For Fleet Financial Group's already-potent mortgage unit, the merger deal with BankBoston is a shot in the arm.

The deal would significantly expand the mortgage company's customer base. Between the bank and the mortgage company, Fleet has a customer base of 14 million households, said A. William Schenck 3d, chairman and chief executive officer of Fleet Mortgage Group of Columbia, S.C. The merger would raise that to 20 million, he said.

Also, Mr. Schenck said, Fleet Mortgage would gain branches and telephone capability as a result of the merger, even if it did not get all of the BankBoston branches. (Some are expected to be sold.)

"The potential goes up for expanding the business," he said.

But that boost might come at the expense of HomeSide Lending of Jacksonville, Fla., another home loan powerhouse, which was originally a joint venture between BankBoston and Barnett Banks.

As a "preferred partner" of HomeSide, BankBoston has a contract to sell all its mortgage production to HomeSide, which National Australia Bank bought last year.

That contract runs for another two years. It would have to be bought out if Fleet Mortgage wanted to feed its $120 billion servicing portfolio with mortgages originated in BankBoston branches.

Hugh R. Harris, president and chief operating officer of HomeSide, said "has been a great partner."

"The relationship is working very well," Mr. Harris said. "We enjoy working with the management of BankBoston, and we are looking forward to continuing the relationship."

Fleet's Mr. Schenck said the fate of BankBoston's arrangement with HomeSide remains to be seen.

"At the moment we don't have a full understanding of what the relationship is" between HomeSide and BankBoston, he said. "We certainly haven't reached any conclusions yet."

HomeSide lost business through one big recent merger but gained through another. Barnett bought out its HomeSide contract-it was a preferred partner-before being bought by NationsBank. But the merger that formed Chicago-based Bank One Corp. went the other way.

The old Banc One Corp. had sold all its servicing to HomeSide and become one of its feeders. HomeSide kept that business after Banc One's merger with First Chicago NBD, and also was sold First Chicago's servicing portfolio.

Herman Churchwell, chief executive officer of Hamilton Carter Smith & Co., expressed doubt that Fleet Boston Corp. would maintain BankBoston's link with HomeSide.

Though the merging companies will probably look closely at the arrangement, "Fleet is very much entrenched in mortgage banking," Mr. Churchwell pointed out. His Beverly Hills, Calif., investment bank specializes in mortgage industry deals.

Losing BankBoston would not be the end of the world for HomeSide. The bank contributed only about $1 billion to HomeSide's $27 billion of originations last year.

Fleet Mortgage appears to be in much better shape than two years ago, when it was suffering from high executive turnover and lackluster results.

Under a new management team led by Mr. Schenck, the company has worked to upgrade and streamline its computer systems.

It recently signed long-term contracts with Cybertek Corp. and Fiserv to maintain its origination and servicing systems, respectively.

Fleet's telemarketing unit is now originating mortgages at a clip of $200 million per month-nearly double last year's rate, Mr. Schenck said.

Last month, the mortgage company as a whole closed a record $4.3 billion of loans. Despite signs that the refinance boom is slowing down, Mr. Schenck said Fleet Mortgage could originate as much as $40 billion this year, up from $36 billion last year.

The new management team has also boosted Fleet Mortgage's sales force to 300 retail loan officers from about 260 last summer, and its wholesale sales team to 55 people from 42. Mr. Schenck hopes to have 84 wholesale loan officers by the end of this year.

"We've really revved up," he said.

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