Legislative auditors charged Thursday that the Real Estate Division let 19 large fines slide through the cracks, collecting just 5 percent of $808,620 owed the state.
They said collection letters weren't sent for an average of nine months after violators failed to pay and delinquent fines were never submitted to the controller's office for collection.
Furthermore, auditor Diana Giovannoni said similar problems were reported in the 2000 audit and were supposed to have been fixed years ago.
Auditors also found the division didn't properly report accounts receivable to the controller. The agency failed to notify the controller of $2.6 million in receivables for the quarter ended December 2008 and left more than $1.6 million old, uncollectable accounts in the division's receivables.
Auditors charged the division didn't investigate appraiser complaints in a timely fashion. Of 24 complaints reviewed, 10 were open an average of 552 days.
"Some of the complaint cases involved serious allegations of inflated appraisals over-valuing residential properties.
"The likelihood of foreclosure increases when a home is overvalued and the house is worth less than the loan," the audit states.
Legislative Audit Subcommittee Chairman Sheila Leslie, D-Reno, said collecting just 5 percent of fines "is pretty poor performance."
Administrator Gail Anderson agreed but said part of the problem in collecting fines is that, when a real estate agent or appraiser is caught doing something illegal, they often just disappear without paying.
"Some of them cut and run once they receive notice of discipline," she said.
As for the appraisers inflating home values to match what lenders want, she said simply: "That is against the law."
But Anderson told the subcommittee every jurisdiction in the nation is battling the same problem.
She agreed to implement the auditors' recommendations as soon as possible.