WASHINGTON – Two years after federal regulators first accused Fannie Mae of serious accounting problems and earnings manipulation to meet Wall Street targets, and the Securities and Exchange Commission ordered it to restate earnings back to 2001, Fannie Mae's accounting nightmare apparently isn't over yet.
While the company continues to investigate $11 billion in accounting problems it disclosed in March, it announced on May 9 that it had identified new errors in two areas. They involved transactions in its business of buying home mortgages from banks and other lenders and bundling them into securities, and the guaranty fees Fannie Mae charges the lenders.
In March, Fannie Mae disclosed accounting problems in several areas including certain loans, investment securities, houses acquired through foreclosures, interest on delinquent home loans, and reverse mortgages.
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However, in a filing with the Securities and Exchange Commission, Fannie Mae said it reviewed the problems with the Office of Federal Housing Enterprise Oversight, and based on the errors found so far, Fannie Mae is still confident it will meet the capital requirements set by the regulator, as well as a required 30% capital surplus.
Fannie Mae also said the restatement process will most likely cost more than $800 million this year. The restatement correction is expected to reach an estimated $11 billion.
OFHEO is in the process of finishing its special examination of Fannie Mae's accounting policies and practices, and its report is expected soon.
Fannie Mae finances one of every five home loans in the U.S.
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