New Jersey borrowers holding mortgages with high interest rates from Fleet Finance Inc. have another chance to bring their rates down, says the state Department of Banking.

Acting Banking Commissioner John M. Traier last week encouraged "any customers of Fleet who are not satisfied with the terms of their mortgages to contact the Department of Banking."

The state agency, in response to consumer complaints, will try to identify any state banking law that Fleet may have violated by making the high-rate loans, a spokeswoman said.

Fleet maintains that it has asked all borrowers several times whether they want to refinance their loans. Those still holding high-rate loans either did not qualify or chose not to refinance, said Agnes Bundy, senior vice president of corporate community development at Fleet.

The state's move came in response to allegations by a public interest group that hundreds of borrowers still hold Fleet mortgages with above- market interest rates, originated through third parties before a federal investigation in 1992.

"We're very concerned," said Phyllis Salowe-Kaye, executive director of Citizens Action, a public interest group that has partnerships with several banks.

In fact, the group has refused to sign a community lending agreement with Fleet, making it the only major bank in the state not in partnership with Citizens Action.

The citizens group helps lenders expand origination volumes through community outreach, while serving as a watchdog for borrowers.

Fleet Finance, which stopped making loans after the 1992 investigation, has more than 1,300 loans outstanding in New Jersey, the company reported. Of these, 193 have interest rates of more than 18%, it said. Nearly all the rest have rates ranging from 12% to 18%.

Citizens Action is also concerned that Fleet has not compensated borrowers who have already paid off high interest loans, or been foreclosed on, Ms. Salowe-Kaye said.

The lack of an agreement between Fleet and Citizens Action is especially important in the wake of the purchase by Fleet's parent company of National Westminster Bank, noted Ms. Salowe-Kaye.

"We've had an agreement with Natwest for eight years," she said. "I don't think Fleet can continue to do outstanding lending in New Jersey that Natwest has been doing without the partnership with Citizens Action."

Ms. Bundy also expressed regret at the dispute. "We're disappointed that our relationship with Citizens Action has dissolved," she said, "and I'm not certain what it will take to repair it."

So far, the banking department has received only a few calls from dissatisfied Fleet loan holders, a spokeswoman reported.

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