Mortgage.com and the company that sold it its Web address are suing each other for allegedly violating terms of a marketing agreement made last year.

First Mortgage Network Inc. of Sunrise, Fla. bought the Mortgage.com domain name from Credit.com Inc. of Alameda, Calif., on Jan. 1, 1999, for $200,000 and 20,000 shares of Mortgage.com stock, plus fees on all loans funded through the Mortgage.com Web site, regardless of origin, up to $1.8 million. The Florida company also changed its name to Mortgage.com at that time.

This contract also laid out a complicated 10-year marketing agreement under which Mortgage.com would pay up to $2.5 million a year to Credit.com for applications funded through Credit.com's Web site or its other marketing efforts, Credit.com said.

The fee structure was amended last June 30, calling for the Florida company to pay Credit.com for all completed applications, not just funded loans. Mortgage.com paid $1.5 million immediately, discharging the $1.8 million obligation, and agreed to pay $80 per application fed to it by Credit.com.

Then in early March, Mortgage.com announced that it had stopped marketing mortgages directly to consumers and would pursue a business-to-business strategy by forming partnerships with real estate brokers and home builders who steered customers to the online lender.

On May 18, Mortgage.com sued Credit.com, claiming breach of contract and asking for declaratory relief. Mortgage.com alleged that Credit.com had failed to keep up its end of the marketing agreement and was asking for inappropriate compensation for the applications it delivered.

Michael D. Ehrenstein, Mortgage.com's lawyer, said, "This case is in its earliest stages, and there is a lot more to come." He declined to comment further.

Mortgage.com argues that it should only have to pay the $80 "if the application fee has been paid, if the application document at a minimum includes the applicant's name and Social Security number, address of the property to be financed, loan amount, and loan purpose," according to its lawsuit.

Credit.com contends "that it is entitled to a fee of $80 for every loan application, even if incomplete," that came from Credit.com or its affiliates, Mortgage.com's complaint says.

Credit.com countersued on May 31, arguing that by changing its business strategy Mortgage.com had breached its contract.

The countersuit complained that by forming partnerships with home brokers and builders, Mortgage.com is violating its contractual obligation to use the Mortgage.com site "as its exclusive site for direct-to-consumer lending."

Through these partnerships, Credit.com complained, the Florida company is or will be "acting in direct contravention of the conflict-of-interest clause contained in the parties' agreements."

Though Mortgage.com has the right to change its business strategy, the complaint said, this does not alter its contractual obligations.

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