IMX Mortgage Exchange, which operates an electronic trading system for mortgage brokers, said it has received funding from a group including computer chip maker Intel Corp. and the venture capital arm of Piper Jaffray Companies.
IMX will get about $10.5 million of funding in its third issue of preferred stock. The other two issues raised $8 million.
The company's MatchMaker system lets brokers electronically submit data about individual loans. Investors with access to the system can then bid on the loans.
Some lenders say they have tried the system and decided not to use it because brokers tend to post loans and then fail to deliver them.
Mark L. Korell, president and chief executive officer of IMX, said dubious brokers are an industrywide problem but that his company has a bright future.
"The significant acceleration of investment in IMX is a great vote of confidence in the company," he said.
IMX, San Ramon, Calif., was founded in 1996. It gained national attention last year by hiring Mr. Korell, who had been CEO of Norwest Mortgage, the largest lender in the industry. Gary Blauer, managing director of Piper Jaffray Ventures, Minneapolis, said IMX has a unique product that can help the industry lessen its reliance on paper. "There's a real need for what these guys can do," he said.
IMX is hardly the only vendor to offer reduced paperwork. Several mortgage companies are part of a consortium that owns Mortgage Electronic Registration Systems Inc., operator of a system that electronically tracks the ownership of servicing rights.
The fledgling company, which has traded more than $180 million of loans in California over its system, recently hired salespeople in Florida, Arizona, Oregon, and Connecticut. The new funding will be used to expand geographically and update technology, Mr. Korell said.
IMX's system is available only through IBM's Global Network, but Mr. Korell said he is working to provide Internet access, too.
An Intel spokesman said the company has invested in several technology companies that it thinks can spur interest in personal computers. Most PCs run on Intel microprocessors.
"The reason we invested in IMX is that this could make the PC more useful for a mortgage banker or mortgage broker," said Robert Manetta, an Intel spokesman. "We have an interest in increasing awareness of electronic commerce."
Silicon Valley venture capital firms such as Hummer Winblad, Mohr Davidow, and Technology Crossover Ventures, have also invested in IMX. Hummer Winblad is a majority owner.