MEQUON, Wis. -- All indicators show the mortgage market is continuing to soften, but don't tell that to Scott Happ. While home sales nationwide have declined, the CEO of Mortgagebot expects sales in 2006 to rise about 30% to reach $22 million in revenue.

In August alone, the application service provider for the online mortgage lending industry reported an average three-year sales increase of 560%. The online lending solution allows a member to start up their application process online, makes an approval, includes a regulatory-required disclosure and locks in an interest rate. A member can also opt to apply for a loan online and then call their credit union and ask a loan officer to pull up their application and finish it on the phone. Or they can go to a CU branch and complete it face-to-face.

"The dynamics of the mortgage market are such that even though the market is down, at the same time more institutions are beginning to offer mortgage loans online," says Happ.

The 9-year-old company has 650 clients nationwide. Of those, about 250 are credit unions, 350 are banks with the remainder being CUSOs.

Happ says credit unions are the fastest growing segment of Mortgagebot's client base, and he expects that trend to continue going into 2007 and beyond. That's partly due, he says, to the "historical dynamic of credit unions adopting member-friendly services."

He explains, "Credit unions are the most advanced of any segment we deal with in embracing mortgage technology. They've always been early adopters of any technology that provides members with better experiences and more options. The same is true of Internet banking--credit unions were the first to adopt that. So the rate that credit unions have adopted online mortgage technology is no different than historical trends." While Mortgagebot's credit union clients include 42 of the top 100 CUs, they also include about 75 small credit unions with less than $300 million in assets.

"Solutions like ours are a hosted solution. A credit union doesn't need to install any hardware or software, and that makes it easier for them to put the solution into their system relatively easily," says Happ, adding that there is still effort involved in the installation. A credit union, for example, has to decide what their site will look like from a branding perspective and determine how loans will be underwritten, "but other than that, it's a low resource implementation process that small credit unions as well as larger ones are equipped to handle."

Even so, Happ says Mortgagebot advises credit unions to be careful when they put the online lending solution in place because "it's a very robust offering and needs to be member friendly." "If we look back to 2000, at most about 1% of all mortgage loans were originated online. Now that figure is north of 10-15%. We have many credit unions that originate more than half their loans online," he added. As another indication of the company's continuing strength, last week Digital Insight Corp. entered into a preferred partner relationship with Mortgagebot. Under the terms of the agreement, Mortgagebot will recommend Digital Insight's consumer Lender Solutions to its more than 650 clients, and Digital Insight will recommend Mortgagebot's Web-based mortgage loan origination solutions to its clients.

"Online mortgage technology is the great equalizer," says Happ. "It provides the community charter credit union players with the tools that allow them to have the same technological advantages as the very large players. In addition, because they know their market and community they serve, it can give them an edge."

--egbarr06@bellsouth.net

Instant Insights /

CUs' Rapid Adoption of Online Mortgage Lending Pushes Mortgagebot's Success Despite Declining Real Estate Market

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