What's going on at Fleet Mortage Group?
That's what many in the industry are asking following a flurry of departures by top executives at the big South Carolina-based company.
In March, longtime production chief Richard M. Duncan headed for the door. He was followed in May by Linda Carman Hitchcock, a rising star who managed Fleet's purchases of mortgages from other lenders.
Next, and most momentously, came the resignation of Andew D. Woodward, chairman for six yearS. He quit two weeks ago to take the top job at Nationsbank Mortgage Co.
Parent Flexing Muscle
In the view of several people close to the situation, these executives and others were uneasy about moves by the-company's majority owner, Fleet Financial Group, to exert greater control. The Rhode Island-based banking company owns 81% of the mortgage operation; the rest is publicly held.
The parent company has recently begun a "reengineering" project at the mortgage unit, as part of an effort that earlier produced plans to cut 5,000 jobs from other operations.
'Worst of All Worlds'
Meanwhile, Fleet Financial has installed a veteran of the lead bank to run loan servicing. And, pending the reengineering - dubbed Fleet Focus - the parent has put on hold a long-awaited plan to update loan originations technology.
"People are losing faith in the direction there," said one source intimate with the situation. "It has the worst of all worlds: publicly traded but bank owned."
Mr. Duncan, now an executive at Resource Bancshares Mortgage Group, and Ms. Carman, who has yet to land a new job, declined to comment. Mr. Woodward has described his move simply to the opportunity presented.
For all the changes, Fleet Mortgage clearly remains a major force in the mortgage industry. In the first three months of this year, the company produced $5.1 billion of home loans, ranking No. 5 nationwide, according the newsletter Inside Mortgage Finance. Fleet's volume was up 34% from a year earlier.
Rhode Island Defense
Fleet Financial, meanwhile, staunchly defends both Fleet Focus and the technology delays.
"I think that people who criticize Fleet Focus haven't been through it," said Michael R. Zucchini, vice chairman of Fleet Financial Group and interim chairman of Fleet Mortgage.
Some sources fret that the project may produce damaging job cuts, perhaps hindering the company's ability to make acquisitions. But Mr. Zucchini said Fleet Focus entails no preconceived plans for cuts. He added the the work should make the unit a better acquirer by increasing efficiency.
As for the originations technology, Mr. Zucchini said, "it's a $25 million-to-$50 million investment... and a three-month delay."
Fleet is acknowledged to be far behind in origination technology and has, since 1993, been looking for a system.
Many other major lenders can fund a loan within 24 hours, but Fleet averages about three days because of systems limitations. Mr. Zucchini calls Fleet's performance "within industry ranges."
Nonetheless, some mortgage professionals at Fleet have reportedly seen the delay as symptomatic of an unnecessary intrusion by the parent.
"There has definitely been bank interference," said one source.
In the case of Mr. Woodward, sources say, compensation may have been an issue. Last year, he was paid $530,000 in cash and bonus, while the heads of a number of other companies made more than $1 million each.
Industry sources say that Mr. Woodward more than doubled his paycheck by moving to the NationsBank unit. He has declined to discuss his pay.
Mr. Zucchini said that Fleet continually reviews compensation but declined to say if the company would offer more to Mr. Woodward's successor.
The process for picking a successor will be closely watched. A search for a new chairman is under way, according to the company. The positions of Mr. Duncan and Ms. Hitchcock, meanwhile, will not be filled until Fleet Focus is completed.