The field of Internet-based mortgage services just got a little more crowded by one that is claiming a first -- this one offering online, binding mortgage approval for consumers.

The company, mortgagebot.com, uses a proprietary automated underwriting system to provide a real-time credit decision for consumers by the time they're finished completing the on-line application.

The on-line application takes most customers less than 15 minutes to complete according to Scott Happ, president and CEO of mortgagebot.com.

"One thing we've noticed about web-based mortgage lending is that it's very rate sensitive, and we're ready to compete on rate. But we'd like to remind consumers to pay close attention to loan fees when they're shopping," Happ said.

Like E-Loan and HomeAdvisor, two of the more well-known online lending services, mortgagebot.com offers reduced rates and fees than traditional lenders because there is greater efficiency and far less overhead in a web-based operation.

iQualify.com, whose parent is Finet Holdings (Nasdaq: FNHC), has offered online mortgage approvals for about a year.

Happ said there are a number of Internet lenders offering unusually attractive rates but charging high loan fees.

"We've seen some lenders with rates as low as ours or slightly lower but who, after some digging, reveal charges like a $995 loan administration fee or a $400 underwriting fee and other junk fees," said Happ. "We're committed to quoting all fees up front and keeping them as low as possible."

Roughly half of the consumers who apply on-line are approved immediately according to Happ. Between 60% and 75% of those who don't receive an instant on-line approval are approved "off line", usually within hours.

In its initial release, mortgagebot.com offers first mortgages for people who are buying or refinancing an owner-occupied, single-family home or condominium with at least 20% equity. The service is currently available in 25 states with nationwide coverage targeted by mid summer.

Mortgagebot.com is a division of M&I Mortgage Corp. which is a subsidiary of Marshall & Ilsley Corp. (Nasdaq: MRIS), a $21.6 billion bank holding company based in Milwaukee, Wis.

Published: March 30, 1999

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