When Tom Palmer took over Fleet Mortgage Group's production arm last year, he concluded that the company had grossly misunderstood how to use its parent bank's retail branches.

Convinced that selling mortgages through bank branches was a slam dunk, it had staffed its 12 offices in the Northeast with inexperienced people, whom it paid base salaries.

In reality, Mr. Palmer said, "it's the hardest business to get," because if the mortgage salesman makes a mistake, the customer will spread the word to other branch customers, or complain to the branch manager, who may then be reluctant to refer other customers. "If you mess one thing up, they're going to remember it."

Mr. Palmer made it a policy to hire only people with mortgage experience, purged and replaced 60 loan officers, changed their compensation plan to commissions, and set minimum production standards.

Such changes are one example of how Fleet Mortgage's new management team says it is making progress in turning the troubled company around.

Since 1996, the Fleet Financial Group Inc. unit has suffered high executive turnover and lackluster results. Many have questioned the bank's commitment to the mortgage business.

"The top of the company has been something of a revolving door for the last couple of years," said Thomas Theurkauf, an analyst at Keefe, Bruyette & Woods, New York. "Just to have some continuity there in terms of management would be very helpful."

Mr. Palmer was the first of four executives brought in during the last 12 months to help shore up Fleet Mortgage. In December, William Schenck left his vice chairmanship at Western Financial Corp. to become Fleet Mortgage's chief executive officer, filling a position that had been vacant for a year.

There are signs that the new team is beginning to make a difference.

Mortgage production revenues at Fleet Financial Group were $66 million in the second quarter, up 47% from a year earlier, according to the bank's earnings release.

Though at least part of that is attributable to a refinancing boom that has benefited other lenders, "it looks as though there is good progress being made," said Mr. Theurkauf.

Since January, Fleet Mortgage's cost of servicing has decreased some $2.50 per loan per year, to $57.50, according to Robert Rosen, the servicing chief, who joined the company in November. He had been at North American Mortgage.

The company has developed software to prevent interest loss on the mortgage-backed securities it services, Mr. Rosen said. That will save between $450,000 and $500,000, he estimated.

Servicing runoff forced the company to take a $75 million impairment charge in the first quarter.

The new management team brought the function of hedging the portfolio under the mortgage company's control; it had previously been handled by the parent bank.

The company hired Stephen Hozie, a veteran of Norwest and Mellon Mortgage, to run the hedging operation and brought in the fixed-income investment firm BlackRock Financial to advise it.

In the second quarter the company "returned to a more normal run rate in terms of amortization expense," said Mr. Theurkauf. "It looks like the impairment problems are behind them unless there's a dramatic change in interest rates."

Last month Fleet Mortgage hired Joseph McCartin as chief information officer from GE Capital Mortgage Services. His job is to improve a crucial area where Fleet has been sorely lacking: technology.

"Fleet in retail has a low level of automation relative to its peers," Mr. McCartin said. "That gives us the ability to leapfrog over our competitors."

A key step has been to arm Mr. Palmer's sales force with laptop computers and authorize them to make immediate credit decisions using Fannie Mae's desktop underwriting software, speeding the time to closing.

On the Internet, Fleet Mortgage is developing a Web site for correspondents and brokers that will allow them real-time access to the company's loan origination systems.

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