More details have emerged about Google Inc.'s nascent foray into the mortgage lead-generation business.
Word about the company's plans emerged in a lawsuit that LendingTree LLC filed against Mortech Inc. in August. LendingTree accused Mortech, which supplies lenders with software to price offers to customers through its lead service, of violating an agreement not to work with its competitors by helping Google with its venture.
Google described its mortgage-leads service in an Oct. 29 post on one of its blogs. One of the main ways the company makes money is by selling advertisements that appear on its search Web site when users type in certain keywords. For occasions when search terms like "mortgage" are relatively vague and make pinpointing relevant offers difficult, Google is testing a new Comparison Ads feature.
A mortgage comparison page, reachable through a promotion that may appear near the top of a search results page, shows offers from various lenders, and lets users enter information including their income and credit rating to narrow the results. Google said that, to start, Comparison Ads is available to "a limited number" of mortgage advertisers and would be shown "to a small number of users in select U.S. states."
Lenders pay for advertisements when a customer calls them or fills out a form to request a quote.
A visit to the mortgage comparison page on Friday showed offers from lenders including National Bank of Kansas City, a unit of the $867.7 million-asset Ameri-National Corp. in Overland Park, Kan.
Google did not respond to inquiries.
Mortech, a Lincoln, Neb., vendor, and LendingTree, which is owned by Tree.com Inc., settled the lawsuit in September. Both companies declined to discuss the terms.
This month Tree.com said it had incurred $1 million of unexpected legal costs last quarter, mostly associated with the Mortech suit.
Mortech announced Friday that, though it remains committed to lender clients who use the LendingTree network, it is shifting its strategy and is "now looking forward to working with other lead-aggregation platforms, real estate marketing businesses and search engine companies."
In an interview, Don Kracl, Mortech's president, would not say whether his company has a deal with Google. "I don't know if there's any one particular company that's going to rise to the fore" among the relationships Mortech is developing, he said.
He described Mortech as largely a provider of data on rate offers that are tailored to factors like the geographic market and loan characteristics like the borrower's credit score.
"How it actually might get deployed by any provider — whether that's a newspaper or search engine or whatever — is largely up to them," he said, and the most effective approach remains to be seen.
Roughly one-quarter of those that use Mortech's software also buy LendingTree's leads, Kracl said. Even though it is no longer LendingTree's preferred provider, Mortech does not expect to lose these customers, with whom it deals directly.
His company does not believe its agreement with LendingTree prevents it from working with competitors, Kracl said, and it is trying to build stronger direct relationships with lenders and consumers.
With many lead aggregators, "there's been a big disconnect between the consumers and the lenders," including the use of "bait-and-switch" tactics in rate offers, Kracl said. "There's so much information and misdirection, so to speak, we think a lot of consumers just get frustrated and kind of throw in the towel, move on."
This is not true of LendingTree, he said, and Mortech's relationship with it is largely "business as usual."
"I don't think their model is really in danger of us or anybody else," he said. LendingTree declined to comment.