Harry Mortgage Co. is building mortgage business in Oklahoma by asking no down payment from borrowers.

Instead, the Oklahoma City lender relies on the home builder or a relative of the borrower to pledge 5% of the property's cost. The pledge is placed into a certificate of deposit that is freed up after the borrower has paid off 5% of the loan's principal.

Or, if the borrower defaults, the CD is cashed in and turned over to the lender.

Harry Mortgage launched the product last spring to fill a niche, and has since closed 10 of the loans, said Steve Harry, the family-owned firm's senior vice president.

"We saw a need in the market for first-time buyers and some of the builders we're working with," Mr. Harry said.

The mortgage is a new twist on pledged-asset loans that have been offered through the Federal National Mortgage Association and some mortgage lenders. Mr. Harry believes that his firm's requirement for a low- percentage pledge makes it unique among other products.

Mr. Harry and his brother, R. Mark, a vice president at the company, are talking up the pledged asset loan on a monthly radio show the company sponsors.

The brothers are also preparing to go interactive, through cameras on PCs that will allow them to conduct face-to-face meetings with realtors and their customers.

New products like the pledged asset loan and sophisticated technology are necessary to retain a competitive edge, Mr. Harry said. "If we don't change, we'll be looking back wishing we did."

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