First Union Corp. has introduced a real-time service for approving mortgage loans on-line that incorporates a human touch.

Once loan requests are submitted over the Internet, customer service representatives call applicants to make sure they understand the product. Within minutes, approved borrowers are sent commitment letters that they can use to secure the loan.

The Charlotte, N.C.-based banking company, one of the first major financial services companies to offer real-time loan approvals on-line, wants to strengthen its relationships with customers as more of its interactions with them occur electronically.

"Creating on-line relationships with our customers is one of our highest priorities," said David Carroll, chief e-commerce officer for First Union. The $235 billion-asset company intends to "anticipate our customers' life-event needs, to expand our relationship as a trusted financial services provider."

First Union combined an electronic mortgage application with automated underwriting from the Federal National Mortgage Association to streamline applying for mortgages. The site features rate alerts and loan calculators.

According to an on-line lending research report by Goldman, Sachs & Co. this month, 13% to 15% of consumer mortgages will be originated through the Internet in 2004. That implies a volume of $175 billion to $200 billion.

Those figures "speak to the expectations that more customers will chose to do business on-line," said Gary Suess, senior vice president and director of nontraditional lending at First Union.

He added that customer expectations will be high because of the site's sophisticated technology.

"We couldn't have a system where improper decisions were going back or we were giving bad information back to the customer," he said.

Xpede of Oakland, Calif., is providing software and services to First Union.

Mr. Suess said First Union's on-line application process was designed to be easy.

"We only ask for needed information as it pertains to the product," Mr. Suess said. For instance, if the applicant is a single borrower, the system will not ask for a spouse's name.

First Union plans to add other features to the site, including instant credit card approvals and detailed account reviews to help financial planning.

"We are committed to using on-line technology and will continue to add on-line functionality and features to help customers bank when, where, and how" they want, Mr. Suess said.

"There is huge potential in this channel, and we want to be a leading provider."

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