I read with great interest your article on "Policing the Real Estate Industry" (Jan. 5). From my perspective, as someone in the real estate industry for the past 20 years, it appears to be an accurate portrayal of the DRE--a lean and professionally run organization. However, your article did not mention a potentially serious side issue that seems to defy any exposure.
More and more real estate brokers have now opened their own escrow divisions, ostensibly under the control of the DRE. Yet there is virtually no control placed upon the handling of the public funds held in trust. Unlike the licensed escrow companies, under the auspices of the Department of Corporations, there are no fidelity bonds required, no surprise audits, and no annual reporting requirements.
While the loss of one's license is a "powerful regulatory tool," it was not sufficient to stop the theft of nearly $1 million in trust funds from licensed companies during the past year.
Granted, a brokerage escrow operation typically has a somewhat smaller amount held in trust, but I truly believe that this situation is a ticking time bomb ready to explode at any moment in this recessionary climate.