Freddie Mac said today it will follow a recommendation to cap its retained mortgage portfolio until the company begins releasing quarterly financial statements in accordance with generally accepted accounting principles some time next year.
As part of the continuing fallout over accounting scandals at Freddie Mac and Fannie Mae, both government-backed mortgage repurchasers have now capped their lending portfolios, as recommended by the Office of Federal Housing Enterprise Oversight.
In 2004, OFHEO accused both companies of improper accounting practices that led them to restate several years of earnings. Congress is debating legislation that would create more government oversight of the publicly traded lenders. Freddie Mac in April agreed to pay $410 million to settle lawsuits by shareholders over accounting practices that led the company to restate three years of earnings.
Freddie Mac today said it would cap its portfolio at 2 percent above its level at the end of June, or $710.3 billion, Reuters reports. Fannie Mae agreed to cap its portfolio in May at $727 billion, where it stood at the end of 2005.
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