Forget free toasters. To attract borrowers, an online mortgage lender is giving away computers.

LoanGiant.com of Southfield, Mich., which opened for business under that name this year, is offering computers and a year of free Internet access to the first 1,000 people from the Detroit area who close a loan. And the company plans to make the same offer to subprime or low-income borrowers around the country when it goes national in September. It is licensed in 39 states but does most of its business in Michigan.

The computers are to be shipped to qualifying borrowers within 60 days of closing a loan. The package - which includes a modem, 15-inch color monitor, CD ROM drive, keyboard, mouse, and software - is valued at $1,295, LoanGiant said.

LoanGiant officials said the giveaway is not just a marketing gimmick but also an extension of social policy. Invoking the words of President Clinton, they said the company is trying to bridge the "digital divide."

"By empowering clients with technology and information, we hope to stabilize their lives by providing them with the American Dream of good credit, low rates, and savings accounts," Andrew C. Jacob, president of LoanGiant, said in a press release.

Though LoanGiant's promotion and rhetoric may seem bold, other online originators have been equally aggressive in pitching loans during the current lending slump.

Mortgage sites have offered cash rebates, free mortgage payments for a year, and fee waivers. OnLoan.com bought an armored truck, equipped it with five computer terminals, and is driving it around southern Florida to drum up business. A commercial mortgage site, MortgageSelector.com, even offers a Lexus or Porsche to reward productive brokers through a point system similar to frequent-flier programs.

HomeAdvisor.com, a multilender site created by Microsoft Corp., tried a free computer offer in March 1999 for people who closed loans of $125,000 or more. It stopped the promotion this year.

Nick Karris, a senior analyst at Gomez Advisors, said that with the online mortgage business getting crowded - more than 100 have entered the space in the last 12 months - interest rates rising, and applications falling mortgage companies that are pure Internet plays face an uphill battle. "It's becoming more and more difficult to efficiently attract and retain the Internet consumer," he said.

Industry observers said many online mortgage sites have reported a high percentage of low-credit-quality borrowers because of the perceived anonymity of the Internet, which removes the embarrassment of a rejection.

Gomez Advisors said 3.6 million people plan to use the Internet to shop for a mortgage in the next 12 months - 72% of the market of prospective homebuyers. Of these people 21% report household income of less than $45,000.

This may offer LoanGiant an opportunity to focus on this market, Mr. Karris said. But executives at other online mortgage firms said the free-computer campaign could prove costly.

"It's a nice promotion, and it will get them traffic," Michael Feldman, senior vice president and co-founder of MortgageIt.com in New York, said of LoanGiant's offer. "But will it result in them making money? It's hard to know."

Fred Fellows, president and chief executive of MortgageSelector.com, said: "Redemption rates on rebates or awards are not 100%. How many subprime customers are going to call and say, 'I want that computer?' I hope a lot, but I doubt it."

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