RealTime IT News

Schwab, E-LOAN Offer Mortgage Services

Charles Schwab & Co. Inc. Tuesday added mortgage products to its lineup through a partnership with online mortgage broker E-LOAN Inc.

E-LOAN will grant Schwab (SCH) warrants totaling 13.1 million shares in two installments. The first batch consists of 6.5 million shares, has a three-year term, and is exercisable at $3.75 per share, subject to certain exercise provisions. The second batch consists of 6.6 million shares, has a 3 1/4 year term, and is exercisable at $15 per share.

Over a four-year term beginning this June, retail Schwab customers will access E-LOAN's (EELN) mortgage products from more than 70 lenders, as well as online rate search, loan comparison and tracking services. E-LOAN's customer service representatives will offer the services.

Schwab currently serves 3.7 million active online accounts with $349 billion in customer assets.

Daniel O. Leemon, Schwab executive vice president of business strategy, will become an E-LOAN director. Leemon said his firm conducted research and found that people who go online would be interested in seeking a mortgage through schwab.com.

"After an exhaustive review process involving nine companies, E-LOAN emerged as the best provider. They are a company with a commitment to customer service, superior technology, a choice-based business model with a breadth of products, and a strong management team," Leemon said.

In related news Tuesday, E-LOAN scored $40 million in cash investments from Charles Schwab Corp., Abbey National, FT Ventures, Benchmark Capital and Technology Partners. Though stake percentages were not specified, Schwab, Abbey National, and FT Ventures contributed $10 million each, with Benchmark Capital and Technology Partners chipping in $5 million each.

The proceeds will be used for working capital and general corporate purposes.