Editor’s note: Part 1 of a three-part series on new online mortgage tools kicks off with a look at LendingArt.com.

If lenders once had the upper hand over borrowers shopping for a mortgage over the Internet — thanks in part because of Web sites that sell an applicant’s personal information as leads — the balance of power may be shifting to consumers.

Editor’s note: Part 1 of a three-part series on new online mortgage tools kicks off with a look at LendingArt.com. Read Part 2, "Widget for mortgage loan quotes debuts," and Part 3, "Mortgage Grader wants to slash loan fees."

If lenders once had the upper hand over borrowers shopping for a mortgage over the Internet — thanks in part because of Web sites that sell an applicant’s personal information as leads — the balance of power may be shifting to consumers.

A new generation of Web-based mortgage shopping tools aims to put consumers in the driver’s seat by letting them query the databases of hundreds of lenders, comparing loan guidelines, rates and fees for a specific transaction without giving up their personal information.

The sites include LendingArt.com, which provides anyone access to wholesale loan prices, RateWindow, a Web "widget" that real estate agents can install on their own sites, and Mortgage Grader, which has patented a process that the company says will soon allow consumers to close a loan over the Internet without paying origination fees.

If there’s a common theme of these new tools, it’s transparency and choice. Instead of delivering consumers to the doorsteps of a few lenders as leads, they give prospective borrowers many of the same capabilities a mortgage broker has — the ability to see the loan programs wholesale lenders are offering, determine whether they can qualify for them, and find out what they’ll pay.

These tools generally provide information only on loans offered by wholesalers, and may exclude programs offered by some retail lenders like banks and credit unions that choose not to do wholesale lending through mortgage brokers. But the sites can arm consumers with the knowledge they need to shop and negotiate for a loan, whether they are talking to a wholesale, retail or correspondent lender.

Real estate brokers and agents can use these services, too, to help clients who are struggling to land financing in a tough lending climate. Some mortgage-search-tool developers offer widgets or APIs that can be incorporated into real estate agents’ or mortgage brokers’ own Web sites, generating traffic and prospects.

LendingArt.com

One of the more radical new mortgage pricing tools, LendingArt.com, provides access to wholesale loan prices — the cost of a loan before a loan originator’s fees are added on.

Consumers can’t actually obtain a loan at the wholesale rate. But they can use the site to find a loan program that best fits their needs, and use wholesale pricing information as a negotiating tool with their mortgage broker or loan officer.

It’s not unlike the way car buyers can obtain the dealer invoice price on the Internet and use it as a starting point for negotiations, said John Alexander, president of Mt. Arlington, N.J.-based NYLX, the company behind the site.

Another way to use LendingArt.com is to see what programs a prospective borrower qualifies for. Because NYLX also provides mortgage brokers with product eligibility and pricing information, it has the latest data on more than 14,000 loans available from 38 of the top 50 wholesale lenders, Alexander said.

"The information that’s available to the consumer is virtually everything that NYLX has available" to mortgage brokers, Alexander said. "We have virtually every wholesale product available in the market today."

Many mortgage brokers may even be looking at a smaller universe of loan programs than LendingArt.com users, because brokers may only have access to information on the programs offered by the lenders they work with. As a result, a consumer or real estate agent may be able to find the loan they are looking for through LendingArt.com — even when their mortgage broker or loan officer has told them it’s not available, Alexander said.

The opposite problem can also turn up. Some brokers may not use a service like NYLX to stay abreast of guideline changes or new or discontinued loan programs. That can lead to a mortgage broker or loan officer mistakenly informing a prospective borrower that they qualify for a loan program that no longer exists or has new, tougher guidelines that exclude them.

Consumers sued lead-generation sites over "bait and switch" tactics allegedly employed by lenders who use them to generate business, saying they are unable to close a loan on the terms offered. While unscrupulous lenders undoubtedly employ such tactics, Alexander said sometimes what appears to be a bait-and-switch ploy is actually the result of out-of-date information.

He said mortgage search sites that rely on NYLX for up-to-date eligibility and pricing information include Bankrate Select, The Money Store and DirectMortgages.com.

There’s no charge for searching LendingArt.com to find loan programs a borrower qualifies for. For an introductory price of 25 cents per query, LendingArt.com will provide pricing information that’s "in depth enough to go into a retail loan office or mortgage brokerage and strike a deal," Alexander said.

It actually costs NYLX more than 25 cents to compile the information and make it available, Alexander said. The introductory "pay as you go" pricing — which will be in place for at least 90 days — is based on the assumption that the site will generate additional revenue by selling advertising.

Users are asked to provide an e-mail address and create a password to use the site, a "very simple three-step process" that simplifies the process of returning to the site to make additional inquires, he said.

"If you are a Realtor or financial advisor, LendingArt will take care of your needs forever," Alexander said. Mortgage brokers who may have many offices and different fee structures are advised to use one of the applications the company has designed for lenders.

Although it may take a fairly sophisticated consumer to take full advantage of the site, Alexander said NYLX is working on a more consumer-friendly version "where lenders will be able to come on and promote their stuff" directly to borrowers.

Tomorrow: We’ll take a look under the hood at RateWindow and Mortgage Marvel.

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