Lisa Norman, a 29-year-old human resources administrator from Fort Lauderdale, Fla., on Wednesday parlayed a recent pizza purchase into free mortgage payments for a year.

She was the winner in a promotion by OnLoan.com of Fort Lauderdale, which picked her name in a drawing at the local Hard Rock Cafe, while its 30-foot armored truck - equipped with five satellite-linked computers - idled outside.

The fledgling on-line mortgage company sent out 1 million "box toppers" via Pizza Hut to promote the contest. It parks the truck, which a spokesman called "very noticeable," at art and home shows on weekends to market the company and drum up applications.

OnLoan's promotion is typical among Internet mortgage companies struggling to gain customers.

Though they see huge potential in the business, on-line mortgage executives acknowledge that customer service in their industry is inconsistent at best. And unlike on-line stock trading, which has succeeded in terms of both providing service and attracting customers, Internet-based mortgage lending has failed to catch fire.

LoansDirect of Huntington Beach, Calif, offers "an additional $350 off" and invites Web surfers to "click here" for human contact. Quicken Loans in Detroit is offering $225 back, and iown.com of San Francisco boasts of no application fee and on-time closing or $500 back.

"The mortgage industry is the furthest behind in taking advantage of automated technology," said Jack Rodgers, executive vice president of mortgage.com in Sunrise, Fla.

Cameron King, senior vice president of ELoan.com in Dublin, Calif., acknowledged that some companies' service levels have led to low consumer confidence in on-line mortgages, but he argued that the industry is changing. "There have been kinks in the process," he said, "but the ability to maintain quality service in an on-line environment is much easier than in a bricks-and-mortar environment."

Nonetheless, current estimates place on-line mortgage activity under 1% of all mortgage lending, indicating that consumers remain wary of applying for home loans from a computer. In contrast, on-line stock trading accounted for 43% of all retail trades for 1999, up from 27% in 1998.

Tom Carter, an e-commerce research analyst for U.S. Bancorp Piper Jaffray, who predicts that on-line home lending will increase to 20% of all home lending by 2004, said applying for a mortgage will never match the experience of on-line trading. "Trading is fun. It's about hope," he said. "A mortgage is a necessary evil, it's something that you have to do to buy a house."

Mr. Carter argued on-line lenders must offer something of value to borrowers if they are ever to increase their market share. "Technology and infrastructure have to be a given," he said, "and these companies need to demonstrate real savings to acquiring a mortgage on-line."

Considering the prevailing opinion that service remains an issue, on-line lenders still have a long road ahead.

Mr. Rodgers said most lending companies on the Internet do a poor job of offering products and service. "It's a lousy process for consumers and a costly process for lenders," he said. "I don't see a lot of people doing a great job with it today."

Joe Sherer, president of Loanz.com of Richmond, Calif., says he fears that a few early servicing missteps by pioneers in the field may have unfairly tarnished the reputations of on-line lenders. But Mr. Rodgers said the inconsistency of some Web lenders' service provides "an opportunity for those who can get the job done."

Indeed, many on-line officials say their reputations will be the key to success. "We want to make sure that the client who closes tells friends, family, and co-workers about our company," said Mark Pappas, president of MortgageIT.com in New York.

Another issue is security and privacy, Mr. Carter said, noting that the mortgage application process requires consumers to answer up to 75 questions about very personal financial information. "Every time there's a scare on Internet privacy," he said, "people become more guarded about applying on-line."

Lenders disagree on the best ways to market the business, and several said that the customer acquisition costs of direct consumer advertising are too high to ever pay off. "It's very expensive to advertise directly to the consumer to get loans on the books," Mr. Sherer said, "and many companies are paying a lot to get each customer."

Scott Leon, chief marketing officer and vice president of OnLoan.com, said that many of his competitors are spending $5,000 to $8,000 per customer. "It's unbelievable," he said, adding that he does not believe that spending so much on direct-to-consumer advertising is the best way for on-line lenders to spend their money. "I believe that brands are built, not bought," he said.

Still, lenders and analysts remain optimistic that the business will succeed. Mr. Sherer noted that it took almost 30 years for consumers to adopt credit cards, but he argued that on-line lending is becoming "adoptable" much faster.

Mr. King agreed, and cautioned that the business is still in its infancy. "We are warming up the pitchers," he said. "We haven't even really started the game yet."

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