The end of winter is usually something to celebrate in most corners of Massachusetts. But the state’s mortgage brokers might have reason to delay winter’s end, as they scramble to pass new state and national licensing requirements for mortgage brokers.

Brokers must pass a national exam this year in addition to a state test, many by July 1 – and almost a third of early test-takers have already failed, including brokers with years of experience, according to the State Regulatory Registry (SRR) Web site.

New testing regulations were passed in 2008 as part of the Housing and Economic Recovery Act. A portion of that law, the SAFE Act, mandated a uniform state and national licensing regime.

With twenty hours of classes required in addition to the test, and a 30-day lag time before it can be re-taken if the broker fails on the first go-round, many are gearing up early to get the exam under their belts – and they’re finding it a struggle.

Bill Poliquan, a 16-year mortgage industry veteran with Norton’s Bay State Mortgage Corp., just took the test last week – for the second time.

“First time I failed by one point,” Poliquan said. “Got a 74, you need a 75. It’s definitely a challenge.”

The Real Deal

The national test covers general mortgage knowledge, loan origination, federal law, and ethics. Massachusetts’ state test is similar, but with a focus on Massachusetts laws, and requires an additional three hours of training.

Since November of last year, all new Massachusetts brokers have had to complete the SAFE act requirements before receiving a license. Brokers who were in the midst of the application process around the time the test was issued – those who received their license after July 31 of last year or applied before Oct. 31 – must complete the SAFE act requirements by July 31. Existing brokers have until Oct. 31 to complete the requirements.

Massachusetts had been one of the states which required pre-license training prior to the SAFE Act, but the new test is stricter, according to Dave Bardsley of Wayland continuing education firm Mortgage State Training..

“Before, the vendors gave the test,” he said. “Now, it’s a Pearson testing center or Prometric. Which means that people are ID’d, their pockets are emptied, it’s the real deal.”

The test may not be a cream puff, but that doesn’t mean it’s impossible, according to Joseph Gagnon of Granite State Mortgage Corp. in Salem, N.H. He’s licensed in both New Hampshire and Massachusetts.

“I studied my rump off because I wanted to make a hundred,” he laughed. “I got a 95.”

Gagnon said the test “was difficult because of the breadth of the stuff you had to study. I graduated second in my class in college,” but was still “a nervous wreck.”

Daniel Ventura, of Fairway New England Mortgage in Newburyport, said if brokers took the training course seriously, studied the sample questions and tried some of the practice tests, their memories should be sufficiently refreshed to tackle the material.

“None of it was earth shattering, I felt that it was information that we’ve known since we’ve been originating,” he said. “Things get a little fuzzy between amount of days between certain disclosures, or certain RESPA and ECOA rules … [but] I didn’t really find it that tough at all.”

Tough Love

Ventura may be the exception. Complaints seem to center on the regulation-heavy nature of portions of the test. It’s not enough to know whether something’s unethical, or if certain information must be given to clients, and in what form; many of the questions ask test-takers to pick out the particular statutes which describe these responsibilities.

That was partly the intent, says Bill Matthews, president and CEO of the SRR, which administers the test. Within the financial services sector, “Appraisers get tested … Real estate, securities, insurance, they all [get tested]. I think mortgage is the only one that hasn’t done it. Some states did, but not all.”

Matthews argues a strict test will benefit the industry. Because of the lack of a licensing requirement, it had been very easy for people to become brokers, which “dilutes the professionalism of the industry.” With a licensing exam requiring in-depth industry knowledge in place, established agents won’t have to contend with a flood of overnight competition during housing booms, Matthews said.

Despite the difficulties involved, brokers who have experienced the test said overall it was worthwhile.

Ensuring brokers are well-acquainted with regulations when they’re talking to consumers will benefit everyone, said Ventura.

“In the long run you’ll have better-educated consumers, and foreclosures and things like that will not be as prevalent as they are now.”