LendingTree Inc. and Bank of America are expected to announce a preliminary agreement today in which Bank of America will use LendingTree’s Lend-X loan origination technology for its online mortgage lending channels.

An executive said it is one of the biggest in a string of deals LendingTree has quietly inked in recent months for Lend-X, a business-to-business technology product it developed two years ago. Details of the agreement between the Charlotte, N.C., companies were not disclosed.

Financial institutions using Lend-X include Freddie Mac, S1 Corp., Priceline.com, EDS’ Wendover, Fleet Bank, Home-Link, MSN Money Central, Wachovia, PNC Bank, and Citizens Bank.

“We are seeing Lend-X gain substantial traction in the market,” said Douglas R. Lebda, LendingTree’s chief executive officer. The Bank of America deal is “a great seal of approval for Lend-X.”

He said his goal is to make Lend-X, which provides front-end application and loan origination technology, the standard Internet lending platform.

LendingTree also has a heavily advertised direct-to-consumer exchange site, LendingTree.com, through which borrowers apply for and receive loan offers from up to four lenders.

Mr. Lebda said LendingTree. com and Lend-X are part of an integrated strategy, and that the consumer loan exchange helped the company develop the technology it is now successfully marketing to other lenders. The strategy is one that LendingTree officials say they planned all along, and one they appear to be pulling off.

Nonetheless, the company has yet to show a profit in a crowded business that in the last six months has had several high-profile disasters.

Mortgage.com and iOwn.com are barely breathing after firing all their employees and seeking alternative strategies. FiNet.com last week announced the firing of almost 20% of its staff, and faces de-listing from Nasdaq. Even E-Loan, one of the pioneers of online lending, is in danger of being kicked off the Nasdaq; its stock is dangerously close to the $1 cutoff. Both FiNet andMortgage.com switched to LendingTree’s business model of selling technology to other lenders after they failed to make a profit from direct lending.

Thomas J. Reddin, chief operating officer of LendingTree, stressed that as a marketplace and not a lender, LendingTree.com has been a success.

“Our relationship with lenders is that we see them as our customers and our partners,” he said. “We work for them and with them to get more volume and drive up conversion rates.”

Yet several analysts say LendingTree should concentrate on Lend-X, not its Web site.

LendingTree’s “biggest opportunity is Lend-X, as opposed to the Web site, which requires ongoing investment and advertising, and the challenge of managing multiple third-party relationships,” said Nick Karris, an analyst at Gomez Advisors, which is based in Lincoln, Mass.

James Punishill, an analyst at Forrester Research in Cambridge, Mass., said that no matter how good an Internet site proves to be, “if it still takes me 30 days to close, and a hand truck full of paperwork, and an army of third-party providers that are living in offline time to execute this, people are going to still live in that offline environment.”

Mr. Punishill said he has predicted “from day one” that LendingTree will be the eventual victor in the business, and that the only question is whether it can survive until profitability. But for now, he agreed, it should focus on Lend-X.

Mr. Lebda, however, strongly disagreed with the notion that consumers are not ready to acquire mortgages and other loans online.

“The reason that online lenders are not doing well is not because consumers don’t want loans online, it’s because those companies are nothing different than offline bricks-and-mortar companies are doing, and they don’t do it as well as the offline companies,” he said. “We believe that companies like Bank of America and others are in a much better position to succeed in online lending, so we want to help enable that for them.”

He added that LendingTree. com has closed more than $1 billion of loan transactions this year and has accepted an average of a million loan applications per quarter.


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