Industry News

Fannie Mae’s ‘best-in-class’ image a ‘façade’

Mortgage giant to pay $400 million in settlement with regulator

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The long-held image of mortgage finance giant Fannie Mae as a low-risk, best-in-class institution was a "façade," the government sponsored corporation's regulator said today in a report summing up findings of a 27-month-long investigation into Fannie's accounting practices. The report from the Office of Federal Housing Enterprise Oversight details an unethical corporate culture where Fannie Mae employees manipulated accounting and earnings to trigger bonuses for senior executives from 1998 to 2004. Fannie Mae has agreed to pay $400 million in fines and implement corrective measures as part of settlements with OFHEO and the Securities and Exchange Commission, the regulator said today. OFHEO also has directed Fannie Mae to limit growth of its portfolio mortgage assets to the level of Dec. 31, 2005, and to review current and former employees for remedial action. "As the OFHEO report shows, the image of Fannie Mae as one of the lowest-risk and 'best in class' institutions was a fa&#...