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Mortgage Brokers Required To Pass National Test

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Mortgage Brokers Required To Pass National Test

Business

Mortgage Brokers Required To Pass National Test

Mortgage Brokers Required To Pass National Test

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To clean-up the mortgage industry, the federal government now requires every mortgage broker to take a test on basic skills and concepts of home lending. It's a requirement whether they've been lending six months or 30 years. Many states, like Oregon, already had such requirements.

RENEE MONTAGNE, host:

To clean up the troubled mortgage industry, the federal government has imposed a number of new regulations. One of them is a national test. Every mortgage broker has to take it, even those who've done the job for decades.

Kristian Foden-Vencil, of Oregon Public Broadcasting, reports how it's working there.

KRISTIAN FODEN-VENCIL: Like many states, Oregon's drawn a bead on mortgage fraud. The attorney general here, has even created a Web page with tips and videos on how to avoid being scammed.

(Soundbite of Web video)

Unidentified Announcer: They may be trying to steal your home, even if they promised to rent it back to you. Let's shut the door on fraud.

(Soundbite of door shutting)

Unidentified Woman: Get out.

FODEN-VENCIL: Oregon's one of 16 states that already had a mortgage broker test, but Kirsten Anderson, of Oregon's Division of Finance and Corporate Security, says in 2008, Congress passed the Safe Act and began phasing in a national exam.

Ms. KIRSTEN ANDERSON (Program Manager, Oregon Division of Finance & Corporate Securities): Well, it's really meant to make sure that the person who's out talking to a consumer, understands how a mortgages works, understands how to evaluate what kind of mortgage would be best for each consumer.

FODEN-VENCIL: So nowadays, if you want to be a mortgage broker, you need four things: first, at least 20 hours of classes; second, a credit check - to make sure you yourself are financially responsible; third, a criminal background check; and finally, the written test.

Mr. ERIC WILEY (Owner, Pacific Residential Mortgage): You know people are nervous. I was actually a little bit nervous too, not knowing what exactly to expect. Multiple choice questions can sometimes, you know, throw people.

FODEN-VENCIL: Eric Wiley has been in the industry for 15 years. He runs Pacific Residential Mortgage in Portland. And while he manages a staff of 120 employees, he still had to take the test.

Mr. WILEY: We've wanted, for a long time, the bar to be raised so that there's a minimum standard that has to be met to be able to serve customers the way we do.

FODEN-VENCIL: Wiley did well. He got 96 percent. You only need 75 percent to pass.

Down the hall at Pacific Residential, Todde Greenough, a nine year veteran, also just took the test. He was surprised by all the security. He says it made him realize just how seriously the government's taking things.

Mr. TODDE GREENOUGH: Everything but your driving license goes into a locker as you go in and you've got to digitally sign your signature. Then you've got to have your both palms scanned. Then you get to go into a back room and then you get your palms scanned again, and you're going in with only the stuff they give you, which is only a white board type of, you know, grease board type of thing and a little Casio calculator.

FODEN-VENCIL: I guess there's some concern about cribbing. Anyway, Greenough passed the exam too. But the question is, does the test work? Does it weed out under educated or unethical people?

Pete Marks, with the Conference of State Bank Supervisors, says it does.

Mr. PETE MARKS (Vice President, Professional Development, Conference of State Bank Supervisors): We know, as of the end of February, that 68 percent of the people who take the test pass it - the national component. And we know that 73 percent of the people that take the state component have passed it.

FODEN-VENCIL: Marks says that means a fair slice of lenders are being pushed out of the industry, which should result in better quality loans. We won't know for sure until every state has the test and number crunchers have a few before and after comparisons.

Back at Pacific Residential, 65-year-old Ed Walunus is cramming for the exam. He's nervous, but his colleagues are encouraging.

Mr. ED WALUNUS: Basically, everybody I've talked to, and I've talked to a lot of people who've taken the test, they said the Oregon test is harder than the national test.

FODEN-VENCIL: And he passed the state exam with flying colors. But even if a broker fails, he or she can take the national test again - four times in a row if necessary. So far about 30 states have the exam and they should be nationwide by the end of the year.

For NPR News, I'm Kristian Foden-Vencil in Portland.

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