MIAMI - On-line mortgage volume doubled to between $10 billion and $14 billion last year, but companies offering mortgages on the Web will have to overcome service hurdles before their stock wins investor support, says analyst James M. Marks.

Mortgages are "ideally suited" for the Internet, Mr. Marks said at the 2000 Mortgage Technology Conference here. But he emphasized that lenders and investors should not underestimate how hard "modifying consumer financial behavior" can be.

Mr. Marks, of Credit Suisse First Boston, said on-line lenders are falling short on convenience, cost, and choice.

Moreover, he said, "People are unclear right now about what it is going to cost" to market mortgages through the Internet and about how profitable it will be.

For now, investors are putting more value on Internet companies that provide business-to-business services, the analyst continued. One reason is the growth of electronic bill payment and presentment, he said.

In discussing the types of business-to-business companies that have opportunities in the on-line mortgage industry, Mr. Marks listed those that focus on broker productivity, such as IMX, Mortgage.com, MortgageNet, IndyMac, and Lion Inc. He also mentioned companies with secondary market focuses, including Keystroke.com, Pedestal Inc. and Ultraprise Corp.

At midday Thursday shares of E-Loan, which topped the industry in on-line mortgage volume in the first nine months last year, with $1.1 billion, were at $12.8125, off 82% from their 52-week high. Mortgage.com, which ranked third, with $860 million of loan volume, was trading at $5.2188, off 77% from its 52-week high.

Richard Beidl, an analyst for TowerGroup of Needham, Mass., said, "Customers are more comfortable using the Internet for informational processes rather than transactional processes."

Most customers "still don't want to give mortgage data on-line," and many continue to find navigation difficult, Mr. Beidl said.

Mr. Marks did have some praise, saying lenders have done a "fair to good" job of distributing mortgages on-line.

But he noted that obtaining a mortgage can be complex and intimidating, and that consumers want personal attention as they make what is probably the largest financial transaction of their lifetimes. The on-line application process is still not fully automated, and Web-originated loans have to be closed in person, he said.

While on-line lenders are beginning to gain market share, traditional ones have been slow to adapt to the Internet

"Only eight of the top 15 [traditional] lenders offer a fully functional on-line application," Mr. Marks said. Most lenders have to "re-key applications into existing systems."

Except for Countrywide Credit Industries, which ranked fourth in on-line mortgage volume in the first three quarters of 1999, with $702 million, "they're moving pretty damn slowly," Mr. Marks said.

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