Updated from 8:38 a.m. EST

Backed by some of the top mortgage lenders in the U.S.,

Microsoft

(MSFT) - Get Report

is forming a new company to promote online real estate transactions.

The software giant will be the majority owner of

HomeAdvisor Technologies

, while

Chase Manhattan

(CMB)

,

Bank of America

(BAC) - Get Report

,

GMAC-Residential Funding

and

Wells Fargo & Co.'s

(WFC) - Get Report

Norwest Mortgage

unit will take undisclosed equity stakes.

Freddie Mac

, the government-sponsored repurchaser of bundled mortgages, is also contributing financing.

Steve Ballmer, president and chief executive of Microsoft, plans to announce the new company to a gathering of real estate brokers Thursday. Shares of the company's stock were up 9/16, or 1%, to 95 15/16 in early trading.

The new venture's centerpiece will be a software platform that automates parts of the mortgage financing procedure. Microsoft said this could save home buyers $2,000 over the course of a loan and cut closing times to around 10 days.

A second division of the new company will market software to real estate professionals, while a third division will operate the

HomeAdvisor.com

Web site. The site currently offers tools for finding homes and helping with loans.

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HomeAdvisor is part of Microsoft's

MSN

portal, which provides business services on the Internet. The travel service

Expedia

(EXPE) - Get Report

, which began as part of the MSN portal, had its own initial public offering in December. Ballmer has followed a plan of starting spinoff companies to attract outside investors and lure employees with stock options.

But HomeAdvisor will face competition from

Homestore.com

(HOMS)

, which said this week it also plans to devise an online transaction platform. Homestore, which had its initial public offering last year, has distribution agreements with

America Online

(AOL)

and

Excite@Home

(symbol)

and has close ties to the

National Association of Realtors.

Aaron Scott, analyst for

Advest

, compared the new venture to Microsoft's Office suite model, which he said essentially offered three software products for the price of one and a half.

"Less up-front charges, more efficient operations, but a higher volume of business ultimately makes more money for the banks and the brokers while saving money for the consumers," Scott said. Scott rates Microsoft shares a buy, and his firm has not done underwriting for the company.

Robert Becker, analyst for

Argus

, said the involvement of Chase and Norwest bodes well for the venture because the two banks pursue a high-volume, low-cost strategy. Between them, "you've got the bulk of the mortgage business right there."

"A lot of people will use the Internet to get as much information as they can about different types of loans," Becker said. "It'll take time before people do the whole kit and kaboodle over the Internet."

While cost savings are an integral part of the volume approach, "they're tossing out a nice round $2,000 relative to what?" he asked. Still, "over time, the Internet will become a very important tool in helping consumers ferret out the overpriced loans."

Becker rates Microsoft, Chase, Well Fargo and Bank of America shares buy, and his firm does not perform underwriting.

Asked how HomeAdvisor plans to make money, Matt Heinz, a spokesman for the company, said it will continue selling banner advertisements on its Web site. Also, he said, "there will be an opportunity for transaction fees" on the loans.

The company will not have exclusive rights to loans originated by the member banks, which generate $400 billion combined in mortgage loans annually.