After years of focusing on conventional loans, Fleet Mortgage Group is making home equity and subprime mortgage loans priorities.
The Columbia, N.C., mortgage company has hired two veteran marketers for a push that is scheduled to go full throttle next year.
"We plan to open up new avenues of productivity and profitability instead of doing things the same old way," said Jack Daly, executive vice president for production at Fleet Mortgage Group.
Fleet Mortgage spent the closing weeks of 1995 rolling out pilot programs in Detroit and Portland, Ore. The first subprime, or B and C, loan was made last week to an Oregon homebuyer who borrowed $107,000.
Fleet Mortgage is also beginning to train its 700 loan representatives to begin offering the products. Executives say once the retail push is under way they will offer the products to wholesale brokers and correspondent banks.
The positioning could make Fleet - already one of the largest conventional lenders - a titan among home equity and subprime lenders.
"This is good for Fleet, but it's not good for other banks," said Robert A. Calvert, president of Calvert Consulting, Atlanta. "It gives them more competition."
Fleet will have to step carefully, though, since the types of loans it is adding carry greater risks, Mr. Calvert said. "Fleet is adding more delinquency potential and will have to spend more time and money collecting the loans."
Mr. Daly said Fleet is taking appropriate steps to keep delinquencies down. Representatives of Fleet Mortgage will take loan applications and handle processing while Option One, the B and C lender Fleet acquired last summer, will handle the riskier aspects of underwriting, securitization, and servicing.
Fleet has also brought on a seasoned lender of B and C products, Dave Molde, who was last with Advanta Corp., one of the industry's top 10 subprime lenders.
Mr. Molde expects the B and C program to make $130 million of loans next year and $370 million in 1997.
"We'll be a resource for customers who do not meet traditional guidelines for A paper," Mr. Molde said.
Fleet also has high hopes for the home equity program. To run it, the mortgage unit tapped Lance Lemoine, who has spent the last few years running a home equity program in the Northeast for the parent company, Fleet Financial Group.