As a correspondent for the Faulkner & Gray mortgage publications, I spend a good portion of my time tracking the mortgage industry's development of the online channel as a place to market, process, deliver and sell real estate loans. After looking at a couple of thousand mortgage websites and watching how the best ones do and don't change, I am convinced that the online development of ways to sell, process, deliver and sell real estate mortgage loans on the Web can be tracked by watching a dozen or so of those sites.

One you certainly have to watch is E-Loan.

Palo Alto mortgage brokers, Christian Larsen and Janina Pawlowski say they started E-Loan because they were tired of paying their superstar loan officers more than they took home themselves. Both had MBA degrees, both were technology savvy, and they decided find some way to eliminate the human loan officer from the process entirely. Their idea was to create a website that would let borrowers explore their mortgage loan choices at home on their computers, with no salesperson steering them to this product or that lender simply because the commission offered happened to be fat.

Once they had forged their mission, legend has it that one of them wrote down the name E-Loan in catsup on a cocktail napkin. The next step was to get the name out, and they started taking out radio ads that drew Web borrowers in droves to see whether they actually could apply for a loan without having to go into some office to make an application. The next step was to start making deals to get E-Loan prominently featured on portal sites and Web directories such as Yahoo! Eventually E-Loan was taking out ads in the Wall Street Journal and saw its name on Red Herring magazine's short list of companies likely to float an IPO to become publicly traded.

Last year Ned Hoyt, president and CEO of rival HomeShark, told me in an interview that only a few multi-lender mortgage websites would survive to compete on a national basis, and that by the end of this year the contenders would have to be doing 500 closed loans per month to remain in contention. That prediction has since become a frequently quoted benchmark that has taken on a life of its own. E-Loan achieved that 500 mark in September and is still seeing its volumes increase at the rate of 20% a month.

When I recently visited E-Loan's new loan processing facility in Dublin, California, the paint was barely dry on the walls and they had office furniture stockpiled in the middle of a huge space in readiness for expansion. Fueled by the refi boom, E-Loan's 1998 loan production is estimated to approach $1 billion. E-Loan president Janina Pawlowski described how the company is using processing teams working with an Oracle database to create scalable and reliable loan processing procedures to make the online borrowing experience more convenient and useful for consumers. E-Loan has come a long way in the two short years of its existence.

Some say that the Internet holds the future of mortgage lending. Including Web TV and other related technologies, I believe that's true. If that prediction bears out, a dozen companies like E-Loan will be the ones to make it happen.