Much of home building has been systematically streamlined, from construction through the final inspection check-off list. But not home mortgages. Buyers still face mountains of forms, over-burdened mortgage brokers, constantly fluctuating interest rates, and a headache-producing closing process without which most people cannot buy their new home. It's not by choice: Most of the forms are required by federal law.

Some builders, in an effort to facilitate the sale and generate extra profits, have created their own mortgage services, absorbing some of the headaches in order to turn a profit and mostly to keep the buyer in-house. Other builders wish their buyers luck as the consumers shop for financing on their own. But some builders, such as Beazer Homes, have found a third way.

In 1995, Beazer partnered with Homebuilder Financial Network, or HFN, to take care of the Beazer buyer, shop for the best mortgage, bear the risk of the loan -- and generate an average of $2,000 to $3,300 in pre-tax profits per home.

"We never wanted to be a mortgage broker," says Beazer CEO Ian McCarthy. "We are a home builder." Nonetheless, by partnering with HFN, the builder can offer mortgage services as an option to buyers.

HFN says it offers a "mortgage in a box," a turnkey optional service to builders and buyers. As with any other option, the buyer can refuse to take it, but since 1995 HFN has generated about $700 million for Beazer, says McCarthy.

The partnership is fruitful for all parties. HFN, based in Miami Lakes, Fla., netted $3 billion in 2002, mostly in origination fees and from the sale of mortgages on the secondary market. Customers choosing to take advantage of the mortgage in a box frequently end up with better terms than they could get on their own, says McCarthy. And Beazer keeps the buyer on track to buy a Beazer home with a Beazer mortgage, without having to launch a mortgage service itself. HFN bears the risk; Beazer takes a share in the profit.

Step This Way, Please

HFN is invisible to the buyer. When buyers ask about financing, a Beazer employee takes them to a Beazer office, where an employee of HFN, who is wearing a Beazer shirt, explains the Beazer mortgage. The mortgage company, which is a cross between in-house and outsourced services, searches among 250 different loan programs to find the best deal.

HFN co-founder and president, Tom Meyer, notes that while the mortgage chase has not changed much from pre-computer days, home buyers have. "The profile of the typical home buyer has changed dramatically," he says. "It used to be June and Ward Cleaver. Now there are single moms, new immigrants, people with employment or credit problems," he notes. Builders who wish to sell homes to these prospective buyers have to find loan programs that represent affordability for nontraditional buyers, preferably at minimal or no risk to the builder.

Meyer says he estimates that HFN, which was founded eight years ago and which now works with 29 builders nationwide, controls perhaps three percent of the mortgage market in the country. And that percentage is growing, he claims. HFN most recently partnered with Ohio's Dominion Homes, Florida's Arvida, California's Brookfield Homes, and Trend Homes of Arizona, as well as Duffy Homes in Ohio, Garbett Construction of Sandy, Utah, and Ameri-Con Homes of Beachwood, Ohio.

Room to Improve

Even with HFN acting as an intermediary between the buyer and the Byzantine mortgage business, some aspects of the mortgage process are still far from pleasurable, acknowledges Beazer's McCarthy.

If there were one thing he would improve, it would be the mortgage process. He says he would like to see the process simplified and clarified. "We try to make it as easy as possible for people," McCarthy says, by assigning n HFN representative to the home buyers to make the closing of the home as hassle-free as possible.

HFN's Meyer notes that builders are investing time and effort in creating what he calls "nice to have" services: moving vans, landscaping, and gardening services. "But builders who focus on these ancillary services associated with the home purchase are missing how critical and central financing is to their business," says Meyer. "That's acutely obvious today, given how low interest rates are and how robust home building is." Yet when interest rates started to rise from these historic lows, consumer reaction was felt.

The basic point cannot be overlooked, emphasizes Meyer. The most important issue in buying a home basically boils down to a financial calculation. The high-volume production builders cannot and should not take their eyes off the financing ball.

But a number of consumer research studies have revealed that the financial consideration that most worries the buyer is not the overall price of the house, but the monthly payment. Car dealers have known this for a long time, HFN's Meyer notes. "Lease this car for $200 a month!" he laughs. Home builders could sell more Cadillac homes if they were able to offer more Cadillac-type mortgages, he says.

Meyer says that mortgage-in-a-box services are only the first step in expanding the builder's mindset. "Builders must learn the role that interest rates play to sell more homes," says Meyer. "If you ask [builders] what business they're in, they will say, 'We're in the business of building and selling homes.' A better answer is that they're in the business of providing homeownership," he says.

Beazer had tried to make other home-based services more accessible to its customers. "We once tried to bundle utility services, telephone, and Internet services," McCarthy recalls, but without success. "It was difficult to get the providers together into a common source," he said.

But mortgage services are especially suitable to aggregation. And Beazer's role in the process is contained: The builder does little more than walk the buyer over to HFN.

Post-purchase customer satisfaction surveys reveal that the mortgage process is an area of universal, chronic consumer complaint. Meyer likens getting a mortgage to going to the dentist: people dread it, but know they must put up with the pain.

Eventually, McCarthy wants much of the underwriting to be simplified. "The actual signing of the forms is not as well automated as it should be," he says. The front end, the part that faces the consumer, should be more automated, he says. "It should be a goal for industry, the mortgage industry, as well as the home building industry," he says. But until it is, companies like HFN will be in great demand.