"The consumer is getting pretty intelligent using it for what they can't get offline, but there is no reason to think processing online is any more or less efficient," says Jack Guttentag, who offline is a finance professor emeritus at Philadelphia's Wharton School, and online "The Mortgage Professor."

"The lamentation in the report is that the automation that you see on the site does not extend to the back office operation, which is true, but it doesn't extend to the back office offline either."

"A mishmash of regulatory oversight has led to a lot of disclosure and complexity. These regulations have become an impediment," Forrester reported one interviewed broker lamenting.

"The traditional friction between lenders and brokers exist, but it's a love-hate relationship. Lenders rely on them, and at the same time want to eliminate them," said one industry source.

"The Net has not simplified anything -- it offers even more information, and now people get confused and go to a broker instead," one broker said, according to study.

Improving the ratio of online closings and creating a sustainable, profitable, online mortgage lending business, hinges on several factors: online lenders offering offline services, digital signatures legislation (currently making its way through Congress) and more consumers who aren't so fidgety.

It will happen -- but not without casualties. By mid-decade the industry will bifurcate into distinct segments.

Today, the top 10 lenders represent 40 percent of the market, with none enjoying larger than a 10 percent share, Forrester reports.

By 2005, the top 10 lenders will snare 75 percent of the market and the remainder will be held by those who offer specialized mortgage products.

"These leftover lenders must prepare themselves for the auction block -- because being acquired by a lender aiming for volume will be their best survival strategy," according to the "Squeeze" report.