Mortgage brokers and lenders soon will be able to use America Online, a popular interactive data network, to exchange loan documentation and related information.

Mixstar Inc. of Newport Beach, Calif., designed the system to eliminate paper communications and speed up the mortgage origination process.

Expected to begin operation in December, the system combines electronic data interchange -- the replacement of documents with electronic transmission -- with the fastest-growing communications network for personal computer owners.

America Online, which has more than a million subscribers, provides a ready-made utility for mortgage data transmissions once the necessary data formats and security are built in.

Using the Mixstar service, brokers can transmit loan packages, loan status information, product details, and other data. If successful, the service could make a dent in the number of phone calls and overnight-courier deliveries associated with mortgage transactions.

Mixstar said it plans to offer services free for a one-month trial, as an incentive to get brokers and lenders interested,

In another move to attract users, Mixstar has approached 25 of the top mortgage lenders, including BankAmerica Corp., San Francisco, and Home Savings of America, Irwindale, Calif., to encourage them to ask brokers to sign on.

"We call it the big-bang marketing approach," said Walter Blass, chairman of Mixstar. "We've negotiated a free one-month trial with America Online and all 25 of the lenders will mass-market this to their mortgage brokers.

Mr. Blass, a former chief executive officer of Shearson Lehman Mortgage Corp., Irvine, Calif., said the service was designed to cut costs by drastically reducing fax, Federal Express, and other such communications within the industry. He said institutions can spend as much as "$200,000 per month just on faxing."

Mr. Blass said he hopes to offer the service for under $50 per month.

Steven Prough, president and chief executive officer of Downey Savings and Loan, Santa Ana, Calif., said the thrift will use the service. He called it "innovative."

"Even though we haven't done a full cost-benefit analysis, we expect quite a bit of savings," Mr. Prough said. "The faxing done now will be done through this network."

America Online, which has alliances with dozens of information providers including Time Warner, Knight Ridder, and The New York TImes, has 1.2 million users. Its principal competitors are Prodigy and Compuserve.

Access to the mortgage network will be restricted to the mortgage industry and MixStar subscribers.

Scott Cooley, president of Contour Software, a Campbell, Calif.-based company with over 4,000 customers using its mortgage loan software, said he was impressed with the efforts of Mr. Blass.

"There will be a lot of skepticism, but a one-month free trial will give these companies a chance to see the benefits," Mr. Cooley said. "With the advent of automated underwriting systems, brokers have a much greater need to access wholesalers."

The ambitious venture will join at least several other networks automating mortgage transactions. That of Computer Power Inc. of Jacksonville, Fla., called CPI Interchange, speeds the origination process by linking lenders with mortgage insurers, servicers, and appraisal firms.

Mr. Blass said perhaps as many as 50,000 brokers deal with the nation's top lenders. As a result, he believes the industry's needs will be served by his network in the role of "public utility."

"In the last four or five years, there has been a proliferation of brokers," Mr. Blass said. "This fragmentation has driven the existence of Mixstar."

Mr. Blass formed Mixstar in May with Joel Packer, the company's president and a former executive vice president with Shearson Lehman Mortgage.

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