Google is planning to launch a service in late August or early September that would provide Web surfers with loan offers from mortgage lenders, according to a lawsuit by LendingTree that seeks to stop the project in its tracks.

LendingTree filed suit Tuesday against Mortech Inc. — the company that provides the "pricing engine" lenders use to generate loan offers through LendingTree — saying the company is barred from providing the same services for other companies.

In its complaint, LendingTree claims that Mortech agreed to make its pricing engine available for use for Google’s loan aggregation service. Lending Tree said it had obtained screenshots of a trial version of the new service.

Attorneys for Mortech have not yet responded to the lawsuit, filed in the U.S. District Court for the Western District of North Carolina.

In a statement, Mortech did not deny working with Google, but said the company "has a proven track record of treating all industry partners and customers with absolute respect and consideration."

Mortech said it would deal with the lawsuit "in a responsible, forthright and timely fashion while upholding our commitment to supporting our customers’ success."

LendingTree says it has a confidentiality agreement with Mortech, dating to April 2008, that prohibited both parties from disclosing to a third party information treated as "confidential, proprietary or a trade secret."

The agreement was amended to limit Mortech’s ability to make its pricing engine services available for use with other online loan aggregators, LendingTree said.

Subject to "a limited exception," LendingTree said Mortech agreed it would "not post or otherwise provide data associated with an offer for a loan product directly to any online loan aggregator."

In return, LendingTree said it gave up some payments it was owed by Mortech under the original agreement, and promised to offer its customers Mortech’s product, pricing, lead management and eligibility solutions when providing such services. …CONTINUED

LendingTree said it sought to amend its confidentiality agreement with Mortech in November.

The month before, Zillow — which launched an online mortgage marketplace in the spring of 2008 — had integrated pricing engines offered by Mortech and several other companies, including LoanXEngine, Mortgagebot and NYLX, into its service. The pricing engines give lenders the option of automating their loan quotes, said David Gibbons, Zillow’s director of community relations.

Neither Google nor Zillow is named in LendingTree’s lawsuit.

In a statement, Google said the company is working on "a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.," but declined to comment on the lawsuit because it was not a party to it.

In its complaint, LendingTree said that when it asked Mortech’s president, Donald Kracl, about a potential collaboration with Google, he did not deny that "Mortech had agreed to make its pricing engine services available … for use with Google’s service." Kracl allegedly provided conflicting accounts over whether Mortech would supply wholesale or retail loan pricing services for Google.

LendingTree claims Mortech has already breached its amended confidentiality agreement by providing data related to mortgage loan offers to Google in connection with a beta test of Google’s new loan aggregation service.

"In the course of its collaboration with Google, Mortech will inevitably disclose the confidential, proprietary and secret information that it has about LendingTree," lawyers for the company alleged. LendingTree has provided Mortech with "substantial information" regarding LendingTree’s ideas for future products.

"Mortech will undoubtedly use this information during the course of its relationship with Google, and such disclosure will irreparably damage LendingTree’s future business," LendingTree claimed.

After filing its complaint against Mortech, LendingTree obtained a court order sealing further documents it has submitted in support of a motion seeking a temporary restraining order and preliminary injunction against Mortech.

The documents contain "nonpublic, sensitive and confidential information" about LendingTree’s business processes and systems, "including descriptions of … new business products currently being developed in conjunction with Mortech," attorneys for LendingTree said in their motion to seal the documents.

A hearing on LendingTree’s motion for an injunction has been set for Sept. 2. 


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