Industry News

Fannie Mae overstated earnings by $6.3 billion

Mortgage repurchaser issues first 10-K since accounting scandal broke

Fannie Mae overstated earnings from 2001 through the first two quarters of 2004 by $6.3 billion, the company said Wednesday In a Securities and Exchange System filing Wednesday, the government-backed mortgage repurchaser restated the audited results previously filed for 2002 and 2003, and unaudited financial statements for the first and second quarters of 2004. Accounting errors related to how the company handled derivatives resulted in a $7.9 billion loss after taxes -- considerably less than a previous estimate of $10.8 billion. Fannie Mae's first 10-K report since an accounting and management scandal shook the company was hailed as a step toward a return to regular financial reporting. "The filing of this Annual Report on Form 10-K for the year ended Dec. 31, 2004, represents a significant achievement in our efforts to return to timely financial reporting," the company said. Before it can resume regular financial reporting, Fannie Mae -- which holds or guarantees nearly 25 percent...