Robert Bernabe is familiar with the apprehension real estate agents often have when a home buyer wants to obtain a mortgage through E-Trade.

"Often the Realtor is wary of an online lender. Either they’ve heard horror stories or it’s outside their range of comfort. We understand that," said Bernabe, head of retail mortgage lending and VP of E-Trade Financial.

As E-Trade closes more mortgages word of mouth about positive experiences spreads among real estate agents, Bernabe believes. The company wants to capture those experiences and translate them into more business through its newly launched Realty Members Program, which encourages brokers to recommend E-Trade to home buyers and sellers.

The majority of E-Trade’s mortgage customers now come directly to the company, not through a real estate agent. With the new program, launched at the end of 2003, that could change.

Real estate salespeople who sign up for the free program get tools and content to display on their own Web site along with a function that enables visitors to access E-Trade’s mortgage center, where they can get local mortgage rate quotes, use mortgage calculators and get pre-qualified for a mortgage. They can also chat online with E-Trade’s loan consultants.

The realty agent receives $5 for each person who clicks through to E-Trade’s mortgage center and provides his or her contact information. E-Trade doesn’t have to close the loan for the real estate agent to get the fee, Bernabe said.

Norm Roos, a Connecticut attorney who specializes in mortgage finance, said those $5 payments don’t appear to be close to running afoul of federal laws that prohibit kickbacks for referral of real estate settlement services.

Roos said the realty Web sites with links to E-Trade’s Web site could be seen as providing a service of value to E-Trade. That would mean E-Trade could compensate the Web site owners for that value. The fact that the value isn’t tied to E-Trade closing the mortgages is also material to whether the program complies with the law, he added.

Stephanie White, a Realtor with RE/MAX Fine Properties in Sugarland, Texas, said she’s considering joining the program after dealing with E-Trade last October. The majority of her business comes from the Web, so it would make sense to add more features to her Web site, she said.

Like other realty agents, White initially worried when buyer wanted wanted to use E-Trade.

"You are skeptical. You’re worried this is something that is not going to go through," White said.

The loan paperwork came in a week before closing and everything flowed without a hitch, White said.

Realty agents who aren’t part of E-Trade’s program, but have clients who want to obtain a mortgage from E-Trade will receive a kit that introduces E-Trade’s loan consultants, processors and managers. After the loan closes, E-Trade sends a thank-you letter to the realty agent and includes gift certificates the agent can give to the client.

"Our aim is not only to make the customer feel comfortable, but make the Realtor feel comfortable," Bernabe said.

Bernabe said E-Trade is finalizing and getting regulatory approval for a partner program through which E-Trade will provide mortgage experience and staff for brokerage companies. The program will target smaller brokerages and franchised offices of larger chains that don’t have an affiliated mortgage company.

Ideally, Bernabe said, real estate agents would become familiar with E-Trade through their clients, then join the Realty Members Program. If that goes well and the brokerage operates in a market E-Trade wants to target, they’d form a realty partnership with the company.

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