Selling mortgages over the Internet is efficient, but perhaps too much so, lenders are saying.

The proliferation of Web-based selling gives borrowers an easy way to compare rates, and because rates matter most to borrowers, Internet-based services are in danger of further commoditizing mortgages.

"Many borrowers don't care where they end up," said John McMurray, president of Keystroke Financial Inc., which runs a Web site that lists the offerings of multiple lenders. "When the origination process is over, it's pretty transparent who they're with."

Another such site, Home By Net, lets borrowers check the latest rates from leading lenders Banc One Corp., BankAmerica Corp., Citicorp, HomeSide Inc., and HomeComings Financial Network. Rates are updated several times a day.

Most multi-lender sites are run by technology companies. What sets Home By Net apart is that it was established by Banc One.

Marci Grayson, business manager for Home By Net, said Banc One knows that borrowers using the Web are more likely to shop around for the best possible rate. She said Banc One is responding to this development by demonstrating a willingness to get consumers the lowest rate, even if it means funneling them to a competitor. Playing such a role reinforces the image of the bank as the consumer's central financial institution.

Ms. Grayson noted that even lenders not selling on the Internet engage in practices that commoditize mortgages. "The dynamics of the industry are not changing," she said. "If you're not going to be a part of the Internet in a multi-lender way, that puts you even further out of the ballpark."

Multi-lender Web sites have become an especially hot topic since Intuit Inc., maker of Quicken personal finance software, unveiled a mortgage Web site earlier this month. The QuickenMortgage site features products from six different lenders.

Banc One is the only bank so far to run its own multi-lender Web site, but others, including Chase Manhattan Corp. and PNC Bank Corp., are featured on QuickenMortgage.

Ms. Grayson said that even though large national lenders dominate the multi-lender Web sites now, smaller players are likely to appear soon. "Over the long haul we will see sites incorporate more regional players," she said.

Gregg Gorman, executive vice president of Chase Manhattan Mortgage Corp., said smaller companies face a hard road because larger companies can cut prices more easily.

In addition, consumer security concerns may come into play. Mr. Gorman said consumers shopping on-line may feel more comfortable dealing with institutions with well-known brand names.

Other observers said the presence of Internet mortgage sites could eventually replace brokers and other traditional forms of wholesale lending. "Over the long term this could take out some of the intermediaries," Mr. McMurray of Keystroke said. "All you need for a mortgage is a borrower and long-term investor."

Many wholesale lenders have Web sites designed to serve a network of brokers. For example, Countrywide Credit Industries and HomeSide, two of the largest wholesale lenders in the country, operate sites that brokers can use to check rate sheets.

"Brokers currently are some of the people you are seeing active on the Web as originators," Mr. Gorman said. "Many are learning how to use the Web and don't see it as a threat."

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