Two studies released this week underscore on-line lenders' lack of progress in the home loan business.

A study by Forrester Research concluded that closing rates on-line are "abysmal" and that consumer acceptance remains years away.

Lenders today count on mortgage brokers for 70% of their loan volume, and "most of our interviewees expect their mortgage brokers to continue to generate the bulk of their origination,'' said Seema Williams, an analyst at Forrester. "They believe consumers still need face-to-face interaction to close one of the largest financial transactions of their lives."

In a separate study, Coldwell Banker found that 85% of homebuyers use the Web for research but only 10% said they were comfortable doing business with companies that "exist solely on the Web with no 'real world' offices to visit and/or contact." This study found that 89% said they would not bid for a home over the Internet without first seeing it in person.

The findings identified limitations of the Internet as a mechanism for closing home loans. They also validated a growing belief in the industry that real estate and mortgage brokers will never be cut out of the process and that Internet lenders must work in partnership with these brokers to survive.

"The Internet brings no efficiencies to the environment today in the business-to-consumer process," said Rick Soukoulis, chief executive officer of LoanCity.com. He said many on-line mortgage companies have essentially taken on the work of mortgage brokers but do it at four times the cost.

"Everybody in the U.S. - brokers, agents, and lenders - will have a Web site within 12 months," Mr. Soukoulis said. "Gathering an application on-line is far from the 'killer app'."

Scott Messina, senior vice president for sales and marketing at mortgageselect.com, argued that people shopping on the Web would be ready to do business if the companies were prepared to handle personal contacts. The company's survey of 1,159 customers found applicants averaged more than 10 phone calls over the length of the transaction, he said.

"The problem is that [many companies] are too much like airline reservation centers," he said. "They take the customers' calls but then try to steer them back to the Net."

Joe Sherer, president of Loanz.com, argued that the Internet eventually would change the mortgage process fundamentally, though he acknowledged that progress has been limited so far.

"The idea of the whole mortgage process as we know it will go away," he said. "I envision buying a mortgage to be like buying a stock - and there's no reason it shouldn't be like that."

But Mr. Soukoulis argued that given the complexity of the transaction full automation of the mortgage process will never occur.

"The Internet is a tool, like a telephone," Mr. Messina said, "and it is as robust or as limiting as the customer wants it. You can't live and die by the Internet; it's just another tool in your arsenal."

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