IndyMac Bancorp is enlisting real estate agents as mortgage brokers in an online sales initiative that illustrates the importance of personal contact in an increasingly automated world but could also draw scrutiny from HUD.

Executives at the Pasadena, Calif., company say that online or offline, personal relationships guide sales - especially in the complicated mortgage process - and that realtors and mortgage brokers remain the biggest influence on borrowers.

"The advantage that realtors hold is that they control the consumer, and studies show that they direct a lot of the purchase market," said Michael W. Perry, vice chairman and chief executive officer of IndyMac. "I think partnering with real estate agents, which a lot of mortgage brokers are doing, is a smart move."

IndyMac set up its Web "business-to-realtor" channel in California in April. Though it only funded $4 million of loans in the second quarter, Mr. Perry expects to be funding $50 million a month by yearend. The service will expand to other states starting next year, he said.

"It makes a tremendous amount of sense," said Gary Gordon, an analyst at PaineWebber Inc. "If originating a loan is not much more than getting the borrower to fill out an application, the realtor can be effective" as an originator. "If there's one key party in the purchase of a home, that's it."

But David F. Broadbent, CEO of OnePipeline.com, which spent the last three and a half years and more than $10 million developing technology to let real estate professionals originate loans online, pointed to an inherent conflict of interest when a realtor or home builder who has a fiduciary relationship with the homebuyer shifts gears from assisting in homebuying or building to arranging a mortgage.

"They sort of have the customer captured in that relationship," Mr. Broadbent said. "And it is the concern of the regulatory bodies that you not use that relationship to inappropriately steer them to a mortgage product that may not be the best for them."

The most notable such agency is the Department of Housing and Urban Development. HUD enforces the Real Estate Settlement Procedures Act, which was enacted to protect consumers and closely guards the realtor-consumer relationship.

A HUD official said the department is investigating complaints that real estate agents are collecting origination fees for doing little more than referring homebuyers to certain lenders' Web sites.

Though he stressed that the Real Estate Settlement Procedures Act applies to the Internet, the official said HUD in early July began a six-month review to determine whether its regulations need clarification "in light of technological changes."

Kerry Killinger, chairman, president, and CEO of Washington Mutual Inc. of Seattle, is one of many in the industry who say that technology will soon give more power to mortgage brokers, loan officers, and consumers but especially to real estate agents.

"While I believe that mortgage brokers will be around for a long time, the realtors may drive more of the lending process through their own operations than they have in the past," Mr. Killinger said in a speech at the Western Secondary Mortgage Conference in San Francisco sponsored by the California Mortgage Bankers Association.

Mr. Gordon of PaineWebber said technology "has changed enough where now the realtor can provide the great bulk of the [broker] function. Five years ago that wouldn't have been possible, and realtors would have to have been referral agents."

Developing the technology has not been easy. OnePipeline.com of Salt Lake City retains 27 law firms around the country and has 100 staff members to keep up with regulations, which Mr. Broadbent said can change weekly.

Mr. Perry would not detail exactly how his technology works, saying it is still in an experimental stage. He said, however, "We think it's the model for a direct lender to access the purchase market instead of having branches and high-commissioned loan officers." A company of IndyMac's size should not maintain branches, he said.

Beyond the technical and bureaucratic issues involved in developing a workable platform - in addition to the settlement procedures law, 33 states have a second layer of regulations - direct-to-consumer lenders may simply maintain too much of a stake in the lending process.

Though he acknowledges there are regulatory concerns, Mr. Perry said, "We are confident that the program fully complies with the Real Estate Settlement Procedures Act." He added that the program was developed "based upon HUD's most current statement of policy."

The convergence of brokers, realtors, and lenders is a natural evolutionary step, he said. "Margins in real estate and mortgage business have declined, and will continue to decline as the result of efficiencies that the Web brings to consumers," he said. "And as a result, you'll see more people doing both."

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