Oregon Public Broadcasting

In an effort to clean-up the troubled mortgage industry, the federal government has imposed several new regulations. They include a test, which every lender has to take - even if they've been doing the job for decades.Like many states, Oregon's attorney general has drawn a bead on mortgage fraud. He even has a web page with tips and videos on how to avoid getting scammed.

 To put an end to such practices, the federal government set new requirements for  lenders six months ago. Kirsten Anderson, with Oregon's Division of Finance and Corporate Security, said, "So it really meant to make sure that the person who's out talking to a consumer, understands how a mortgage works. Understands how to evaluate what kind of mortgage would be best for each consumer."So nowadays, if you want to be a mortgage lender, you need four things:

1. At least 20 hours of classes on mortgage lending.
2. A credit check - to make sure you're financially responsible.
3. A criminal background check.
4. And finally, you have to pass a written test.

"We've wanted for a long time for the bar to be raised so there's a minimum standard ... that has to be met to be able to serve customers the way we do," said Eric Wiley, who has been a mortgage lender 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. "You know people are nervous. I was actually a little nervous too, not knowing what exactly to expect. Multiple choice questions can sometimes throw people," he said.He got 96 percent. You only need 75 percent to pass. Down the hall at 'Pacific Residential Mortgage,' Todde Greenough, a nine year veteran, also just took the test. And he was surprised at all the security surrounding the exam. "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 both your palms scanned two different times and then you go into a back room and you get your palms scanned again. You're going in with only the stuff they give you which is only a white grease board and a little Casio calculator," he said.

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', said, "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 pass it." Marks said that means a fair slice of lenders are being pushed out of the industry, which should result in better quality loans.Back at 'Pacific Residential Mortgage,' 65-year-old Ed Walunus has his exam on March 25th.  He's nervous, but he just passed the Oregon version of the test, which checks knowledge of the local law. "Basically everyone 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," he said.Even if a broker fails, he or she can take the national test again - four times in a row if necessary. After that, they have to wait six months before starting over.