Fannie Mae May Need to Restate Earnings
By Mark Felsenthal
WASHINGTON (Reuters) - The No. 1 source of U.S. mortgage finance, Fannie Mae, may need to restate its earnings as a result of a government review of its accounting policies, a federal regulator said on Wednesday.
The Office of Federal Housing Enterprise Oversight has announced a review of the accounting practices of Fannie Mae (NYSE:FNM - news) as a precaution, after an accounting scandal last year at sibling government-sponsored mortgage finance enterprise Freddie Mac (NYSE:FRE - news).
In a quarterly report on capital levels at the enterprises, OFHEO said, "Fannie Mae's capital classification is based on financial information and the application of accounting policies currently under review by OFHEO. The outcome of the review may result in a restatement of prior period results and a revision of the respective capital calculations."
The report did not specify whether results would need to be restated lower or higher, or if at all. Freddie Mac restated earnings upward by $5 billion in 2000-2002 and earlier periods, after the company acknowledged executives had ignored accounting rules in a bid to mask volatility.
OFHEO spokeswoman Corinne Russell declined to elaborate beyond the statement, saying the review is still underway.
The comments come as momentum builds in Congress to create a stronger regulator for Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks after Freddie Mac's accounting problems rattled investors and policy-makers last year.
A Senate panel is due to take up a bill to create a new oversight agency for the mortgage finance enterprises on Thursday.
Fannie Mae stock dipped on the news, but recovered some lost ground by the end of the day, slipping 88 cents or 1.2 percent to $74.35 on the New York Stock exchange.
A Fannie Mae spokesman said the company had shown more than adequate capital and risk buffering in the regulator's capital adequacy test.
"The language in the letter with respect to the OFHEO special examination straightforwardly states the fact that it is ongoing," Fannie Mae spokesman Chuck Greener said in a statement. "As previously announced, OFHEO has recently retained a national accounting firm to supplement the agency's efforts and obviously has not reached any conclusions."
More News:
3-31-04 Snow defends outsourcing of jobs
3-31-04 Elderly who can't pay taxes losing homes
3-31-04 Factory Orders Rise 0.3 Pct. in February
3-31-04 Fannie, Freddie Had Adequate Capital
3-31-04 Finance: Do-It-Yourself Credit Counseling
3-31-04 Grasping for debt relief
3-31-04 Ideas for How to Spend Your Tax Refund
3-31-04 In Wisconsin, Bush preaches free trade, lower taxes
3-31-04 Kerry Releases New State-by-State Report on Job Growth
3-31-04 OPEC Tightens Oil Supply Restrictions
3-31-04 Stocks Fall, Jobs and Oil Hover
3-31-04 White House urges OPEC not to harm U.S. economy
Great Mortgage Articles:
Homeowner's Insurance | Debt Overload | Credit Cards | Successful Remodeling | Managing Mortgages | Refinancing Loans | Home Improvement | Moving Tips | Homeownership Mishaps | Best Appraisals | Clean Your Credit | Real Estate InvestmentsApply Online | About Us | Contact Us | Free Mortgage Quotes | Our Programs | Home Equity Loans
Second Mortgages | Refinance Mortgage | FAQ | Colleagues
