Fleet Mortgage Group's plan to cut 550 jobs over the next 18 months, announced Wednesday, is unusual among the recent spate of layoffs in mortgage banking.
Unlike job cuts this year by lenders such as Prudential Home Mortgage and Countrywide Credit Industries, the layoffs at Fleet Mortgage are a permanent downscaling rather than reactions to this years' steep downturn in mortgage activity.
"We took care of the originations side earlier this year, these are the result of a reengineering," said a company spokesman. Fleet Mortgage has cut about 900 jobs thus far this year, bringing employment at the Columbia, S.C.-based company to about 4,100.
The cuts result from a fourmonth program at Fleet, similar to one at Fleet Financial Group, which owns 80% of the mortgage company.
Fleet Mortgage believes that it has identified $40 million of pretax profit improvements that are sustainable annually.
As a result, Fleet says its cost to .produce a dollar of revenues will drop from a current level of 75 cents to around 60 ceres by the fourth quarter of 1995.
"Improvements resulting from this program will allow us to increase our leadership position ... by reducing costs, simplifying procedures, redesigning work processes, enhancing fee income, and improving customer service," said Michael R. Zuc-chini, chairman of the mortgage group.
Fleet executive were not available to explain how the cuts would be made and the efficienties gained, "We'll be working with our employees, explaining to them," said a spokesman.
Fleet Mortgage will record a $10 million charge in the third quarter to fund the restructuring.
The news was greeted favorably by analysts. "It's not unexpected given the environment. They are preparing for a better year," said Teri L. Seelig, a senior vice president at Fitch Investors Services.
Company watchers pointed to the parent's success at implementing cuts at Fleet Bank. "They have some credibility,"said one.
Shares of Fleet Mortgage advanced 50 cents in early trading Thursday, changing hands at $19.25.
