Two top former Fannie Mae executives will likely be named in a lawsuit being prepared by the company’s federal regulator, the Office of Federal Housing Enterprise Oversight, over an accounting and management scandal. 

OFHEO director James Lockhart said Fannie Mae’s former CEO Frank Raines and former Chief Financial Officer Timothy Howard are likely to be named in the pending lawsuit. Lockhart made the remarks at an American Enterprise Institute roundtable discussion about the future of the government-sponsored mortgage repurchaser, Reuters reported.

From 1998 to 2004, OFHEO has estimated Fannie Mae overstated reported income and capital by $10.6 billion. The company agreed to pay $400 million in fines as part of settlements with OFHEO and the Securities and Exchange Commission.

But the company appeared to be on the way to putting the scandal behind it. Last month Fannie Mae announced that the Justice Department had wrapped up its investigation and would not file charges against the company.

OFHEO also fined Fannie Mae’s sister company, Freddie Mac, $125 million after a 2003 investigation that led to a $5 billion restatement of earnings.

This week Freddie Mac officials announced they believe the Justice Department has wrapped up its investigation of the company’s accounting problems.

Freddie Mac CEO Richard Syron told investors this week that the company is on track to lift voluntary restrictions on the growth of its loan portfolio next year, when the company resumes issuing quarterly financial reports based. Freddie Mac plans have its books in order after it releases results for 2006 in the first quarter of 2007, Syron said.

Both Freddie Mac and Fannie Mae have placed voluntary restrictions on the growth in their portfolios. Congress is considering legislation that would create a stronger independent agency to oversee both enterprises, but there has been disagreement over provisions that would restrict their lending portfolios and the Senate may not work out a compromise this year.

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