Fannie Mae’s federal regulator has suggested that the mortgage giant may have manipulated earnings to justify bigger bonuses to executives, according to news reports.

The regulator, the Office of Federal Housing Enterprise Oversight, presented the results of its long-running review to Fannie Mae’s board of directors Monday night, according to the Washington Post. In the investigation, OFHEO apparently found a pattern of practices aimed at ironing out volatility in profits from quarter to quarter similar to what occurred at rival Freddie Mac.

While OFHEO found a “smoothing” pattern of earnings reporting at Fannie Mae, the review found no evidence of accumulated profits that haven’t been disclosed, as happened at Freddie Mac, the Associated Press reported.

OFHEO’s investigation stems from the accounting scandal at Freddie Mac, which last year revealed the company had understated profits by almost $5 billion for 2000-2002 to smooth earnings and meet Wall Street expectations. Freddie Mac paid a $125 million fine and ousted several top executives.

A spokeswoman for OFHEO said Tuesday that the agency was not commenting on the Fannie Mae review or on when or if it might be released publicly.

Fannie Mae is a shareholder-owned company chartered by Congress to ensure a constant flow of mortgage funds. Fannie Mae’s stock (NYSE: FNM) was trading at $75.18 this morning.

***

Send tips or a Letter to the Editor to samantha@inman.com or call (510) 658-9252, ext. 140.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×