Mortgage giants Fannie Mae and Freddie Mac exceeded the 2004 housing goals required by their government charter, but Freddie Mac was penalized for counting certain purchases without prior approval, the Department of Housing and Urban Development said Monday.
HUD said both of the government-sponsored enterprises exceeded their housing goals in 2004, but the Department penalized Freddie Mac’s 2004 performance for its failure to obtain HUD’s approval during the 2004 performance year before counting certain mortgage purchases.
In 2003, the Office of Federal Housing Enterprise Oversight discovered accounting irregularities by Freddie Mac, leading to a massive re-audit and earnings restatement and internal probe, as well as a management shakedown.
OFHEO last year also uncovered accounting violations at fellow GSE Fannie Mae, setting off shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission. As a result, the company will have to restate earnings by as much as $12 billion.
In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae’s chief financial officer, Timothy Howard, resigned Dec. 21.
Even with those penalties, which reduced the credit Freddie received for certain purchases, the company exceeded its housing goals, HUD said.
Fannie and Freddie are required to meet annual goals for funding mortgages for low and moderate-income buyers as well as for loans in underserved areas.
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