A veteran mortgage executive, Gregory T. Barmore, has been named chairman of a start-up company, LoanNet LLC.
Mr. Barmore, 57, was chairman of GE Capital Mortgage Corp. for 11 years. LoanNet processes mortgage applications for lenders, saving them the cost of hiring back-office employees and updating computer systems.
"For a long time I have believed we needed a significantly more reliable, lower-cost, more consumer-friendly way to process loans from application through closing," Mr. Barmore said. "In the current environment, that's even more needed."
The former GE executive lives in Maine and will remain there. LoanNet, based in the nation's capital, is run by founder Laurance T. Burden, its president and chief executive officer. Mr. Burden previously worked at American Management Systems and Freddie Mac.
After a lender takes a mortgage application, it must do credit checks, verification, title search, automated underwriting, preparation of closing documents, and other functions. LoanNet says it will do all these things faster and at a lower cost than lenders can do for themselves.
The average lender takes 30 to 45 days to process a mortgage, at a cost of $1,500 per loan-or perhaps $1,200 for a very efficient lender, said R. Roy DeLoach, LoanNet's executive vice president for marketing. LoanNet, on the other hand, can do the same thing in two weeks, and its fee is only $650 per loan, he said.
LoanNet has been up and running since October and is processing about 1,500 loans a month. Its Schaumburg, Ill., processing center can now handle 4,000 and should be able to manage 10,000 a month by midyear, Mr. DeLoach said. If volume grew beyond that the company would need to open another processing center, he said.
Most lenders' back offices have old computer systems, but volume has been so brisk for the last year that the lenders have been unable to replace or update those systems, Mr. DeLoach said.
That gives LoanNet a competitive advantage, Mr. Barmore said. "When you start from a blank slate, you can take advantage of all the current hardware and software."
While at GE, Mr. Barmore helped create Mortgage Capitol Group, a lobbying organization. He left GE in 1997, saying he would retire, but then served a brief stint as president of Mortgage Electronic Registration Systems while that company searched for a permanent chief executive.
LoanNet's board also includes former Congressman Tony Coelho.