Online mortgage services promise to cut the time, cost and hassle of getting a mortgage. But, as with every facet of Web commerce, the competition is fierce, and competitors are still trying to figure out the best way to turn site visits into profits.

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For example, E-Loan, Inc., a June 1997 start-up that recently announced it had received $25.4 million in its second round of venture capital, isn't profitable yet. But revenue this month is expected to rise from $825,000 to more than $1 million, putting the company on track to hit $10 million in annual sales, said co-founder and CEO Chris Larsen.

Palo Alto, Calif.-based E-Loan faces stiff competition from a wide variety of online mortgage services, which include QuickenMortgage from Intuit, Inc. in Mountain View, Calif., and one from Homeshark, Inc. in San Francisco.

Only a tiny fraction of mortgages now are processed online, said Theodore Iacobuzio, an analyst at The Tower Group in Newton, Mass. "But the mortgage market is so huge, even a small fraction of the mortgage [business] would be a very large market for these guys," he said.

Like other online mortgage sites, E-Loan aims to reduce the paperwork of mortgage applications and cut out middlemen, such as mortgage brokers and bank loan officers. Larsen said the online process cuts about 70% from the normal cost of loan origination. But unlike some other mortgage sites, which collect a fee for referring home buyers to lenders, E-Loan is a mortgage broker that actually processes the mortgage application and earns a fee for each transaction.

Key to E-Loan's strategy is E-Track, a combination document management and workflow system designed to automate much of the paper-pushing and telephoning now needed to close a mortgage, said E-Loan's president, Janina Pawlowski.

For example, the software automatically sends E-mail that tells customers about the status of their mortgage application and recommends the best deals for borrowers. The Web-based service works well for relatively straightforward mortgages, such as when a good credit risk takes out a conventional mortgage on a home, Pawlowski said. But human interaction is still needed for more complex cases, such as a second mortgage or a customer who has bad credit, she said.