff are currently working “remotely” for at least part of their work week. We’ve been able to beef up our technology to support our telework efforts and our staff are all doing a wonderful job of providing the services for the licensees and those trying to get their real estate license.
DUANE GOMER: What are you “looking forward to” after the lockdowns end?
COMMISSIONER MCCAULEY: I miss the opportunity to visit our offices. The entire period that I have been Commissioner there has been travel restrictions. I want to get out and visit my people where they work. We communicate extensively now via video chats, email and text. But nothing replaces in-person visits, and I have not met many of my staff.
DUANE GOMER: Every time that I have talked to a commissioner, I have asked a question that is on the mind of all licensees. What about the fees?
COMMISSIONER MCCAULEY: At the moment there are no plans to raise any fees. That includes renewal fees, exam fees, application fees and first license fees, plus subdivision and other fees. The fees have not been raised in over 15 years. Our salaries and other expenses are increasing so more money may be needed soon. A 3rd party study of the fee structure has been authorized and this study should give us insight into the future.
DUANE GOMER: When we talked two years ago, there were several vacancies on your assistant commissioner list. Have they been filled?
COMMISSIONER MCCAULEY: Yes. The following is a list of our new staff: Chief Deputy Commissioner Marcus McCarther from the Department of Consumer Affairs; Assistant Commissioner Rick Lopes for Communication and Publications from the Contractors State License Board, and Assistant Commissioner Sonja Palladino for Legislation and Regulation from the Department of Housing and Community Development. Also, Jeff Oboyski was reassigned from Enforcement to Licensing; Chika Sunquist from Mortgage Loan Activities to Enforcement; and Shelly Wilson from Communications and Publications to Administrative Services.
DUANE GOMER: In the Winter 2022 REAL ESTATE BULLETIN you mentioned a new program, Online Exam License Application (OELA). It was officially launched on October 1, 2021. How is it doing?
COMMISSIONER MCCAULEY: Outstanding. Licensees can now submit their real estate exam or exam/license applications through eLicensing. Users can also upload any necessary documents and pay the required fees online. It is fast, efficient and eliminates the need to print and mail a paper application and supporting documents. Step-by-step instructions are also available. If a deficiency is identified, DRE will email applicants with instructions on how to resolve the issue electronically. Users can check their status online, and they will receive an email notice when they can schedule their exam. Over 70% of the applicants are using the service and the percentages are increasing daily.
DUANE GOMER: Are there any pending changes to education requirements for renewing or for statutory courses?
COMMISSIONER MCCAULEY: Yes. In September 2021, the Legislature passed and Governor Gavin Newsom signed Senate Bill 263, which amended the continuing education requirements for real estate licensees. SB 263 added new requirements to existing continuing education and takes effect on January 1, 2023. In addition to existing CE courses for license renewal, beginning January 1, 2023, real estate licensees with licenses expiring on or after January 1, 2023, will need to complete DRE-approved courses on implicit bias training; and fair housing, which includes an interactive component.
DRE staff have begun to work with private course providers to ensure that licensees will have sufficient time to complete the new approved CE requirements prior to the start of the new year.
DUANE GOMER: Have you approved any of the Implicit Bias Courses at this time?
JEFF OBOYSKI: We have already received a number of courses for review and approval, Our staff is working quickly to go through those, but at this time, none have been approved.
DUANE GOMER: Just before you began your term, a regulation was approved that allows someone with a disciplinary sanction on their record to request removal of that sanction. Have you been receiving any requests?
COMMISSIONER MCCAULEY: Yes, we are receiving some, and I have approved most of those.
JEFF OBOYSKI: There are a couple requirements to a petition. First, the discipline must be at least ten years old, and the petitioner must be a licensee. Additionally, there is a cost of $1,275 when petitioning to remove prior discipline information from DRE’s website.
DUANE GOMER: There is a question that I have asked you, Wayne Bell, Dan Sandri and Jeff Davi. Is a redo of the DRE Reference Book under consideration? The Real Estate Law book is renewed and updated every year, and the 2022 edition is now available. But the current reference book was printed in 2010, and there have been law and regulation changes since then that are not discussed in or covered by the Reference Book. Also, when the 2010 edition was printed the pages in the table of contents did not match where the content was located in the book, and that was somewhat confusing.
COMMISSIONER MCCAULEY: We understand that an updated Reference Book would be a big service to everyone. It would be very valuable and it is on our radar as we speak.
DUANE GOMER: Currently there are changes pending to Commissioner’s Regulations 2780 and 2781, which discuss, “Discriminatory Conduct as the Basis for Disciplinary Action”. Daniel Kehew, everyone’s favorite attorney at DRE, mentioned to me that there have been no written comments, and there will be no hearing so the regulations should be in effect soon. What was changed in 2780?
COMMISSIONER MCCAULEY: The major changes to 2780 were adding more protected classes to the previous list. The new classes are gender, gender identity, gender expression, sexual orientation, familial status, genetic information, source of income, veteran or military status, citizenship, primary language, and immigration status.
DUANE GOMER: The protected classes from the prior 2780 were race, color, sex, religion, ancestry, physical handicap and marital status and national origin. In the new 2780 the term physical handicap is changed to disabled. And did I mention that 2781 is unchanged and is only one paragraph stressing the fact that you should not do any panic selling.
DUANE GOMER: Previously, you mentioned that you would be using the Citation and Fine Program. What is happening in this area?
COMMISSIONER MCCAULEY: Yes, I like this program. It can be used for many minor and technical violations. The fine is $2,500.00 per violation, and if there are four violations in a case, the fine would be $10,000. These violations do not warrant formal disciplinary action and the fines help encourage and reinforce compliance with the Real Estate Law.
COMMISSIONER MCCAULEY’S FINAL COMMENTS:Today’s market is challenging. For licensees, brokers, salespersons, lenders, and others who provide real estate related services, we are seeing market conditions that are perplexing. That means we all need to be exponentially diligent in providing services to consumers. The explosion of technology continues to present both opportunities and challenges. Using these tools makes our jobs easier, but also exposes us to risk. For example, are you sufficiently explaining disclosures to a client who is scrolling through them in 90 seconds? The reliance on tech could mean that there is less demand for licensees in the future. Those who thrive will be challenged to step up their game and continuously strive to be high-performing professionals. Maintaining knowledge in key areas that can be risk points will be an crucial investment. Ultimately, DRE and licensees’ goal is the same: for licensees to provide quality services to consumers. We look forward to partnering with the profession to make that a standard we consistently meet.
DUANE GOMER’S FINAL COMMENTS: If you have ever read any of my writings, you know that as a networking question, I always ask someone I meet, “Where did you go to High School?” Two years ago we learned that Douglas McCauley graduated from St. Mary’s Rams High School in Stockton and then on to California State University Sacramento. Jeff Oboyski went to St. Joseph’s High School in Pittsfield, MA, and then on to Canisius College in Buffalo, NY. (It is very close to Tops Market).
CONCLUSION: Again, I want to thank the Commissioner and Jeff Oboyski for their time. If any readers want to hear more from them, read the quarterly Bulletin. The latest Winter Bulletin 2022 is available online. Outstanding topics including not only a Commissioner’s Update but information on New Real Estate Laws, DRE Works to Curb Unlicensed Activity, Being Water Smart, a very valuable List of DRE Publications, California Mortgage Relief Program, Studies on the Conversion of Property from Commercial to Residential, OELA, and much more. BTW, you might consider reading some back issues of the Bulletins. Managers, you would get some great ideas for company meetings from DRE Publications.
After two years the Commissioner wants to continue to improve the overall DRE Brand, stressing strong consumer protections, efficient licensing, and effective communication. I believe that we are all on the same side so let’s work to make California a showplace and a model for other States.