Annual report fiscal year 2005

GEORGIA REAL ESTATE COMMISSION
GEORGIA REAL ESTATE APPRAISERS BOARD
ANNUAL REPORT
FISCAL YEAR
2005
TABLE OF CONTENTS
Letter to the Governor Exhibit A Investigative Statistics Exhibit B Financial Data Exhibit C Organizational Chart Exhibit D Licensing Statistics Exhibit E Commission Regulatory Activities Exhibit F Strategic Plan Exhibit G Resultsbased Budget Program Measures Exhibit H Appraiser Board Regulatory Activities

GEORGIA REAL ESTATE COMMISSION
Suite 1000 International Tower 229 Peachtree Street, N.E. Atlanta, Georgia 30303-1605 404-656-3916 Voice 404-657-7367 Fax Internet www.grec.state.ga.us
MEMBERS
BILL BONNER Chair
GEORGE W. HOLTZMAN Vice Chair
SCOTT FREE DENA R. RODRIGUES BURT WILKERSON GWEN FULCHER YOUNG
STAFF
CHARLES CLARK Real Estate Commissioner

August 31, 2005
The Honorable Sonny Perdue Governor State of Georgia State Capital Atlanta, GA 30334
Dear Governor Perdue:
Pursuant to the Official Code of Georgia Annotated 43-40-2(e), I submit the Annual Report of the Georgia Real Estate Commission for the fiscal year (FY) July 1, 2004, through June 30, 2005. As that statute requires, this report includes a summary of all the Agency's actions (Exhibits A and E), a statement of income and appropriations (Exhibit B), the Agency's organizational chart (Exhibit C), the numbers of persons licensed (Exhibit D), steps taken in education and research (Exhibit E), the Agency's Strategic Plan (Exhibit F), and the Agency's Results Based Budgeting Program Results and Measures (Exhibit G). Since the Commission also provides administrative support for the Georgia Real Estate Appraisers Board, I have included a summary of their activities as Exhibit H.
In FY 2005, we issued a total of 12,203 new individual licenses, an increase of 1,837, or 17.7% over FY 2004. FY 2004 had also exceeded FY 2003 by 13%. Reflecting probably both good real estate brokerage markets and fewer job opportunities in other sectors of our economy, FY2005 marked the ninth consecutive year the Commission issued over 5,000 applications for new individual licenses.
Another good indicator of the continuing strong real estate markets is the number of persons renewing licenses. In 2005, 15,641 licensees were scheduled to renew; 13,534 actually paid renewals. That 86.5 % renewing rate confirms historical data that suggests higher renewal rates in years with strong real estate markets and lower rates in years with weaker markets.
No general tax revenues may be used to support our Agency's operations. All funding comes entirely from user fees from licensees. For a sixth consecutive year, the Agency's revenue generation significantly exceeded its budget despite several reductions of fees the Commission and the Board have implemented. During the coming year, we plan to work with you and OPB to achieve the proper mix of budget enhancements and fee reductions needed to balance revenues and costs as the law requires.

August 31, 2005 The Honorable Sonny Perdue Page 2
We appreciate the fact that you have recognized that our Agency does not rely on general tax revenues to pay our Agency's costs of operation. Thus, you recommended a budget for our Agency in FY 2005 that better funded the Agency's critical operations at no cost to general state revenues.
Other, statistical data and activities of special note include:
Allowing licensees to renew licenses using a credit card over the Internet continues to be a successful program. In FY 2005 79.5% of all renewals were made on the Internet. Since the Commission began Internet renewals in FY 2000, they have increased each fiscal year from 9.5% to 24.2% to 31.5% to 61% to 67% to 79.5% this fiscal year. The program allows the Commission to mail new pocket cards to licensees the day after they pay their fees. It also significantly reduces the Agency's accounting and application processing costs. (Since the system saves many hours of staff work, the Commission passes on that savings to licensees who use the system in the form of a reduced renewal fee.)
The Commission must maintain records on over 198,000 active, inactive and lapsed Licensees. During FY 2005, the Agency processed over 230,000 data entries to maintain those records. Over 112,000 of those entries were processed through on-line systems. The new systems for online initial licensing, for on-line continuing education credit posting, and for online renewing of licenses have helped the GREC avoid having to employ additional processing personnel while still timely processing the growing number of applications.
The Agency received and processed 118,037 telephone calls (29,024 more than FY 2004). That increase resulted largely from the increase in the number of new applicants and an increase in the number of inquiries from licensees regarding continuing education credits. To help handle those calls, the Commission also utilized a Voice Response System that provided information for 82,867 (15,360 more than FY 2004) inquiries from licensees about their continuing education credits and license status 24 hours a day, seven days a week.
In FY 2005 approximately 33% (6% more than in FY 2004) of the 230,682 applications processed came to the Agency by mail, 12% (19% less than in FY 2004) came by fax, and 53% (an 11% increase over FY 2004) via the Internet. In-coming mail has fallen precipitously since the Agency began accepting electronic applications in the mid 90's. The major factors

August 31, 2005 The Honorable Sonny Perdue Page 3
leading to decreased mail activity are (a) the use of online renewals, (b) the issuance of most new licenses at the time of examination, and (c) the uploading of continuing education credits by approved schools directly into our computer system. The numbers of applications the Agency processed in FY 2005 increased by over 25,000 from FY 2004. Without electronic technology, the Agency could not have absorbed that increase without unreasonable delays in processing.
Requests for Investigations from the public numbered 729, 52% above the yearly average of 478 in the 1990s and 13.5% above the 642 in FY 2004.
The Agency concluded 2,543 investigations, an 8.8% increase over FY 2004. Average case production per Investigator remained a little over 280.
The Commission imposed disciplinary actions on 253 licensees arising from 272 investigative cases, including revoking 57 licenses and imposing a total of $93,900 in fines and $106,350 in costs on 111 licensees.
Because appraisal cases referred from financial institutions are good indicators of the possibility of mortgage fraud, the Commission and the Appraisers Board have devoted more investigative resources and given priority to working those cases in an effort to reduce the financial harm to the public from such fraudulent activities. The Attorney General's office has joined us in making special arrangements to expedite prosecution of those cases through a Special Assistant Attorney General.
The Commission implemented changes in its advertising rules to eliminate out-dated requirements and to address better how changing media has influenced advertising. The Commission especially appreciates the help in this process that it has received from various trade associations including: The Building Owners and Managers Association, the Community Associations Institute, the Empire Real Estate Board, the Georgia and Atlanta Apartment Associations, the Georgia Association of Realtors, and the Real Estate Educators Association.
In the area of education, the Commission funded $50,000.00 in scholarships for real estate licensees to take advanced education courses. With the help of the Georgia Real Estate Educators Association, the Commission also reorganized our rules regulating schools to simplify them and to eliminate out-dated or unnecessary requirements.

August 31, 2005 The Honorable Sonny Perdue Page 4
As the numbers above indicate, our staff has done an outstanding job of increasing production without new personnel. Yet, three statistics from this FY2005 Report raise special concern about their ability to continue to meet the workload with current staffing. First, the average time to complete Requests for Investigations rose from 109 days to 149 days. Second, completed applications that could not be processed in five days rose to over ten per cent of our workload. Third, the volume of telephone calls the Agency must handle rose over 29,000 leading to long delays in service. These statistics reflect increases in our workload that existing staff can not effectively handle. The Agency will make appropriate budgetary recommendations in its FY2007 budget request.
The Commission members would like to express our appreciation for our Staff. They have continued their exceptional work and generated record production in many areas, despite significant workload increases in all areas of our operations. We note especially outstanding performances by our managers and by staff members Jeff Angel, Joyce Baity, Bess Buckley, Vivian Chang, Craig Coffee, Alan Gloer, Felicia Hubbard, Shin Liu, Doug Milton, Nick Nichols, Matthew Richardson, and Wanda Sorrells.
Please do not hesitate to call on me if you need further information regarding this report.
Sincerely
Bill Bonner Chair
Enclosures

GREC FY2005 Annual Report

EXHIBIT "A" Page 1

GEORGIA REAL ESTATE COMMISSION INVESTIGATIVE ACTIVITIES
FY2003 FY2005

SOURCE OF REQUESTS FOR INVESTIGATIONS
Public Licensees/Appraisers Commission Other Appraisal Board
TOTAL

FY2003

FY2004 FY2005

504 98 1,502 65 346 2,515

534 108 1,478 35 352 2,507

596 133 1,682
78 351 2,840

ANONYMOUS COMPLAINTS (Not investigated)

14

9

18

CASES INVESTIGATED

2,568

2,337

2,543

TRUST ACCOUNT EXAMINATIONS AND REVIEWS

1,272

1,475

1,162

In addition to the written complaints cited above, the Commission's staff processes daily a number of informal complaints, grievances, and inquiries. The staff resolves most of these informal matters rapidly to the satisfaction of the public. Many complaints involve contract disputes and require legal assistance. The staff refers the complaining party to an attorney or small claims court for appropriate action. The staff makes the same referral when the complaint does not involve a licensee, which is the case with many complaints the Agency receives, both written and oral, concerning individuals, builders, and developers selling their own properties.
The Agency's web site had 10,022 visits that sought information about our investigative procedures or a Request for Investigation form (up from 4,923 in FY 2004). In FY 2005 the staff also mailed Request for Investigation forms to persons who called our office with a real estate brokerage or appraisal problem. 642 persons used either the mailed forms or a downloaded form to request an investigation. In FY2003, 630 persons used them to request investigations.

GREC FY2005 Annual Report
DISPOSITION OF GREC INVESTIGATIVE CASES1 Disciplinary Process Ordered Cases A.G. declined to prosecute Criminal Convictions Reported Licenses Issued - No Hearing Licenses Denied - No Hearing Letters of finding written2 Closed due to no violation Cease and Desist Orders or Agreements3 Sent to other agencies for prosecution

FY2003
226 3
1,075 48 228 421 9 1

GREC FORMAL DISCIPLINARY ACTIONS1

Dismissed or No violation

-

Citations (for minor violations)

17

License Denied After Notice of Hearing Filed

32

License Issued After Notice of Hearing Filed

4

Reprimand and/or Educ. and/or Audit and/or Fine

77

Suspension and/or Educ. and/or Audit and/or Fine

51

Revocation

74

Revoke Broker and Issue Salesperson License

5

Other

-

TOTAL

260

FY2004
298 1
1,281 69 176 413
14 -
40 42
9 41 73 55
3 263

EXHIBIT "A" Page 2
FY2005
255 5
1,554 100 108 399
17 -
59 34 10 35 58 54
3 253

Formal Disciplinary Actions are either citations (generally, for minor technical violations - 59 in FY2005) or sanctions (more serious violations - 194 in FY2005). In FY2005 the Commission imposed 9 sanctions when two or more Requests for Investigation (RFI) filed regarding the same person. 9 licensees had two RFIs, and none had three or more.
For several years the Commission has made extensive use of consent decrees to resolve contested cases. Where there is little dispute regarding the facts in a case brought against a licensee and both parties agree on the sanction to be imposed, the Commission uses the consent decree to save all parties the time and expense of a full, formal hearing. Over 80% of all cases are resolved without the Commission's holding a formal hearing.
1Includes Commission actions only. For Appraiser Board actions see Exhibit H.
2The Commission sends letters of findings to licensees when an investigation reveals only technical license law violations that involve no harm to the public.
3The Commission issues cease and desist orders or letters to persons acting without proper licensure. If they cease activity or became licensed, no other legal action is necessary.

GREC FY2005 Annual Report
TYPES OF INVESTIGATIONS COMPLETED
ADMINISTRATIVE ISSUES Most frequent types: Prelicense Investigations Application Problems
SALES TRANSACTIONS Most frequent types: Agency Issues Earnest Money Issues Handling of Offers Misrepresentations
MANAGEMENT TRANSACTIONS Most frequent types: Rent/Security Deposit Management Problems
NON LICENSE LAW MATTERS Most frequent types: Commission/Fee Dispute License Not Required
APPROVED SCHOOLS
SPECIALIZED TRANSACTIONS
TRUST ACCOUNT EXAMINATIONS
TRUST ACCOUNT REVIEWS
APPRAISALS Most frequent types: Standards Violations Value Disputes Application Investigations
TOTALS
INVESTIGATIONS PENDING AT END OF FY

FY2003 1,379

FY2004 1,397

EXHIBIT "A" Page 3
FY2005
1,684

327

450

432

47

30

68

130

54

123

89 1
106 1,166
489

38 0
93 1,382
622

2 0 47 1,115 579

3,734 300

3,812 534

4,050 780

GREC FY2005 Annual Report

EXHIBIT "B" Page 1

AGENCY'S SEPARATE BUDGET UNIT STATUS
According to a 1977 court ruling and subsequently adopted state statutes, the Real Estate Commission's budget for direct and indirect costs must approximately equal its revenue collections. Revenue collections include fees paid for license transactions such as original applications and renewals. These revenue calculations do not include Recovery Fund income. Direct costs include expenses for which the Commission directly pays; for example, employees' salaries, rent, telephone, and computer charges. Indirect costs represent services to the Commission provided by other state agencies and paid out of other state budgeted funds; for example, legal services from the Attorney General's Office and bookkeeping and personnel record keeping by the Secretary of State's Office. These indirect costs for the Commission have varied from 15% to 20% of its direct legislative appropriation. The Governor's Office of Planning and Budget (OPB) and the Legislative Budget Office (LBO) instructed the Commission to base its proposed budgets on its estimated income for the year for which it is submitting a budget proposal and that it attempt to set fees at a level so that its direct appropriation equals roughly 85% of income.
If the Commission's income significantly exceeds legislative appropriations for direct and indirect costs, it must reduce fees charged to licensees. Throughout the 1980s and the 1990s, the Commission received 90%+ of the revenue its fees generated to fund its cost of operations. During those two decades the Commission made one reduction when appropriations in earlier years had fallen below fee income. Conversely, if income falls significantly below legislative appropriations for direct and indirect costs, the Commission must increase fees charged to licensees. It has had to increase fees only once since 1980.
In 1990, the Commission began providing administrative support to the Real Estate Appraisers Board. By 2000, the Appraisers Board was generating more income than it needed to support its operations while the Commission was generating less. In 2000 and 2002 the Appraisers Board reduced the fees that it charged to appraisers.
In order to keep its revenues equal with its costs, the Commission had to adjust its fees in 2000, 2001, and 2002. As a part of that adjustment process, based on advice from an industry task force, the Commission simplified its renewal fee schedule (the major fee it charges) to two major categories, individuals and firms. It raised some fees by not more than $10.00 per year, and some were lowered by not more than $15.00 per year. The revised schedule will make any future adjustments that may be needed easier to accomplish and more equitable among classes of licensees.
Since 2000 the Commission's income has significantly exceeded its costs of operation. The increased income has resulted largely from the fact that the real estate economy in Georgia has remained strong while the remainder of the economy has become weaker. Thus, more licensees than usual renew their licensees, and the Commission has seen a steady, significant increase in the number of new licensees (FY1998 - 4,943; FY1999 5,082; FY2000 5,365; FY2001 6,073; FY2002 7,231; FY2003 9,171; FY2004 10,366; FY2005 12,203). Recognizing that the Agency generates its own income (instead of being funded from general tax revenues), the Governor and the General Assembly increased the Agency's budget for FY2004 and for FY2005. If the real estate economy cools and the Agency has fewer renewals and new applicants, the Commission and the Board may not need to adjust their fee structures. If Agency's fees continue to exceed significantly costs of operation, the Commission and Board will consult with the Office of Planning and Budget and the Legislative Budget Office and make appropriate adjustments in their fee structures.

GREC FY2005 Annual Report

EXHIBIT "B" Page 2

INCOME AND APPROPRIATIONS

Georgia Real Estate Commission

Fiscal Year

Fee Income

Legislative Appropriation + 15%

1998 1999 2000 2001 2002 2003 2004 2005

2,029,621 2,063,606 2,605,034 2,980,439 3,098,135 3,452,842 3,672,567 3,939,067

2,200,762 2,287,588 2,246,494 2,290,734 2,204,926 2,109,264 2,284,120 2,419,904

8 Year Totals 23,841,311

18,043,792

Georgia Real Estate Appraisers Board

Fiscal Year

Fee Income

Legislative Appropriation + 15%

1998 1999 2000 2001 2002 2003 2004 2005

444,380 489,680 493,310 468,895 527,216 627,861 666,985 614,210

372,888 439,460 392,777 386,452 427,164 415,182 464,406 626,916

8 Year Totals

4,332,537

3,525,245

Agency Totals

Fiscal Year

Fee Income

Legislative Appropriation + 15%

1998 1999 2000 2001 2002 2003 2004 2005

2,474,001 2,553,286 3,098,344 3,449,334 3,625,351 4,080,703 4,339,552 4,553,277

2,573,650 2,727,048 2,639,271 2,677,186 2,632,070 2,524,446 2,748,526 3,046,820

8 Year Totals 28,173,848

21,569,037

Appropriation As % of Income
108.4 110.8 86.2 76.8 71.2 61.1 62.2 61.4
75.7
Appropriation As % of Income
83.9 89.7 79.6 82.4 81.0 66.1 69.6 102.1
81.3
Appropriation As % of Income
104.0 106.8 85.2 77.6 72.6 61.8 63.3 66.9
76.5

GREC FY2005 Annual Report

EXHIBIT "B" Page 3

REAL ESTATE EDUCATION, RESEARCH, AND RECOVERY FUND

All fees from the Recovery Fund come from a $20.00 payment with each new license issued and from the interest earned on such payments. Thus, most licensees make only one $20.00 payment to the Fund. By law, the Commission cannot use funds collected for the Recovery Fund to pay the operating expenses of the Commission. The Commission may use these funds only to pay court ordered judgments and limited education grants. The law requires the Commission to maintain at least a $1,000,000.00 balance to cover potential court ordered judgments.
I N C O M Ea

FISCAL YEAR 1974 - 2002
2003 2004 2005 Sub-totals TOTAL INCOME:

LICENSEE PAYMENTS & JUDGMENT COLLECTIONSb
3,112,548.29 203,833.00 236,434.97 276,562.67
3,829,378.93 6,119,503.39 D I S B U R S E M E N T Sa

INTEREST EARNEDc
2,209,421.84 2 5,9 00.86 18,789.08 36,012.68
2,290,124.46

JUDGMENTS PAID & COLLECTIONS COSTS

EDUCATION/RESEARCH CONTRACTS

FISCAL YEAR

NUMBER

AMOUNT

NUMBER

AMOUNT

1974 2002 2003 2004 2005
Sub-totals

131

789,866.51

1

6,228.00

0

6.00

0

0

132

796,100.51

189

2,618,990.50

4

127,397.25

7

158,685.37

6

96, 133.95

206

3,001,207.07

TOTAL DISBURSEMENTS:

3,797,307.58

TTOTTALL INCCOOME::

6,,1119,,55033.339

LLESSSS DISBBUURSEMENTSS:: 3,77977,307.588

BBAALAANCCEE ONN HHANND:: 2,,33322,195.811

aFigures reflect deposits and requests for withdrawals made to the Secretary of State's fiscal office. bDuring FY1981-2004 the Commission collected $89,658.85 on judgments it had paid. After paying $24,550.56 in collection costs, the Commission deposited the balance into the
Recovery Fund. cThe Department of Administrative Services invests all state funds.

GREC FY2005 Annual Report

FY2005 ORGANIZATIONAL CHART

EXHIBIT "C"

GEORGIA REAL ESTATE COMMISSION (Five Licensees & One Consumer Appointed by Governor)
Chair Bill Bonner, Fayette County Vice-Chair George W. Holtzman, Hinesville
Members Scott Free, Perry Dena R. Rodrigues, Marietta Burt Wilkerson, Macon Gwen Fulcher Young, Augusta

GEORGIA REAL ESTATE APPRAISERS BOARD
(Four Appraisers & One Consumer Appointed by Governor)
Chair Charles B. Bramlett, Monticello Vice-Chair Sandra McAlister Winter, Alpharetta
Members William R. Coleman, Jr., McDuffie County
Patricia K. Love, Columbus D. Scott Murphy, Suwanee

REAL ESTATE COMMISSIONER (Appointed by Commission)
Administration - Two Positions

Information Systems Information Services Education and Training Investigations Compliance Section

Three Positions

Seven Positions

Two Positions

Sixteen Positions Two Positions

(Because the Commission supplies administrative support for the Georgia Real Estate Appraisers Board, the Board pays the costs for four of the Commission's employees.)

Permanent Employees and Their Years of Service as of June 30, 2005

Charles Clark, Real Estate Commissioner

Jeffrey Ledford, Deputy Real Estate Commissioner

Mattie Abbott (25), Data Transcriber I Jeff Angel (7), Systems Programmer 2 Joyce Baity (25), Administrative Clerk Audrey Brown (10), Investigator Bess Buckley (9), Investigator Vivian L. Chang (5), Investigator Craig Coffee (5), Information Services Manager Deborah Dupree (19), Administrative Clerk Charlotte Durant (8), Education Advisor Delories Gibson (17), Compliance Manager Alan Gloer (21), Investigator Lorine S. Hall (1), Information Specialist Teresa Holder (7), Director of IS Julia M. Howard (5), Investigator

Felicia Hubbard (12), Information Specialist Diane M. Keys (5), Investigator Shin Shin Liu (4), Network Specialist Oil Mata (1), Investigator Shonda Mason (6), Secretary II Doug Milton (26), Investigator Joanne Newton (1), Investigator Nick Nichols (10), Information Specialist Matt Richardson (2), Investigator Rosa Scott (9), Investigator Wanda J. Sorrells (25), Investigator Ric Wilson (16), Director of Education Kimberley Wimby (6), Information Specialist

GREC FY2005 Annual Report

EXHIBIT "D"
Page 1

SUMMARY OF PAST LICENSING STATISTICS

Fiscal Year

TOTAL ACTIVE BROKERS

TOTAL ACTIVE SALESPERSON

TOTAL INACTIVE LICENSEES

TOTAL ACTIVE FIRMS

1960 1965 1970 1975 1980 1985 1990 1995 2000

2,349 2,885 3,296 6,971 10,010 9,637 13,442 12,871 13,380

5,058 10,719 11,554 18,670 28,188 26,514 28,433 24,406 28,503

3,941 13,324 18,906 11,219 11,941

5,111 6,118 8,015 8,385 9,070

2001

13,510

30,381

11,870

8,891

2002

13,710

32,751

12,132

8,929

2003

14,090

36,382

12,555

9,193

2004

14,794

40,966

13,264

9,730

2005

15,616

46,376

14,649

10,454

All 61,992 active individual licensees are affiliated with 10,454 firms that conducted business as sole proprietors (4,025), corporations (4,860), limited liability companies (1,472), or partnerships (97). Licensees on inactive status may not conduct business unless they activate with a licensed firm.

Total active brokers include associate brokers, brokers of sole proprietorships, and qualifying brokers of corporations, limited liability companies, and partnerships.

EXAMINATION RESULTS

FISCAL YEAR

TOTAL BROKER EXAMINEES

TOTAL BROKER PASSING

% BROKER PASSING

TOTAL SALES EXAMINEES

TOTAL SALES PASSING

% SALES PASSING

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

507 478 481 482 528 578 663 715 825 963 1,156

372

73.3

4,756

3,274

68.8

369

77.2

5,339

3,753

70.3

396

82.3

5,012

3,842

76.6

441

91.5

4,449

3,831

86.1

475

89.9

4,714

4,008

85.0

529

91.5

4,874

4,245

87.1

588

88.7

5,702

4,998

87.7

637

89.1

7,055

6,202

87.9

706

85.6

8,341

7,429

89.1

810

84.1

9,996

8,727

87.7

951

82.3

11,848

10,107

85.3

In 2005, 57 persons took the Community Association Managers examination, and 49 (85.9%) passed.

GREC FY2005
Annual Report
FISCAL YEAR
RENEWALS PAID Community Association Managers Salespersons Brokers Firms
Total Renewals
NEW INDIVIDUAL LICENSES ISSUED Resident Salespersons Resident Associate Brokers and Brokers Resident Community Association Manager
Total Resident New Licenses
Nonresident Salespersons Nonresident Associate Brokers and Brokers Nonresident Community Association Manager
Total Nonresident New Licenses
Total New Licenses
NEW FIRMS LICENSED Resident Sole Proprietorships Resident Corporations Resident Partnerships Resident Limited Liability Companies
Total Resident New Firms
Nonresident Sole Proprietorships Nonresident Corporations Nonresident Partnerships Nonresident Limited Liability Companies
Total Nonresident New Firms
Total New Firms
FIRMS REOPENED
FIRMS CLOSED
TRANSFERS TO OTHER FIRMS Salespersons Associate Brokers
Total Transfers

FY 2003
30 14,581
4,041 2,960
21,612
7,581 799 25
8,405
544 222
0
766
9,171
201 605
6 216
1,028
38 53
0 16
107
1,135
6
171
8,853 1,683
10,536

FY 2004
39 22,955
5,468 3,170
31,632
8,443 861 27
9,331
870 164
1
1,035
10,366
256 364
2 261
883
26 16
1 11
54
937
16
160
9,187 2,439
11,626

EXHIBIT "D" Page 2
FY 2005
59 19,336
4,885 2,887
27,167
9,645 896 46
10,587
1,254 362 0
1,619
12,203
193 676
2 370
1,241
65 70
4 50
189
1,658
61
189
8,534 1,770
10,304

GREC FY2005 Annual Report
FISCAL YEAR
ADDRESS CHANGES Firms Individuals
Total Address Changes
NAME CHANGES Firms Licensees
Total Name Changes
CERTIFICATIONS OF LICENSURE For Courts Others
Total Certifications
APPLICATIONS FOR INACTIVE STATUS Salespersons Brokers/Associate Brokers
Total Inactive Applications
LICENSES VOLUNTARILY SURRENDERED
LAPSED LICENSES Education not completed Renewal fees not paid
Total Lapsed Licenses
LICENSES REACTIVATED From Inactive Status From Lapsed Status
Total Reactivated
DUPLICATE CERTIFICATE REQUESTS
EDUCATION CERTIFICATIONS FILED Post License Course Continuing Education
Total Education Certificates Filed
TRUST ACCOUNT REGISTRATIONS New Closed
OTHER (biographical data and computer records changes)
TOTAL

FY 2003
817 5,579 6,396
138 586 724
311 2,334 2,645
3,804 340
4,144 331
1,644 4,235 5,879
3,867 1,426 5,293 3,542
6,363 40,532 46,895
1,874 873
22,059 143,381

FY 2004
690 5,833 6,523
151 567 718
411 4,007 4,418
3,982 380
4,312 351
1,663 4,272 5,935
3,745 882
4,627 3,779
7,151 69,729 76,880
1,708 1,265 19,835 185,405

EXHIBIT "D" Page 3
FY2005
583 11,125 11,708
179 451 630
473 5,490 5,963
8,532 866
9,398 549
1,992 4,309 6,301
4,593 1,636 6,229 3,956
7,763 78,612 86,375
1,740 597
28,812 213,840

GREC FY2005 Annual Report

EXHIBIT "E" Page 1

FISCAL YEAR 2005 ACTIONS BY THE COMMISSION TO IMPROVE REGULATION

I. NEW OR MODIFIED LAWS

A.

License Law Changes Proposed

1.

clarify that sanctions permitted to be imposed on classified appraisers may also be

imposed on Commission approved schools and instructors,

2.

provide for the recusal of a Commission member when an investigation involves the

appraisal activities or application of a Commission member, and

3.

authorize the Commission to provide investigative information to the Governor when an

investigation involves a member of the Commission.

Legislation making these changes passed the Senate and the House but was VETOED by the Governor.

B.

Rule and Regulation Changes

1.

Modified advertising requirements to include having firm names as large as or larger than

affiliates, and deleted requirement that franchisees must have a special legend in their

advertisements. [Rule 520-1-.09]

2.

Clarified how firms must register trade names with the Commission. [Rule 520-1-.04]

3.

Allowed licensees to use a special legend or their license numbers when advertising real

property they own. [Rule 520-1-.11]

4.

Required licensees to use their license numbers on all brokerage engagements and on

offers to purchase, sell, lease, or exchange real property. [Rule 520-1-.10]

5.

Modified procedures for election of the Commission's officers. [Rule 520-1-.01]

6.

Modified rules for veterans' preference to correct internal references and to base

decisions of what periods of time constitute war or declared conflicts to coincide with

those periods established by the United States Government's Office of Personnel

Management. [Rule 520-1-.04]

7.

Clarified types of criminal history reports that applicants for a reciprocal license must file

and authorized persons seeking a reciprocal license in another state who were licensed by

reciprocity here to take our state's qualifying examination if necessary to obtain a license

in another state. [Rule 520-1.04]

8.

Reorganized rules governing schools and instructors. [Rule Chapter 520-2]

II. GENERAL ACTIVITIES A. Elected Bill Bonner of Fayette County as Chair and George Holtzman of Hinesville as Vice Chair.

GREC FY2005 Annual Report

EXHIBIT "E" Page 2

B. Neal Jackson of Walton County completed his term and Governor Perdue named Scott Free of Perry to fill his seat.

C. Opposed the adoption of Senate Bill 254 which deleted language from the license law that had made the Commission a separate budget unit in order to comply with a court decision in 1976. The Governor VETOED the bill.

D. Held a planning session to prioritize its work toward meeting goals, revised the Agency Strategic Plan and the Information Technology Strategic Plan; and adopted a Results Based Budget Program including program goals, program results/objectives, and associated result measures.

E. Published newsletters and license law manuals on the Internet (www.grec.state.ga.us) rather than printing them in order to permit timely updating of material at substantially reduced costs.

F.

Acted on a report from an Industry Trade Group that the Commission asked to examine its Rules

on advertising to make recommendations. The Trade Group sought advice from members of the

Building Owners and Managers Association, the Community Associations Institute, the Empire

Real Estate Board, the Georgia and Atlanta Apartment Associations, the Georgia Association of

Realtors, and the Georgia Real Estate Educators Association. Trade Group participants included:

Chair Arlene Davis, Lawrence Batiste, Bill Boatman, Linda Durrence, Emily Fu, Gloria Key-

Taylor, Elaine Lee, David London, Raymond Morris, Judy Presley, David Thomas, Rusty Willis,

and Buddy Weston.

G. Updated its reciprocal licensing agreements with other states so that licensees may obtain licenses in 28 other states without additional qualifications (including Alabama, North Carolina, South Carolina, and Tennessee) and in 14 other states with reduced additional qualifications (including Florida). 11 jurisdictions are currently either unwilling or legally prevented from entering into reciprocity agreements.

H. Continued work with its Education Advisory Committee to develop a comprehensive education strategic plan.

I.

Made available on its web site a Customer Satisfaction Survey to help assure quality service to

customers.

J.

Adopted or modified existing policies to:

1. update its Investigative Policies and Procedures to be consistent with law changes

and to revise the Basis for Issuance of License form used by the staff when

applicants report lesser criminal violations; and

2. revise procedures for applicants who must submit Federal Criminal Information

Center reports to shortened the time involved in that process.

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EXHIBIT "E" Page 3

IV.

INFORMATION SERVICES

A. The Agency's computer system now allows licensees to pay renewal fees through the Internet (www.grec.state.ga.us) with the use of credit cards. 10,768 of the 15,641 licensees scheduled to renew in FY2005 (69%) used the GeorgiaNet on-line renewal system. Only 9.5% used the on-line system in the first year of its operation, 24.2% the second year, 31.5% the third year, 61% the fourth year, 67% the fifth year, and 69% this year. Reports from ARELLO members indicate that Georgia's on-line renewal system is used significantly more than similar programs in other states.

B. Continued improvements to computer programs to (1) allow non-financial transactions (for example, transfers of licenses) to be completed on-line, (2) allow approved schools to upload electronically course completions directly into individual licensee records, and (3) allow approved schools and instructors to renew their approvals on-line using a credit card.

C. Processed 230,682 applications (213,840 Commission and 16,842 Board) for licensure, renewal, transfer, inactive, reactivation, trust account registration, name change, change of status, certification of licensure, address change, duplicate license, and reporting education courses. Continued program of clarifying applications by telephone whenever possible instead of returning them by mail to applicants. (Handled over 1,654 such applications.) Continued computerized tracking of incomplete applications to reduce the time required to notify such applicants of their errors.

D. Responded to 118,037 telephone calls (an increase of 29,024, or 32.6%, over FY2004) and 3,050 walk-in customers regarding licensing and real estate license law and appraising matters. In addition, 82,867 callers used the Agency's Fax on Demand and Integrated Voice Response systems (available 24 hours a day, seven days a week) for accessing applications and licensee data (a 22.7% increase in usage of these systems over FY2004). The Agency maintained its Internet Web Page (www.grec.state.ga.us) that provides printable applications, school listings, and other information needed by consumers and licensees.

E.

Approximately 34% (up 6.8% over FY2004 ) of applications came to us by mail, 12% (down 19%

from FY2004) came by fax, and 53% (up 11% over FY2004) via the Internet. These figures

reflect the significant decrease in-coming mail the Agency has experienced since it began

accepting electronic applications in the mid 90s. The major factors leading to this decreased mail

activity are on-line renewals, the issuance of most new licenses at the time of examination, and the

uploading of continuing education completion certificates directly into the Agency's computer

system by approved schools.

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EXHIBIT "E" Page 4

F.

Revised all applications to comply with new rules.

IV. ENFORCEMENT AND INVESTIGATION
A. The agency's complaints analyst process includes the use of a senior experienced staff member to review all Requests for Investigation received by the agency to evaluate both whether the Request lies within the Agency's jurisdiction and what investigative priority it should receive. About one fourth of all Requests for Investigation involve issues that fall outside Agency jurisdiction. Persons making those requests are immediately referred to more appropriate resources to help with their problems. The system has also allowed the agency to respond more quickly to Requests for Investigation requiring immediate action.
B. Made available Request for Investigation forms to members of the public who contacted the Commission's office with a complaint about the activities of a real estate licensee. The Agency's staff mailed such forms, and the public also accessed those forms on the Agency's Internet site (that section of the site had 10,022 users in FY2005) and through its fax-on-demand system. 729 persons used the forms to request an investigation of a real estate licensee.

C. Total Requests for Investigation filed by the public increased by 15.7% to 729 in FY20054.

C.

Opened 2,840 new investigative cases.

D. Completed a total of 2,543 investigative cases and 1,162 trust account examinations and reviews.

G. Imposed disciplinary actions on 261 individuals and firms for violations of the License Law arising from 269 investigative cases, including revoking 57 licenses, issuing 56 Citations, and imposing a total of $93,900 in fines and $106,350 in costs on 111 licensees.

H. Thirteen cases involving potential claims against the Real Estate Education, Research, and Recovery Fund were pending in court at the end of FY2005. In FY2005, no cases resulted in a judgment obtained by a consumer and necessitating a payment from the Fund.
G. Completed the field investigation of Requests for Investigation (our most complex types of investigative cases) in an average of 149 days (up 40 days over FY2004). The average for all types of investigative cases was 47 days (up 7 days over FY2004).

GREC FY2005 Annual Report

EXHIBIT "E" Page 5

H. Continued a computer cross check of licensee data bases with the Department of Human Resources Delinquent Parents Data Bases to assist in the collection of delinquent child support payments. One licensee had to be suspended this year as a result of matches in that cross check. (The Commission has suspended 16 licensees since the inception of this program in FY1998.)

I.

Continued a computer cross check of licensee databases with the Georgia Student Finance

Commission to assist in the collection of delinquent college loans. Suspended 33 licenses as a

result of matches in that cross check. (The Commission has suspended 201 licensees since the

inception of this program in 1999. GSFC reports that the first 61 of those suspensions resulted in

the collection of $160,373.93)

V. EDUCATION
A. Rewrote and reorganized the two Chapters of the Commission's Education Rules based upon review and recommendation from the Commission's Education Advisory Committee (EAC). The following persons served on that Committee: William Aaron, Tim Adams, Linda Bardach, Lewis Conn, Robert Collins, Gene Dunlap, Gregory Dunn, Kay Evans, Rebecca Fletcher, Mickel Graham, Rhonda Haran, Robert Hart, Teresa Lambert, Frank Mears, Juanita Motley, Joseph Rabianski, Barry Richardson, Bobbie Sanford, and Hank Tanner.
B. Provided six electronic newsletters containing information on brokerage topics of general interest and information fliers about the 2004 School Meeting, four instructor workshops, and a major conference on mortgage fraud by posting on the Commission's web site and by email notification as a means of providing updated information for licensees, schools, instructors, and students.
C. Revised the Commission's Statement of Policy on Funding Education Grants.

D. Conducted four workshops of two days each for instructor training and a one day advanced instructor workshop for approved instructors.

E. Convened the annual 2004 School Meeting with over 200 licensees, school directors, and instructors in attendance. An advanced instructor workshop attended by 80 approved instructors preceded the meeting.

F.

Examinations:

1.

issued new licensees to qualified, successful examinees on the day they passed the

examination;

GREC FY2005 Annual Report

EXHIBIT "E" Page 6

2.

continued electronic registration procedures, daily computerized testing, and instant score

reports at four sites in Atlanta (2), Macon, and Savannah.

3.

continued the use of multiple forms in each test center for security;

4.

Agency staff reviewed the bank of examination questions dealing with Georgia law in

order to correct or retire questions that are no longer valid due to law changes.

5.

provided failing examinees with score reports reflecting how they performed in the

various subject areas of the examination;

6.

provided examinees who failed examinations with a series of written suggestions on how

they might better prepare themselves for future examinations;

7.

administered 17,306 examinations to applicants (a 19.4% increase over FY2004); and

8.

tested 57 community association manager applicants with 49 passing (85.9%).

G. Participated in 28 programs serving 2,706 persons around the state and nationally to inform the public and licensees on the license law and Georgia's real estate licensing system.

H. Evaluated and approved 32 new schools and 17 new prelicense instructors; and authorized 43 prelicense courses and 1 ,097 new continuing education courses.

I.

Reviewed seven contract proposals requesting $136,746 for educational and research programs

and committed funding of $136,746 for the six programs including: (1) administering and offering

at least 11 brokerage and trust account seminars, (2) providing four workshops for new and

prospective prelicense instructors, (3) producing the annual continuing education meeting for

approved instructors and schools, (4) developing and producing monthly electronic newsletters

distributed through the Commission's website and automated e-mail notification service, (5)

supplementing funds available for scholarships to licensees for approved courses, and (6)

providing funds to offset some of the costs of developing a new broker qualifying examination

that will test both knowledge and judgment with simulations rather than solely multiple choice

questions.

J.

Paid $96,133.95 to fund five different education contracts.

K. Continued work on a revised broker curriculum.

L.

Participated in a major symposium on mortgage fraud in an effort to raise awareness of mortgage

fraud and increase knowledge of the various means by which mortgage fraud is perpetrated among

licensees and the general public.

GREC FY2005 Annual Report

EXHIBIT "F" Page 1 of 6

Georgia Real Estate Commission Georgia Real Estate Appraisers Board

Strategic Plan 2005
Introduction
In 1926 the Georgia General Assembly created the Real Estate License Law (License Law) and established the Georgia Real Estate Commission (Commission) to regulate licensees. Through the License Law the Legislature sought to protect the public in real estate transactions from either intentional or unintentional harm that could arise in their relationships with real estate brokers. Initially, the License Law required only a simple registration process for all persons engaged in real estate brokerage in five of the state's largest counties. Modifications of the License Law in 1956 sought to assure minimum competency levels of new licensees by requiring pre-license education and the passing of an examination and made licensing of real estate practitioners applicable statewide. In 1977 lawmakers made the Agency a separate budget unit and added provisions that require that fees its charges must be set by the Agency so that they are reasonably calculated to generate only sufficient revenue to fund its direct and indirect costs of operations. In 1980 lawmakers added post-license and continuing education requirements of licensees.
From inception, the License Law allowed the Commission to discipline licensees found guilty of violating its provisions by reprimanding, suspending, or revoking a license. Later new provisions gave the Commission the flexibility to require education and accountant's reports for trust accounts violations in lieu of, or in addition to, the traditional sanctions. Other additions to the License Law authorized the Commission to impose fines when the Commission deemed them appropriate; revoke the license of a broker found incompetent to exercise those duties and simultaneously issue a salesperson's license if the broker otherwise demonstrated honesty and trustworthiness; and to impose fines or educational requirements for relatively minor violations by issuing citations.
Federal legislation adopted in 1989 required appraisers to be state licensed or certified in order to appraise real property used as security for certain loan transactions involving agencies of the federal government. In 1990 in response to that law, the General Assembly created the Georgia Real Estate Appraisers Board (Board) by adopting the Real Estate Appraiser Licensing and Certification Act (Appraiser Act). The Board began its formal operations on July 1, 1990, with staff support to be supplied by the Commission. The Appraiser Act requires that anyone conducting real estate appraisals in Georgia must obtain state registration, licensure, or certification before undertaking appraisal work. It grants to the Board final authority within federal and state guidelines (1) to establish standards for real estate appraisals, (2) to set qualifications for real estate appraisers, and (3) to discipline real estate appraisers.

GREC FY2005 Annual Report

EXHIBIT "F" Page 2 of 6

The Planning Process
Since the mid-1990's the Commission and the Board (the Agency) have been developing and refining the Agency's mission and goals and objectives. In 1997 the Agency produced its first strategic plan that also included an Information Technology Strategic Plan element. The Agency's Strategic Plan evolved out of meetings and discussions with the members of the Commission and the Board, representatives of the regulated real estate brokerage and appraisal industries (including both practitioners and educators), and all staff members of the Agency. Based on the views of those groups, supervisory personnel representing all five major work divisions of the Agency wrote and edited the Plan. The members of the Commission and Board reviewed and approved drafts and the final version of the plan. Using a similar methodology, the Commission and Board refined the strategic plan and adopted those revisions in 1998, 1999, 2000, and 2001.
The 2002 and 2003 planning process built upon those efforts. The Real Estate Commissioner appointed a Strategic Planning Team consisting of the agency's management team. That group, in meetings and individually, reviewed, rewrote, and refined the Mission and Vision Statements, the Goals, and the Strategic Objectives; identified the Business Functions and Information Subject Areas; and either produced or reviewed and approved every aspect of the new draft strategic plan. The Revised Strategic Plan was reviewed and further refined by the Real Estate Commissioner. The Commission and the Board then reviewed the Revised Strategic Plan and adopted it in its final form.
[Details of the Agency's Information Technology Strategic Plan are available upon request.]
The Agency's Mission
The mission of the Georgia Real Estate Commission and the Georgia Real Estate Appraisers Board is to ensure professional competency among real estate licensees and appraisers and to promote a fair and honest market environment for practitioners and their customers and clients in real estate transactions in Georgia.
The Agency's Vision
Georgians who use the services of real estate brokers and appraisers to facilitate real estate transactions will encounter responsive, knowledgeable, and ethical professionals.

GREC FY2005 Annual Report

EXHIBIT "F" Page 3 of 6

Agency Strategic Goal

Desired Long-term Outcomes

Assure that real estate licensees and appraisers meet standards of at least minimum competency and adhere to regulatory requirements in the conduct of business.

Real estate licensees and appraisers will deliver their services competently and within the law.

Timely resolve complaints about real estate brokerage and appraisal activity under the License Law and the Appraisal Act, and assure due process rights under those laws to real estate licensees, appraisers, and members of the public.

Real estate licensees, appraisers, and consumers of their services will see their complaints involving real estate and appraisal activities handled thoroughly, thoroughly, and timely.

Develop solutions to minimize or eliminate problems that real estate licensees, appraisers, and members of the public encounter in complying with the License Law and the Appraisal Act.

Enforcement of the License Law and the Appraisal Act will effectively protect the public interest in real estate transactions without being unduly burdensome or unnecessarily inhibiting those transactions.

Maintain effective communication between the Agency and real estate licensees, appraisers, and consumers of their services.

Real estate licenses, appraisers, and members of the public will realize effective access to the resources of the Commission and the Board.

Enhance the efficient and cost effective operation of the agency.

The Agency will effectively protect the public interest and provide services to licensees, appraisers and the public while maintaining reasonable licensing and classification fees.

GREC FY2005 Annual Report

EXHIBIT "F" Page 4 of 6

ACTIONS TAKEN TO IMPLEMENT AGENCY'S STRATEGIC PLAN
The Agency has taken a number of steps to implement its Strategic Plan. Among those and the fiscal year in which they began are:
General
Entered into reciprocal agreements with all adjoining states in order to provide increased economic opportunity for Georgia licensees. FY 1990 and following.
Created a variety of task forces to advise the Agency on a variety of regulatory matters. FY1994, FY1996, FY1997, FY 1998, FY1999, FY 2000, and FY 2003.
Licensing and Administrative Services
Contracted with a private vendor to develop and administer examinations and to issue initial licenses to qualified real estate applicants. FY1997
Contracted with a private vendor to issue initial classifications to appraiser applicants who qualify by examination. FY2002
Implemented technological programs to allow quicker responses to inquiries regarding regulated activities and quicker processing of applications from regulated entities. FY1997, FY2000, FY2001, FY2004, FY2005
Streamlined application processing to meet maximum five day processing goal. FY1998
Implemented programs to permit licensees to renew licensees and transfer between firms via the Internet with the use of a credit card. FY2000, FY2003, FY2004, FY2005
Developed additional features of the Core Licensing System to provide resolution of incomplete and incorrect applications on same day received, to trace returned applications, and to ensure proper collection of and accounting for fees. FY1999, FY2000
Implemented web technologies to allow development of on-line applications and database search capabilities while maintaining database integrity. FY2000, FY2001, FY2002, FY2003, FY2004, FY2005
Converted school and instructor records to electronic format integrated into the Core Licensing System. FY2000, FY2001

GREC FY2005 Annual Report

EXHIBIT "F" Page 5 of 6

Developed and implemented electronic programs to eliminate the need for approved schools to issue education certificates by allowing them direct up-loading into the agency's database. FY2000, FY2001, FY2002, FY2003
Revised filing system to eliminate the need for paper storage. FY1999, FY2000, FY2001

Education
Revised regulations of approved schools to allow those schools greater flexibility in the offering of courses desired by licensees thereby creating more time for Agency personnel to evaluate educational performance on-site. FY1997
Encouraged the use of computer technology to provide for independent study courses throughout the state and the development of a distance learning program using television technology in southwest Georgia. FY1998
Provided newsletters to licensees in on-line formats. FY1999 - FY2005
Developed and made available on-line exercises for use in agent training that simulate real brokerage experiences and provide virtual opportunities for decision making in ethics, handling trust funds, and interaction with customers and clients. FY2002 - FY2005
Implemented program enabling all real estate and appraisal schools to enter course completions for individual students directly into the Agency's database, thus eliminating the requirement that schools issue paper certificates of course completion and significantly reducing staff time spent on processing paper applications. FY2004
Increased qualifying requirements for licensed and certified appraisers and revised criteria for all courses that qualify for classification to ensure that appraisers meet national standards of minimum competency. FY2005

Investigations
Developed a new program of providing preliminary approval/denial decisions to applicants with criminal convictions prior to their incurring the expense of education and examination cost. This program also reduces the number of formal hearings required and their related costs. FY1997
Assigned additional personnel to investigative activities and revising its program for the selection of firms for detailed trust account audits. FY1998, FY2005
Created complaint analyst position to expedite investigative services. FY 2000

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EXHIBIT "F" Page 6 of 6

Implemented program to require all applicants to submit criminal activity reports for the Georgia Crime Information Center (and if needed from the National Crime Information Center). FY2003
Reduced time for obtaining National Crime Information Center reports from three months to two weeks. FY2005

GREC FY2005 Annual Report

EXHIBIT "G" Page 1 of 2

Fiscal Year 2005 Results-based Budget Program Request

SECTION 1:

PROGRAM RESULTS AND MEASURES

1.1. Agency Name:

Georgia Real Estate Commission Georgia Real Estate Appraisers Board

1.2. Program Name:

Regulation, through licensing of practitioners, of real estate brokers and real estate appraisers.

1.3. Program Purpose: To protect individuals involved in real estate transactions by regulating real estate brokers and real estate appraisers.

1.4 Is this program composed of subprograms?

(No subprograms)

Section 2:

Program Goals Desired Results, and Results Measures

2.1 Goal 1: Real estate brokers and real estate appraisers will be qualified and provide competent service.

2.2 Desired Result 1.a: Findings of negligence (does not include findings of dishonesty) will occur in no more than 33% of all completed investigations.

Actual Results 1.a.: Real Estate Broker and Appraiser negligence found in investigative cases

FY 1998

FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

28% (411)

23% (385)

23.9% (380)

27.5% (527)

23.1% (414)

18.2% (469)

FY 2004
17.3% (405)

FY 2005
13.7 (348)

GREC FY2005 Annual Report

EXHIBIT "G" Page 2 of 2

Desired Result 1.b:

Georgia's passing rates on the qualifying examinations will be within 5 points of the average passing rates of other states giving the same examinations; thereby insuring that persons successfully passing them are minimally qualified.

Actual Results 1.b: Real Estate Qualifying Examination

FY 1998

FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

not calculated

8.8% above

10.4% above

7.6% above

8.1 % above

11.1% above

10.5% above

11.2% above

Goal 2:

Staff will respond to all applicants, licensees, and the public's requests for information within agency guidelines.

FY

FY

FY

FY

FY

FY

FY

FY

1998

1999

2000

2001

2002

2003

2004

2005

80% of telephone customers seeking information will reach a staff member directly or use IVR or Fax on Demand.

82%

75%

82.7%

92%

90%

92% 92.75% 94.7%

Not more than 20% of telephone customers wil l have to exercise

the option of leaving a voice mail message to which a staff

18%

25%

17.3%

8%

10%

8%

7.25% 5.3%

member will respond within 2 business hours.

95% of requests for applications and materials filled within one

business day.

95%

99%

99%

99%

99%

99% 99%

99%

95% of requests for written responses to questions will be responded to within 2 business days.

95%

99%

99%

99%

99%

99% 99%

99%

95% of all completed applications will be processed within 5 business days of receipt.

85%

94%

94.3% 96.4%

95%

96% 94%

90%

90% of successful examination applicants will have the option of

obtaining a license the same day of meeting all qualifications.

90%

94%

93.8%

95%

94.1% 89.8% 90.6% 94.1%

GREC FY2005 Annual Report

EXHIBIT "H" Page 1

FISCAL YEAR 2005 ACTIVITY GEORGIA REAL ESTATE APPRAISERS BOARD

APPRAISERS BY CLASSIFICATIONS

FY 2003

FY 2004

State Registered State Licensed State Certified Residential State Certified General

3,440 1,084
918 1,448

3,722 1,235
952 1,419

TOTAL

6,890

7,328

REVENUES AND EXPENDITURES1

FY 2003

FY 2004

State Fees Collected Federal Registry Fees

627,861 93,175

666,985 102,525

Budgeted Appropriation Budget + 15%2

361,028 415,182

403,381 464,406

INVESTIGATIONS

FY 2003

FY 2004

Cases Opened Cases Worked

470

399

535

502

Dispositions Closed No Violation
Letter of Finding
Issue/Deny Applications Disciplinary Process Ordered

115

77

43

29

265

294

112

92

Disciplinary Actions Imposed Citations Revocations Suspensions Other Applications Denied Cease and Desist

3

10

38

25

18

20

23

10

24

22

1

-

1Figures supplied by the Secretary of State's fiscal office. 2Minimum revenue Board must raise through its fee structure, not including Federal Registry Fees.

FY 2005 3,572 1,358 999 1,420 7,349
FY 2005 614,210 102,920
545,145 626,917
FY 2005
529 579
109 33 242 131
21 28 11 20 26 -

GREC FY2005 Annual Report

EXHIBIT "H" Page 2

I.

NEW OR MODIFIED LAWS

A. Appraisal Act Changes

Sought law changes to: 1. clarify that sanctions permitted to be imposed on classified appraisers may also be
imposed on Board approved schools and instructors, 2. provide for the recusal of a Board member when an investigation involves the
appraisal activities or application of a Board member, 3. authorize the Board to provide investigative information to the Governor when an
investigation involves a member of the Board, 4. provide that the Board may choose not to investigate appraisals when the dispute is
over value and the appraised value is less than 20% different than the sales, lease, or exchange price or assessed value, and 5. meet federal guidelines by allowing the opening of investigations on appraisals within five years of the appraisal instead of the current three years. Legislation making these changes passed Senate and House but was VETOED by the Governor.

B. Rule and Regulation Changes

1. Required that appraisers search and report a three year sales history for all subject properties in order to be consistent with USPAP. [Rule 539-3-.01]

2. Revised election procedures for officers of the Board. [Rule 539-1-.01]

3. Reorganized rule for schools and instructors. [Rule Chapter 539-2]

4. Clarified types of criminal history reports that applicants for a reciprocal license must file and authorized persons seeking a reciprocal license in another state who were licensed by reciprocity here to take our state's qualifying examination if necessary to obtain a license in another state. [Rule 539-1-.03]

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EXHIBIT "H" Page 3

5. Revised education and experience criteria rules to comply with new increased criteria required by the federal government. [Rule 539-1-.16]

II. GENERAL ACTIVITIES

A. In January the Board elected Charles Bramlett of Monticello as its Chair and Sandra McAlister Winter of Alpharetta as its Vice Chair. Other Board members included William Coleman Jr. of McDuffie County, Patricia K. Love of Columbus, and D. Scott Murphy of Suwanee.

B. Governor Perdue named four new members to the Board and reappointed one member: 1. Sandra McAlister Winter of Alpharetta to succeed George E. Junnier of Blue Ridge who had served nine years; 2. William R. Coleman, Jr. of McDuffie County to succeed Franklin S. Horne, Jr. of Macon who had served for six years; 3. D. Scott Murphy of Suwanee to succeed Gary L. Bernes of Marietta who had served for six years; 4. Patricia K. Love of Columbus to succeed Charles S. Wood of St. Simons Island who had served for five years; and 5. Charles B. Bramlett to succeed himself.

C. For the first time since the Board's inception, revenues generated by user fees ($614,210) fell slightly below costs of operation (budget plus 15% or $626,917).

D. Opposed the adoption of Senate Bill 254 which deleted language from the Appraisal Act that had made the Board a separate budget unit in order to comply with federal requirements for appraiser autonomy. The Governor VETOED the bill.

E. Posted information on its web site to inform appraisers about the requirements for supervising new appraisers and how the new legal requirements for Certificates of Permanent Location for manufactured housing will affect appraisal reports.

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EXHIBIT "H" Page 4

F. Opposed proposals by the Appraiser Qualifications Board (AQB) to require a college degree for appraiser classifications, to dictate content and hours in continuing education courses on USPAP, to create and administer a uniform national examination, to dictate how soon after passing an examination an applicant must activate a classification, to usurp the States' processes of instructor approval for USPAP continuing education courses, and to double the education requirements for classifications since they produced no empirical evidence of the need to do so.

G. Testified before a Senate Subcommittee citing the monopoly activities of the Appraisal Foundation and urged Congress to amend Title XI as follows:

1. Require that lenders utilize appraisers classified by state regulatory agencies in all "federally related transactions" (as that term is currently defined in Title XI);

2. Require that lenders require that all appraisals conducted in "federally related transactions" be conducted in accordance with the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of The Appraisal Foundation;

3. Authorize lenders to use any classified appraiser they choose so long as that appraiser holds a classification issued by the regulatory agency in such appraiser's state of residence;

4. Sunset the Appraisal Subcommittee;

5. Provide that any unexpended funds collected by the Appraisal Subcommittee as previously authorized by Title XI shall be paid to The Appraisal Foundation to establish an endowment to help fund the operation of the Appraisal Standards Board;

6. Allow the members of Federal Financial Institutions Examinations Council to contract with the Appraisal Standards Board to research issues and promulgate appraisal standards; and

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EXHIBIT "H" Page 5

7. Allow states to establish reasonable education, examination, and experience criteria for appraiser classifications (rather than the Appraisal Qualifications Board, a private entity) after affording interested parties (for example, local appraisers, the AQB, and consumers such as lenders) the opportunity to express their recommendations.

The Board believes these amendments are necessary to assure a cost efficient regulation of the industry, to allow consumers and appraisers more direct access to the regulatory process, and to reduce to appropriate levels the involvement of the federal government in a regulatory area reserved to the states by the United States Constitution.
H. Georgia has the 6th largest population of licensed and certified appraisers and ranks 4th in the number of sanctions imposed after an investigation.

I.

Continued its request that the Appraisal Subcommittee make a complete public accounting

for the expenditure of funds it gives to the Appraisal Foundation. The ASC has declined to

do so as of the date of this report.

J.

Continued work with the Association of Appraiser Regulatory Officials (AARO) to help

reduce problems for appraisers in working across state lines.

K. Entered into a new full reciprocal agreement with the Florida Real Estate Appraisers Board. Continued reciprocal classification agreements with states of Alabama, Arizona, California, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, New Hampshire, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington, and Wyoming. (All states must grant classifications to applicants from Canada and Mexico because of the provisions of the North Atlantic Free Trade Agreement.)

L. Supported efforts of AARO and the American Society of Appraisers to amend Title XI to provide for easier issuance of temporary practice authorizations to Georgia appraisers who wish to practice in other states.

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EXHIBIT "H" Page 6

M. Opposed the adoption of House Resolution 1295 in the U. S. House of Representatives since it increases federal control of regulation and authorizes the Appraisal Foundation to establish appraiser criteria and to profit from its control of the industry.

N. Held three of its twelve meetings by conference call in order to reduce costs and save time when no person was scheduled to appear before the Board.

O. Continued utilizing a system of Customer Satisfaction Survey to help assure quality service to customers.

P. Supported efforts of the Association of Appraiser Regulatory Officials (AARO) to combat inappropriate pressure on appraisers from lenders to produce particular values.

Q. Expressed written concerns to the Appraisal Standards Board regarding its proposed "Scope of Work" project, particularly with its lack of enforceable standards.

R. Continued research to develop improved systems for checking appraiser logs submitted by applicants for new classifications and for assuring better supervision of new appraisers.

S. Sent to Fannie Mae comments on its proposed new forms objecting to its call for disclosing for whom the appraiser may have previously appraised a property, its overly broad intended user definition, and its failure to have a signature block located adjacent to the value estimate.

III. INFORMATION SERVICES

A. The percentage of increase in the number of classified appraisers in Georgia slowed to only three tenths of one percent (26) in FY2005. In FY2002 the rate of increase was 15.8%; in FY2003 it was 14.4%; and in FY 2004 it was 6.2%. For the first time the number of Registered Appraisers declined (-150). Licensed Appraisers (+123) increased slightly.

B. Continued to make available to appraisers and the public (1) a fax on demand system and an integrated voice response system to enable appraisers to obtain information on their

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classifications and needed applications twenty-four hours a day and (2) computer programs to allow (a) appraisers to change their addresses via the Internet, (b) approved schools to upload electronically course completions directly into individual licensee records, and (c) approved schools and instructors to renew their approvals on-line using a credit card

C. Working with GeorgiaNet, continued to allow appraisers to renew their classifications using the Internet and credit cards. 5,232 of the 6,775 appraisers scheduled to renew in FY2005 (77.2%) did so on the Internet. Those numbers have increased yearly since the online renewal program began: 27% in FY 2001, 45% in FY 2002, 73% in FY 2003, and 76% in FY 2004.

IV. INVESTIGATIONS

A. Because appraisal cases referred from financial institutions are good indicators of the possibility of mortgage fraud, the Board and the Real Estate Commission have devoted more investigative resources to giving priority to working those cases in an effort to reduce the financial harm to the public from such fraudulent activities. The Attorney General's office has joined us in making special arrangements to expedite prosecution of those cases through a Special Assistant Attorney General.
B. Engaged a retired Certified General Appraiser to provide technical expertise in the investigation of complicated appraisals.

C. Continued working with the Real Estate Commission, the Department of Law, and the Department of Banking and Finance to investigate and prosecute possible law violations in "flip" loan transactions.

D. Continued supporting the Georgia Real Estate Fraud Prevention Awareness Coalition in educating appraisers and developing effective methods for discouraging and preventing "flip" loan transactions.

E. Completed 579 investigations (an increase of 45% over FY2004) that included 290 investigations of applicants with prior convictions or sanctions and 194 value disputes or

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possible standards violations. Opened 529 new investigations (an increase of 9% over FY2004). Ordered disciplinary proceedings in 131 cases. Had 197 investigative cases pending at the end of the Fiscal Year.

F. Issued citations to 21 appraisers. Imposed disciplinary actions on 89 persons for violations of the Appraiser Act arising from 101 investigative cases, including revoking 28 classifications and imposing a total of $34,350 in fines and $36,600 in costs on 46 appraisers.

G. Made available Request for Investigation forms to members of the public who contacted the Board's office with an appraisal problem. The Agency's staff mailed such forms upon request, and the public also accessed them on the Agency's Internet site and through its faxon-demand system. In FY2005, 124 persons used the forms to request an investigation of an appraiser.

H. The average time for completing our 579 investigations was 64 days. The average time to complete an investigation originated as a result of a Request for Investigation from the public was 133 days. Requests from the public are typically the most complicated investigations we undertake.

I. Continued its policies and procedures governing investigations: to share investigative findings with its affiliated agency, the Georgia Real Estate Commission; in most cases, to take no action on appraisal referrals from HUD when that agency's disposition revealed that it had only required that the appraiser take some additional education; to establish guidelines for extending deadlines in Consent Orders and for recommending settlements; to refer cases to the Attorney General's office solely on credible findings of a review appraiser; to impose sanctions on non-resident appraisers who are disciplined by their resident state regulatory body that are consistent with that state's action;

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to impose the same sanction on a "supervisory" appraiser as it imposes on an appraiser, unless the supervisor demonstrates extraordinary circumstances;
to authorize the Real Estate Commissioner to approve issuance of classifications to persons convicted of misdemeanors.

J. Adopted or modified existing policies to: update its Investigative Policies and Procedures to be consistent with law changes; revise the Basis for Issuance of License form used by the staff when applicants report lesser criminal violations; and revise procedures for applicants who must submit Federal Criminal Information Center reports to shortened the time involved in that process.

K. Completed a database of all of its sanctions created for access by the public and to assist in assuring the imposition of similar sanctions for similar violations.

L. Continued its programs of cross-checking its data base (1) with that of the Child Support Division of the Department of Human resources in order to identify parents delinquent in child support payments (one classification suspended as a result of a match) and (2) with that of the Georgia Student Finance Corporation in order to identify appraisers delinquent in student loan payments (six classifications suspended as a result of matches).

V. EDUCATION

A. Continued its contract with Applied Measurement Professionals (AMP) to offer qualifying examinations and to allow successful applicants to obtain their classifications on the same day they pass the examination.

B. Provided electronic and printed newsletters and information fliers about the 2004 School Meeting, four instructor workshops, and a major conference on mortgage fraud by posting on the Commission's web site and by automatic e-mail notification as a means of providing updated information for appraisers, schools, instructors, and students.

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C. Conducted four workshops of two days each for instructor training and a one-day advanced instructor workshop for approved instructors.

D. Approved 6 new schools, 64 new pre-classification courses, 187 new continuing education courses, and 10 pre-classification instructors. The Board now has approved for appraiser education a total of 288 pre-classification courses (224 in FY 2004) and 1,243 continuing education courses (1,056 in FY 2004).

E. Tested 307 applicants (230 passing) seeking to become state licensed real property appraisers; 110 applicants (90 passing) seeking to become state certified residential real property appraisers; and 42 applicants (40 passing) seeking to become state certified general real property appraisers.

F. Passing percentages on state qualifying examinations in FY2004 were calculated in two

ways: (1) the percentage passing on the first try, and (2) the percentage passing regardless of

the number of attempts. (Board data shows that those who were within ten percent of passing

on the first attempt will usually pass in the second or third attempt. Those who fail the first

attempt by more that ten percent usually never pass.) The results were as follows:

Licensed

Certified Residential Certified General

1st Time

56.6%

68.8%

90.2%

Total Persons

74.9%

81.8%

95.2%

G. Continued a computer assisted examination program that allows applicants to (1) schedule for an examination within five days of completing registration procedures, (2) test at their choice of two sites in Atlanta or one each in Macon and Savannah, and (3) obtain a score report immediately upon completion of the examination and receive a classification the same day.

H. Increased qualifying requirements for licensed and certified appraisers and revised criteria for all courses that qualify for classification in order to meet new federal requirements.