A survey report from TowerGroup casts yet more doubt on the near-term future of the Internet mortgage business, though its author acknowledges the Web will play an important role in "revolutionizing" the industry.

The Needham, Mass., company's findings, released Wednesday, add to mounting evidence of consumers' reluctance to get mortgages online. In fact, the author, Richard A. Beidl, says most people will only do it if someone is there to walk them through the process - namely mortgage brokers and real estate agents.

Mr. Beidl, director of TowerGroup's Global Mortgage re-search and advisory service, says Internet originations will have accounted for only 1.4% of the estimated $1 trillion in mortgage originations at yearend, even though 50% of consumers use the Internet to research and shop for mortgage rates and loan products.

And though more than 70% of consumers expressed a willingness to apply for a mortgage online by 2005, actual applications received through the Web will make up just 10.2% of originations by 2005, the report concludes.

"Based on what we're seeing right now, we continue to say that the percentages will be considerably less than most have forecast," Mr. Beidl said in an interview Thursday. "The Internet will be fundamental in revolutionizing the mortgage business, just not in the way that people have expected it to be."

Web mortgage lending's pioneers may have misread the impact the Internet would have and failed to appreciate people's innate need for real rather than virtual contact with pros, Mr. Beidl said

"The bottom line is that this is a big purchase decision for a consumer - a huge debt - and it's only done every five to seven years," he said. "Consumers want somebody there to answer questions and provide them help; that's a cultural thing, and until we simplify the process, they will require more assistance to make that choice and find the right situation for them."

Doug W. Naidus, chief executive officer of MortgageIT.com, New York, agreed with many of Mr. Beidl's assertions. From the onset of the Internet, he noted, consumers have been loath to deal with companies exclusively online, and companies that have failed to recognize this are faltering.

The online-only model "has failed miserably," he said. "It's been proven out at this point that consumers need more than an Internet presence. And the market is penalizing companies that didn't get it by not doing business with them."

Mr. Naidus said he wholeheartedly agrees that brokers and real estate agents will be instrumental in advancing the Internet in this sector, both with consumers and the industry. To get people comfortable with the technology and procedures, his company operates MITLending.com, a resource for mortgage brokers, which enables the brokers, sitting face to face with a borrower their office, to use all the technology and resources that they need to originate a loan, which MortgageIt.would purchase and fund for them.

In September MortgageIT.com initiated an effort aimed at mortgage brokers and real estate agents, opening production facilities in Houston and Madison, Wis. The facilities will house account executives who will work with the local mortgage and real estate broker communities to establish relationships to bring the MortgageIT.com product to those markets. MortgageIT plans to open facilities in all major mortgage cities, including Atlanta, Chicago, and Dallas in the near term and Seattle, Salt Lake City, and St. Louis later.

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