As part of a year-long campaign to transform itself into a full-service destination site, E*Trade (Nasdaq: EGRP) announced Monday that it has become the leading investor in online mortgage bank LoanCity.com’s second round of funding. New Enterprise Associates provided much of the funding for LoanCity.com’s first round.
LoanCity.com offers a technology platform that connects consumers, mortgage brokers and lenders. LoanCity.com currently works with lenders that combine to service approximately 75 percent of all U.S. mortgages. The company offers more than 50,000 loan programs for consumers.
“By investing in LoanCity.com, E*Trade is supporting its broad mission of empowering consumers to achieve their financial goals,” said Tom Bevilacqua, executive vice president of corporate development and strategic investments for E*Trade.
E*Trade All About Expansion
The investment in LoanCity.com is just the latest way E*Trade, which plans to introduce after-hours trading in September, has branched out with new services and investments. For example, E*Trade is partnered with and has an equity stake in the new online investment bank E*Offering, which is giving retail investors a chance to buy certain IPOs at the offering price.
In June, E*Trade announced a deal to merge with Telebank, marking the first merger of an online bank with an online broker. Earlier in the year, E*Trade acquired financial information site ClearStation, which offers stock market news and data. E*Trade has also found the time to launch a venture-capital fund.
Stock Impact
Shares of E*Trade climbed 1-3/16 to 27-3/4 in early trading today after the news. The recent turmoil in the Internet sector and concerns about interest rates have been a double whammy for online brokers such as E*Trade, which is more than 40 points off its all-time high.
If, as anticipated, the Federal Reserve raises interest rates this week, some analysts are expecting a rally. If that happens, online brokerages are expected to see a significant rebound.
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Loan City is a failed operation, as of the date of this posting. i AM a broker and have submitted many, many loans to this poor excuse of a company, and their representatives have continually increased the turnaround times on files, ultimately rendering deals dead! That means all of my time and money spent on advertising, sales and marketing, just to get a client has been for nothing but heartache and damage economically and to my reputation. I discourage anyone dealing with this company or its affiliates to forego the option, and they will have no problem telling you to go somewhere else.